By purchasing and holding tens of thousands of existing homes, investors have created a demand where little had existed and drastically reduced the inventory of homes for sale, which has helped boost prices over the past six months. The investors’ goal is to buy and rent out a large portfolio of homes and collect monthly lease revenue until home prices increase to significantly higher than what the investors paid, at which time they will sell the homes.
This snatching up of homes by investors makes it nearly impossible for traditional homebuyers in certain neighborhoods to acquire an existing home without paying a premium to an investor, but it also raises serious concerns about what will happen to the housing market when all those investors decide to sell. The concerns about the destabilizing effect investor dominance in the housing market could have on local communities has led to programs designed to help offset this negative effect.
Fannie Mae, the first bank-owned home seller to express concerns about this destabilizing effect has implemented a program called First Look, which prohibits investors from bidding on Fannie Mae-owned homes for the first 15 days after they are listed for sale. Read more…
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