Packed In: Investors buy up single-family homes, leaving fewer options for locals
SPOKANE, Wash. — For the first time in three quarters, investors are buying up more single-family homes, according to a new study from Redfin. They say 1 out of 7 homes goes to investors, but the situation is even worse for lower-priced options.
Investors have their eyes on less expensive, more affordable homes on the market. The study found that 1 out of 5 lower-priced homes went to investors. James Young studies real estate markets and trends at the University of Washington where he leads the Washington Center for Real Estate Research. He says these investors are buying homes they can turn into rentals, purchasing properties for family members and flipping them to make a profit.
“Unfortunately, with the shortage of supply and a lot of cashed-up investors, the investors are able to pay cash, waving the contingencies and then buy the property without a mortgage,” he said. “Now, that’s a fairly unique situation.”
Even if the homes stay as rental options on the market, it doesn’t help the issue that there simply aren’t enough homes. Supply is nowhere close to keeping up with the demand of homes. He says this won’t be a quick fix.
“There hasn’t been a lot of supply coming out of the past few years, so that makes it even worse,” Young said. “There’s no quick solution to this. It took years to get into this situation, and I’m afraid it’s going to take a while to get out of it.”
Not having enough homes means current renters who’ve been saving up to buy can’t. Instead, they’re stuck in the place which shrinks vacancies. According to the 2021 Washington State Apartment Market Report, the vacancy rate for apartments in Spokane county was only 0.6%. This is dramatically low which leads apartments being able to charge higher rent. Investors see the Inland Northwest as a booming opportunity for growth.
“With rental rates going up, sure, it’s going to make it more attractive for investors to buy those types of houses,” he said.
Young says older people chose to retire when COVID hit, and many are downsizing. This means they’re competing for first-time homes again, further heightening the shortage of supply. Young says removing some of time it takes to develop homes will tremendously help this issue, but until then, the market can’t level out.
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