Real Estate Investor demand is a key component of the 2022 Housing Market and could eventually cause a Housing Crash. Consider this: Real Estate Investors (many on Wall Street) bought a record number of homes in 2021 and their buying spree in 2022 continues. Many are worried that the US Housing Market is facing a Great Reset.
Data from Core Logic shows a massive 64% jump in real estate investor purchases in 2021 while regular home purchases declined. Both small and large investors alike bought homes. But the most notable purchases are financed by companies like Goldman Sachs and Blackrock.
There’s two problems with Real Estate Investors buying up homes: 1) it robs inventory from the housing market and makes the Housing Bubble Bigger in the short-term and 2) in the long-term it makes the Housing Market more volatile.
That’s because home prices in 2022 are now dependent on sustaining the current level of investor demand (roughly 20% of all single-family homes purchased) in the market. And if there is any drop-off in investor buying, say because the Federal Reserve and Jerome Powell hike interest rates and enforce monetary tightening, then home prices could decline.
NY Post Article: https://nypost.com/2022/05/11/goldman-sachs-backed-firms-buy-entire-florida-community-for-45m/
CoreLogic Investor Data: https://www.corelogic.com/intelligence/single-family-investor-activity-stalls-in-the-fourth-quarter-of-2021/
Redfin Investor Data: https://www.redfin.com/news/data-center/new-construction/
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