The latest recovery in the U.S. housing market is being spurred not by your average homeowner looking for a bargain, but real estate investors scooping up cheap homes and renting them out, according to The Wall Street Journal
That role is significantly different from the one played by speculators who helped fuel the housing bubble of the last decade, the Journal reported, noting that today’s investors have set off a chain reaction that has helped stabilize prices.
“They warmed up the market, and it brought buyers back,” Lanny Baker, chief executive of the real-estate brokerage firm ZipRealty, told the newspaper.
Citing National Association of Realtors figures, the Journal said that cash buyers, mainly investors, now make up about 32 percent of sales nationwide, with Southern California and Phoenix, Ariz., among the most popular target markets.
Buyers have included individual and startup investors as well as big Wall Street players and private equity firms. Over the past year, firms such as Blackstone Group and Colony Capital have spent billions of dollars buying up single-family homes, according to the Journal.
“It’s a very attractive time to buy a home if you can,” Justin Chang, president of Colony American Homes, told the newspaper, adding that is has created a “big opportunity to rent homes to people who, for whatever reason, have chosen not to buy or can’t buy.”
Indeed, the rental market is booming in the wake of the housing crash, which turned the American dream of home ownership into a nightmare for many who lost their homes to foreclosure.
“There had to be a shift toward renting single-family units that owners could no longer afford,” Christopher Thornberg of Beacon Economics told the Journal. “Investors played a critical role in that transformation.”
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