Institutional House Buyers Pulling Back from Housing
The housing market is headed for a rough time according to this article, The Smart Money Quietly Abandons The Housing Market.
Here are some tidbits from the article:
“In some of the formerly hottest metro areas, purchases by large institutional investors – those having bought at least 10 properties over the past 12 months – plunged in January from a year ago, according to RealtyTrac’s Residential & Foreclosure Sales Report: in Jacksonville, Florida, by 21%; in Tampa, by 48%; in Tucson, 59%; Memphis, 64%; in Cape Coral-Fort Myers, Florida, by 70%!”
“But 23 of the 101 metro areas had year-over-year gains, some of them late starters. In Atlanta, institutional purchases rose 9% to where a quarter of all homes were purchased by institutional investors. That’s how the Fed has “fixed” the housing market. In Austin, the institutional share soared by a mind-boggling 162% to reach nearly a fifth of all purchases. In Denver, their share rose 21%, in Dallas 30%.”
“And in Cincinnati 83%. “Big hedge fund investors,” explained Michael Mahon, Executive Vice President at HER Realtors, which covers the area. “I think that’s contributing to the lower levels of inventory available on the market,” he added, seeing how these vacant homes have been pushed from the much scrutinized for-sale listings to the ignored for-rent listings.”
In other words, look at the astronomical % of houses in these markets being purchased by these short-term institutional rent to flip type models – Atlanta (25% of all purchases), Dallas (30% of all purchases), Denver (21% of all purchases) and Cincinnati (83% of all purchases).
Now tell me this makes sense or is sustainable. I don’t care what your market is doing right now. The question for the last several years is what should the housing market be doing given the terrible economy and how does that differ from the actual results. The difference is the housing market propping orchestrated by the government. As this article suggests, a large leg of the housing market propping (the institutional buyers) is on its last legs.
If you are thinking about selling your house or investment property and you have a cash buyer I recommend that you make a deal with that cash buyer before they disappear…