Let’s face it. Not everyone can or wants to buy a home. I wish they could, and I wish they would. As you have heard me say before, there is no better way to build generational wealth than to own real estate! For the 22 years that I have been selling real estate, there have always been good opportunities for investing in real estate, AND good opportunities for first time home buyers. About 10 years ago, the national investors showed up in Winston-Salem and although their buying patterns haven’t been consistent for all of those years, they are now back, buying up more properties than ever, and they brought their buddies from Wall Street with them.
I own a few rental properties, and many of my friends and colleagues do as well. Some of us manage them ourselves, and many call our good friend Brad Hunter to procure tenants and manage properties for us. For the most part, local investors like us keep our rents in line with the market and limit rent raises with long-term tenants. We also rely on local tradesmen and subcontractors to keep our properties in good working order. We answer our phones, make necessary repairs, bend a little on late payment fees if we need to, and don’t ask tenants to pay rent or put in a service request via an online portal. We build relationships and support our local economy relying on plumbers, electricians, handymen (and handywomen), roofing contractors, and flooring companies to partner with us. Wall Street investors are raising rents and being inflexible with lease terms. The worst part is, they have basically priced out the first time home buyer. Many agents that are currently working with first time buyers have written multiple offers, 10+ at times, before they get an offer accepted and an executed contract. The combination of growing governmental regulations on development, increased costs of building materials and an influx of “buyers” into the market has really hurt the American dream of homeownership.
With interest rates at rock bottom, buying power has increased so a buyer’s money will go farther. That should be good news, right? The investors should be priced out. But Wall Street buyers who are purchasing homes to rent have pushed their purchase price to over $300,000. And yes, many offers are coming up to 5% over the listing price and the buyer’s local representative hasn’t even seen the house. I try to avoid talking “purchase price” with my clients, because it can be scary. Let’s just look at your monthly payment, and establish a comfort level there before moving forward.
What is the end game for these real estate investment trusts? I’m not sure. Someone smarter than me knows. If they are here for the long term, I do know that they are betting big on the City of Arts and Innovation for sustained population growth through increasing talent-driven employment opportunities. They must approve of our healthcare system, and recognize that the quality of life is great and the cost of living is “affordable.”
Right now I know that they are driving up rental prices and severely limiting opportunities for buyers under the $325,000 price point. If you are concerned about access to “affordable housing” this alarming trend should concern you too.
Cheers to chasing the American dream of homeownership! Tori