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Are Investors Driving Up Housing Prices?

 

Are investors the reason why house prices continue to rise everywhere?

A recently published article said investors are pushing up the prices of homes across the country because of the sheer number of properties they’re buying. They’re saying this because they believe there’s a trend of new investors coming into the market and buying real estate, and I agree. After the Great Recession, people found stocks to be volatile and not tangible like real estate investments are. Additionally, they’re saying there’s an HGTV effect, and more people think they can buy homes and flip them. I noticed this trend as well.

“Investors are pushing up the prices of homes across the country because of the sheer number they’re buying.”

The article said there were about 1,200 to 1,250 investor LLC purchases in our market. I don’t like this data because it doesn’t include the mom-and-pop shops that buy in their name. If we break it down, about 7.2% of sales were to investors. The purpose of a flip is to make a house clean and updated like much of the market wants. If there wasn’t a market for flipped homes, investors wouldn’t try to fill the gap. I searched our MLS for homes sold by LLCs in the past two years and found that about half of them were resold as flips. This means that investors are filling the need to improve the housing stock.

As millennials get older and buy more homes, we’re seeing a skill gap. Not everybody’s as comfortable swinging a hammer as they might have been in the past. The cash needed to hire someone for those updates has also increased significantly.

If you have any questions, please let me know. You can reach me by phone or email. I’d love to help you.

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