The title of today’s blog was lifted directly from this WSJ article.
I blogged last week about why inventory levels are so low. One of the reasons was investors buying up properties en masse, and today’s WSJ article is case and point.
Per the WSJ: “Real-estate investors have a mountain of money looking for a home. Lately a lot of it is ending up in suburban single-family houses.”
Invitation Homes, the country’s largest rental-home owner, recently raised an additional $1 billion to buy up more homes. Invitation currently owns 80,000 houses and the additional cash will allow it to buy about 3,500 more.
WHY THIS MATTERS
This matters b/c Invitation is not the only major fund buying up houses. There are now many huge landlords/funds doing the same b/c they believe that real estate and single-family homes in particular are now one of the most viable asset classes for investors.
This is for all the usual reasons: (1) the stock market is too volatile and overheated; (2) a mass movement to the suburbs; (3) the Fed throwing money at the economy like never before, pushing up asset prices; (4) very low interest rates; and (5) an acute housing inventory shortage, among other things.
There is also a trend towards renting in lieu of buying, as housing continues to get more expensive and out of reach of even affluent buyers. Per the WSJ, Invitation’s typical tenants are parents with kids, pets and six-figure incomes.
This is great information, once again, to share with potential buyers who are nervous about a repeat of the 2008 meltdown.
(As an interesting aside, we had an appraiser come in under contract price last month in a very hot market b/c he was worried that “we might be on the cusp of another 2008…” He was not on our panel for the area and we will make sure we won’t use any appraiser who will add that much subjectivity to appraising, but I was fascinated by the fact that a seasoned appraiser was so unaware of all the data I have been sharing about the housing market in general and why this is not 2008.)
Buyers should be very comforted by the fact that huge funds like this, with all of their resources, analyses, data and sophistication, believe so strongly in residential real estate.
This is also more great info to share with buyers who are wondering why it is so hard to find a house and/or who are wondering why their agent is asking them to bid so aggressively.
Please note that we cannot share entire WSJ articles to nonsubscribers b/c they are copyrighted, but we can share key excerpts so feel free to request them from us.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167