Investors Have Outsize Impact on Brokerage Business and Housing Market
Excerpt from Motoko Rich, New York Times
REAL Trends and the Personal Real Estate Investor Magazine have just completed an in depth national consumer study regarding the new investor class. Turns out that investors, who represent more than 25% of all housing purchases, are just getting started. Below is an excerpt from an article written by Motoko Rich of the New York Times.
“With home prices down more than a third
from their peak and the market swamped with foreclosures, large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants. Nobody has ever tried this on such a large scale, and critics worry these new investors could face big challenges managing large portfolios of dispersed rental houses. Typically, landlords tend to be individuals or small firms that own just a handful of homes.
But the new investors believe the rental income can deliver returns well above those offered by Treasury securities or stock dividends. At the same time, economists say, they could help areas hardest hit by the housing crash reach a bottom of the market.
This year, Waypoint signed a $400 million deal with GI Partners, a private equity firm in Silicon Valley.
Gary Beasley, Waypoint’s managing director, says the company plans to buy 10,000 to 15,000 more homes by the end of next year. Other large private equity investors — including Colony Capital, GTIS Partners and Oaktree Capital Management, in partnership with the Carrington Holding Company — have committed millions to this new market, and Lewis Ranieri, often called the inventor of the mortgage bond, is considering it, too.
In February, the Federal Housing Finance Agency, which oversees the government-backed mortgage companies Fannie Mae and Freddie Mac, announced that it would sell about 2,500 homes in a pilot program in eight metropolitan areas, including Atlanta, Chicago and Los Angeles.
And Bank of America said in late March that it would begin testing a plan to allow homeowners facing foreclosure the chance to rent back their homes and wipe out their mortgage debt. Eventually, the bank said, it could sell the houses to investors.
The REAL Trends/Personal Real Estate Investor study, entitled The Invaluable Investor, also found that investors are increasing their desire to own-rent-hold and that the typical professional investor is buying more than 8 new properties on average each year.