Residential real estate purchased by businesses hits record high in the United States
Soaring house prices and rents are fueling the appetite of real estate companies for homes, adding unwanted competition for many potential buyers.
Residential real estate purchased by businesses or institutions reached an all-time high of 67,943 properties in the second quarter, according to Redfin, a Seattle-based online brokerage firm.
This is more than double compared to the previous year, when the pandemic temporarily hampered the real estate market. It also accounts for 15.9% of all properties sold in the April-June quarter, just below the record 16.1% sales share in the first quarter of 2020, Redfin said.
The data, which goes back to 2000, includes all types of residential properties, including apartment buildings and condos. It excludes purchases made by small individual investors.
Looking at single-family home sales alone, businesses accounted for 16.1% of all purchases in the second quarter, Redfin said. Ten years ago it was 8.4%.
The trend adds challenges to potential buyers, especially many first-time buyers who already face stiff competition for affordable homes at a time when the inventory of properties on the market is near historic lows and prices continue to rise. ‘to augment.
The S&P CoreLogic Case-Shiller Home Price Index in 20 cities climbed a record 19.1% in June from a year ago as too few homes are available for purchase and low interest rates have allowed wealthy buyers and real estate investors to pay more.
“When you have investors in a limited supply market and they come in with the money, they are able to outbid any regular buyer,” said Sheharyar Bokhari, senior economist at Redfin.
The impact of real estate investors on the single-family home market is especially felt now, as competition has become so fierce that homes often sell out within days.
“Houses don’t stay on the market very long,” Bokhari said. “People are frustrated with losing bid wars, especially if they lose to a (company) rich in cash.”
Real estate investment trusts and other corporations have traditionally owned apartment buildings, but the real estate crisis of the mid-2000s helped usher in a wave of investment on Wall Street in previously owned single-family homes.
Investment funds like Blackstone Group have bought thousands of foreclosed and distressed homes. Most of the properties have been converted to rentals. And while the housing market has more than rebounded since then, a shortage of homes for sale and growing demand for rental housing have motivated Wall Street to invest its investment in renting single-family homes, rather than selling them during a market. housing thirsty for inventory.
Blackstone Group, which formed single-family home rental company Invitation Homes in 2017, agreed in June to buy Home Partners of America, which buys and then rents homes.
For some potential buyers frustrated with the most expensive housing market in decades, renting a home is the second best thing, and that’s helping to boost rents, which have jumped 7.5% nationwide in June compared to the previous year, according to real estate data company CoreLogic. .
Not all real estate companies are dedicated to renting homes. Lots of flip houses they buy. And there are so-called “iBuyers,” companies like Zillow, Redfin, and Opendoor, who buy homes, usually from sellers who want to sell their homes quickly, and then put the homes back on the market.
Yet nationally, investors bought more homes than they sold in the first half of this year, according to data from Realtor.com.
“In the first few months of the pandemic they were adding to stocks and that was also the case in the spring and early summer of 2019, but generally throughout most of this historical data we We have seen more buying investors than we have selling investors, ”said Danielle Hale, chief economist at Realtor.com.
The Biden administration hopes to ease the competition that potential buyers face from large real estate investors as part of a larger initiative to address the housing shortage and reduce price pressures in the market. housing.
Last week, the White House said it was ordering federal housing finance agencies to give buyers and nonprofits an exclusive 30-day window to bid on more than 12,000 homes that are no ‘have not been auctioned for foreclosure.