With all the recent hype in the news, after a hedge fund bought an entire community in Texas, I thought it would be fitting to dig into what is happening with investment firms and the real estate market. Why are hedge funds and investment firms buying up single family residences and how can we compete?
A recent Redfin analysis showed, investor purchases accounted for over 18% of single family homes in 2021, up 12.6% from the previous year. A number that is projected to increase to 50% in the near future. Single family homes made up 75% of investment firm purchases last year, a record high. Why have investors turned so heavily to the single family market?
With the stock market boom in 2020 there was a projected adjustment in 2021. Investors often turn to real estate during stock market declines but as a result of Covid, investment firms lost out significantly from closed down offices, retail centers and hotels. Portfolio managers, looking for alternative equity investments, saw that only 17% of millennials own a home, despite being the largest generation by population. Most millennials (63%) have no savings for a home down payment and have been priced out of the housing market. Therefore the rental market, which grew 19% in 2021, is expected to continue to skyrocket well into the future.
If you are considering investing in real estate, there has never been a better time to own a single family rental property. How do you compete with investment firms offering cash, well above asking prices? Companies like HomeLight, Ribbon, and Opendoor offer programs that let you make cash offers without footing the bill yourself. The company makes a cash offer on your behalf, and you mortgage the property in a separate transaction without involving the seller. You can usually make up the difference in what the company charges in the all-cash pricing discount you get on the home. Here is an article with multiple companies that offer cash advance options: Cash Advance Home Buying.
Your Realtor should not only be someone you trust in knowing the real estate market but also in wealth building, preservation and management. At the Zager Group, we don’t take this responsibility lightly. We are committed to continuously learning and sharing about making the wisest choices for our future and the future of our friends and clients. We pride ourselves in being experts in this field. If someone you care about needs guidance or recommendations, please share our contact information as we are honored to be able to help!
As you can see from the numbers below we are starting to see a slight increase in inventory but prices are continuing to rise. We are up another 3% for condos and 7.9% for single family homes from last week. Our Local Market…
We had 7 new condos and 4 new homes come onto the market this week. We currently have 21 active condos ranging from $495,000 to $2,299,000; the median condo price is $799,000. We currently have 41 active homes on the East Shore ranging from $999,000 to $64,500,000 with the median price of $2,995,000. Here’s a year to date local update:
Local East Shore Lake Tahoe, Nevada Stats – All Year to Date
- Total Sales YTD: Condos: 46 | Homes: 38
- The Median Sales Price: Condos: $710,000 | Homes: $1,750,000
- Number of Sales Over $1 Million: Condos: 11 = 24% | Homes: 34 = 89%
- The Highest Priced Sale: Condos: $5,665,500 (Tahoe Beach Club) | Homes: $32,000,000
- Median Price Per Square Foot: Condos: $590.67 | Homes: $630.55
- Median Days on the Market: Condos: 82 | Homes: 89
If you would like to receive our in-depth market update or would like an evaluation of your property’s value we would love to hear from you! We’ve put together some information below that we think you’ll find useful. If you have anything you want to share with our community please let us know so that it can be included in future newsletters.
Thank you!
Craig Zager & The Zager Group