First-Time Buyers Have to deal with New Competitors

Investors are scouring real estate markets trying to find low-priced homes, and they’re increasingly stepping on the toes of first-time home buyers, who have been hunting in the same range of prices. “The investor is starting to gobble up pretty much anything under $200,000,” Dennis Cisterna, chief revenue officer for Investability Real Estate, which markets rental homes, told The Dallas Morning News. “We are not adding any new supply to the market to serve that first-time home buyer.”

First-Time Buyers Have to deal with New Competitors

Housing inventories have reached the lowest level in 30 years, as well as the shortages are most pronounced in the low and middle price levels. “We are losing inventory at a record pace and in the segment of the market with the most demand,” says Javier Vivas, a realtor.com® analyst.

Investors comprised 33% of all single-family and condo sales in 2016, the largest percentage ever recorded by real estate data firm ATTOM Data Solutions. “This is setting the stage for a boom in single-family rentals,” says Daren Blomquist, an economist at ATTOM.

But while institutional investors dominated the rental real estate market following the housing crash, they’re getting priced out of markets including Denver and Dallas. Smaller mom-and-pop investors now are stepping in to take their place. “The investors are competing for those starter homes,” Blomquist says, adding that 61% of investor purchases are for homes between 1,000 and 2,000 square feet.

Investors also have a tendency to pay cash, that is definitely causing it to be challenging for first-time buyers who need financing to compete. About 19 million single-family homes in the U.S. now are owned by investors, as outlined by ATTOM Data Solutions.

We have put together a really easy to follow Home Buying Process graphic for you to download.

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