Here’s why investors are flooding the housing market across the country.
Recently, an article claimed investors are pushing up prices of homes across the country because of the sheer number of properties they’re buying. There’s a few reasons this article believes this is happening.
One explanation is that buying real estate is becoming a popular way for new investors to get started. That’s something I agree with because many younger investors were put off of stocks by the volatility of the Great Recession. After all, they’re not tangible like real estate investments, are they?
There also may be an HGTV effect, where more people think they can buy homes and flip homes. I’ve noticed this trend in my experience. Some people come from a family tradition of flipping homes, but many others saw how fun it looked on TV and wanted to give it a try.
“About half of all real estate investors are planning to flip their properties.”
Another interesting thing about this article was that our marketplace had approximately 1,200 to 1,250 Investor LLC purchases. This number isn’t perfect because it doesn’t include private, personal investors, but if we break it down, there were approximately 17,000 sales across the metro. That means that about 7.2% of sales were to investors. How many of those investors were planning to flip, and how many just wanted to sit on the property and rent it out?
As the millennial population gets older and buys more homes, there’s a skill gap, where not everyone is as comfortable swinging a hammer or doing home renovations as they might have been in the past. In our marketplace, when I do some searches, let’s say there’s 1,250 LLC purchases. I did a search for properties in our MLS, and found that about half of LLC purchases were flips.
What does that mean? Investors are filling the need to improve that housing stock. If you have any questions about this, please call or email me. I look forward to hearing from you.