How investment firms are threatening the housing market
Institutional buyers are snapping up houses at a feverish pace and keeping some potential homeowners out of the market. Rising mortgage rates could be to blame.
Institutional buyers are snapping up houses at a feverish pace and keeping some potential homeowners out of the market. Rising mortgage rates could be to blame.
A young client of mine told me he and his wife had been outbid on a handful of houses this past spring, despite the fact that they had literally begun showing up to see homes for sale with a checkbook and engineer in tow. They couldn't figure out who it was buying up all the properties in the upper middle class enclave in which they hunting.
Turns out, it was private investment firm, paying cash. This meant no mortgage contingency, which is music to a seller's ears. In some cases, homes were being bought over the phone, their realtor told them.
Bloomberg tells us that this phenomenon hasn't stopped yet...
Ten years ago, we were told to become owners.
Now we're all supposed to be renters.
Endless ZIRP and QE has certainly helped home prices, but it's introduced a new predator into the housing ecosystem, one that shows no sentimentality when scooping up property whatsoever.
Just as the Federal Reserve intended, I'm sure.
Chalk up another 'W' for the holders of financial assets.