...
By Suzanne Blake
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
A real estate analyst has sounded the alarm about a new trend that could weaken housing markets across the United States.
"The collapse in investor demand in the U.S. Housing Market is alarming," Nick Gerli, the CEO of the Reventure app, wrote on X, formerly Twitter. "In a market like Atlanta, investors are buying 65% fewer homes than they did at the peak of the pandemic."
In the markets affected by fewer investor purchases, housing inventory and supply are skyrocketing. This can cause home values to drop in many of the markets on a month-to-month basis, Gerli said.
Read More on U.S.
Why It Matters
Monthly home values have already dropped in 27 out of the 50 states this year, according to Zillow. While Florida, Colorado, Washington, D.C., California, and Washington state experienced the greatest value declines from March to April, the data could foreshadow a larger shift in the housing market.
Investor buying could play a significant role in determining home prices, depending on the market, and sellers may soon find themselves in a challenging situation.
What To Know
Beyond Atlanta, Gerli said investors are abandoning other markets, including Jacksonville, Phoenix, Charlotte, Nashville, Miami and Denver.
While Jacksonville saw investors buying down by 63 percent, Charlotte experienced a 61 percent decline, and Nashville saw a similar 59 percent decline.
"The issue with investors in the housing market is that they tend to 'amplify' whatever the current market trends are," Gerli said.
"If there is a bubble, investors will make the bubble bigger, bringing in external capital into a local housing market that should be dependent on local buyers.
"Meanwhile, in a crash or downturn, investors tend to make the situation worse. Leaving the market in droves before the crash gets worse."
...
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, has seen this trend in his market region of Fort Worth, Texas.
"There were multiple homes purchased during the new build process by an investment group, and they have been left vacant for months," Thompson told Newsweek.
"We are starting to see renters come back in as of now, but those places were vacant for at least six months which can be a large cash outlay for those companies. They were even trying to sell the properties outright, yet the market is just so tight at the moment."
What People Are Saying
Nick Gerli, the CEO of the Reventure app, wrote on X: "Home values in many of these markets boomed during the pandemic, as a result of the huge spike in investor demand. So what happens to home values when this demand goes away, and when these investors sell? I believe we're starting to see the answer."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While lower demand from investors in some housing markets may be seen as a worrying sign, it actually could be a good thing for potential buyers in the coming months and years. Less demand for housing from the portfolios of some investors will equate to more availability, particularly in markets like Atlanta, Jacksonville, and others that have seen a substantial decline."
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: "When I see headlines calling this 'alarming,' I'm like...alarming for who exactly? For the investment firms that got caught holding overpriced assets when the music stopped? Or for my oldest son, who might finally be able to afford a home?
"It's not a crisis, it's a housing market correction that's been a long time coming. And frankly, it can't happen fast enough."
What Happens Next
While a lack or reduction in investor demand may be a key factor in a potential housing crash, homebuyers are likely to benefit from the trend in the coming months, Beene said.
"While in the past less investor demand has assisted in housing crashes going deeper, pricing remains strong, as most sellers and builders are offering smaller discounts instead of dramatically dropping prices," Beene said.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines