They really buried the lede on this one. Tight supply and high mortgage rates is leaving a lot of pent up demand. We can keep hoping for a correction, but I’m not being on one quite yet.
I’m sure PE is buying some homes, but that’s a different statement from the much stronger claim that they’re buying so many that they’re directly creating a shortage.
Many factors have influenced this unusual market, of course. But one that affects the housing shortage in particular is institutional real estate investment. Institutional investors purchased 13.2 percent of all properties sold in 2021, according to a 2022 report by the National Association of Realtors (NAR). Perhaps more concerning is the fact that they bought those homes for 26 percent lower than the state median prices during that period.
These large investment companies are exacerbating the home-inventory shortage by buying up the most affordable properties and renting them out, making it even harder for individuals and families, especially first-time homebuyers, to get themselves onto the housing ladder. Source
Industry advocates argue that they do not control enough market share to dictate prices in any market. Large institutions owned roughly 5% of the 14 million single-family rentals nationally in early 2022, according to analysts.
By 2030, the institutions may hold some 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast by MetLife Investment Management. Source
They really buried the lede on this one. Tight supply and high mortgage rates is leaving a lot of pent up demand. We can keep hoping for a correction, but I’m not being on one quite yet.
There is no supply because private equity is buying so many homes
But they’re still building… 650ft² “luxury” condos for $2600/mo. Utilities and renting shitty “common room” all extra of course.
What’s the actual data on this?
I’m sure PE is buying some homes, but that’s a different statement from the much stronger claim that they’re buying so many that they’re directly creating a shortage.
As is true in most things, it’s complicated. PE buying houses in large numbers is not the sole cause of the housing crisis, but a contributing factor.
https://www.cnbc.com/2023/02/21/how-wall-street-bought-single-family-homes-and-put-them-up-for-rent.html
Balanced take haha
Private investors like like 20-30% of the market which is large but pretty standard historically.
I am not sure what percent is PE of that number. My understanding “smaller” investors with cash is majority of it.
Here’s some data I found.
Hitting the low end of the market appears to allow them to set the floor.
You don’t have to own the market to control it.
Prices are set at the margins.