Real estate investor demand in the Housing Market has surged over the last year. Heading into 2021 investors were buying nearly 30% of all homes in America, heavily contributing the current Housing Bubble America is in.
CoreLogic Article/Data: https://www.corelogic.com/intelligence/single-family-investor-activity-remained-high-in-the-third-quarter/
Zillow Price / Rent Data: https://www.zillow.com/research/data/
This Investor Market Bubble is occurring just as first-time home buyers continue to be priced out of the market. This impact is worst in cities such as Atlanta, San Jose, and Los Angeles, where investors are buying close to 40% of all the homes. Housing markets such as Salt Lake City, Memphis, and San Francisco also have a very high share of investors and speculators purchasing real estate (California is especially bad).
Many people fear that the surge in investor demand – particularly in California’s Housing Market – is part of the Great Reset and will keep prices high forever. And mean that first-time buyers and small investors will never get a chance to own a home (“Own Nothing and You Will Be Happy”).
However, the impact of investors in a housing market doesn’t tend to be permanent. Data from previous US Housing Crashes suggests that areas with more investors, as well as 2nd home buyers, experience more volatility. Home prices and real estate values go up more in the Bubble, but then go down more in the Housing Crash.
Markets like Phoenix and Las Vegas are great examples of this. These metros experienced 50-60% decline in home prices during the 2007-12 Housing Crash. One of the primary reasons was due to a high share of speculative demand in the market in the Bubble that suddenly vanished in the Crash.
Meanwhile, cities like Pittsburgh, Buffalo, Albany, and New Orleans have a relatively low share of investor demand. Interestingly, these “boring” Housing Markets were some of the best performers in the last Housing Crash because of this reason. Less speculation and investor demand in the Bubble meant less of a decline in the Crash.
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0:00 Wall Street Housing Market Takeover
1:30 CoreLogic Data on Investor Demand in 2021
2:56 Housing Crash Risk HIGHER in Investor Cities
4:16 Top 10 Investor Real Estate Cities (AVOID!)
5:46 Higher Interest Rates = INVESTOR FIRESALE?
7:30 Cash Flow is WORST EVER. Bad for Investors.
8:21 Top 10 LOWEST Investor Demand (SAFER?)
9:24 Lessons from 2007-12 Housing Crash (Phoenix -55%)
10:43 Is 2022 Another 2007? Same Story Playing Out
11:52 Institutional Investors are CLUELESS (Important to Remember)
13:10 Higher Prices in Short Run (Bigger CRASH Long Run)
14:30 Hit the LIKE BUTTON (and become a Member!)
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