Home shoppers may have some of the lowest mortgage rates in recent history in their corner, but they’re also facing stiff competition from yield-chasing investors. So says the Wall Street Journal, who spoke with industry experts and found that a number of the nation’s hottest markets are increasingly being overrun with investor purchases.
“You now have permanent capital competing with a young couple trying to buy a house,” John Burns told WSJ. Burns’ eponymous real estate consulting firm estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in. “That’s going to make U.S. housing permanently more expensive,” he said.
Per the Wall Street Journal, Houston has become a favorite target for investors, along with Las Vegas, Miami and Phoenix. In fact, Texas’ largest city saw investors accounting for some 24 percent of recent home purchases, per John Burns Real Estate Consulting.
“Limited housing supply, low rates, a global reach for yield, and what we’re calling the institutionalization of real-estate investors has set the stage for another speculative investor-driven home price bubble,” the firm concluded.
This investor rush may feel a bit too familiar, but the article warns that there are some inherent differences between today’s market and what we experienced 10-15 years ago, when financial institutions were seemingly lending money to anyone who asked.
Head to the Wall Street Journal to check out their full report here.