Is Wall Street Buying Up Main Street? | Think Realty | A Real Estate of Mind

Abstract

Let's explore whether institutional investors are negatively impacting housing availability and affordability with major purchases. What can you do about it? Further, what advantages do institutional investors have versus you? Deep Pockets, Company Size, and Track Records Institutional investors have really deep pockets. A seller doesn't care what your mortgage's interest rate will be-they just want the most money they can get for their property now! Their deep pockets also mean institutional investors can make offers in cash, whereas a traditional buyer will need to finance the property. According to Redfin.com, investors own just under 16% of the current housing stock in the U.S. How much of that 16% is owned and controlled by institutional investors versus mom-and-pop investors? To find out, take a look at a company called Invitation Homes, which is owned by BlackRock. It is the largest rental property company in the U.S. Invitation Homes owns half a percent of all the single-family homes for rent in the U.S. So, if Invitation Homes' market share is only half a percent of all single-family rental homes and they are the biggest institutional investor, then it appears smaller investors are making up a vast majority of the investing being done in the U.S. Are Fundamentals Driving Up Housing Prices? If institutional investors aren't driving prices up with their purchasing power and economies of scale, what is pushing housing prices up on Main Street? The fundamentals! Think Econ 101. There will always be large institutions to compete with, but as a savvy investor, you can strategize against them. Lemaster is a seasoned real estate investor who has accumulated a large portfolio of rental properties across multiple markets, including single family, multifamily, commercial, and new construction.