The U.S. housing market has been affably making its ascent up the rungs of the ladder to recover, and rather swiftly in recent months. New reports show a net gain of 12 percent in existing homes, as compared to the same month last year. In a rather odd change of situations, however, many buyers are actually corporate investors as opposed to home seekers.
As the throes and hard iron grip of the recession that has embroiled America since 2007 slowly eases its tension, investors are becoming once again the confident bunch they were six years ago. But there is a different flavor of investors this time around. During the housing boom in the early 2000s, most buyers were house hunters seeking that dream home. Due to lax restrictions and stated income loans, many subprime buyers were coaxed into purchasing homes at loans they could never hope to repay after the payments reset from interest only. This time, it’s actually well qualified corporate investors, who see the recipe for profits in a still depressed real estate market that has yielded historically low interest rates for borrowers.
According to the National Association of Realtors, the median price on homes fluctuated during March, but was bolstered due to strong market demands, selling steady at about $184,000 per home. That’s a staggering 11 percent higher sell rate than in March, 2012, a year earlier. The rate of home sales was faster, too, about 10.3 percent faster than the same time a year prior.
“Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity,” said National Association of Realtors chief economist Lawrence Yun in a recent statement. “In the same time frame housing inventories have trended much lower, which is continuing to pressure home prices.”
In the past, most housing recoveries were paved by eager home buyers ready to grab up low priced value homes with even more lucrative interest rates on home loans.
But according to a recent article by the Wall Street Journal, this recovery is vastly different in its scope.
“Investors – including some big Wall Street players – are leading the way,” the popular newspaper wrote. “Their role is noteworthy given that flippers and speculators were blamed for helping to inflate the housing bubble of the past decade.”
Warren Buffet Says He’d Buy 1000s of Homes
Last year, billionaire investor Warren Buffett told CNBC: “If I had a way of buying a couple hundred thousand single-family homes I would load up on them. It is a very attractive asset class right now. I could buy them at distressed prices and find renters.”
Major Investors Following Suit
- Blackstone has acquired a portfolio of 20,000 rental homes worth $3 billion.
- Colony Capital has spent more than $1 billion on 8,000 homes in seven states.