Scroll through your feed and you’ll see a lot of finger-pointing as to why houses cost so much. And according to a national survey, many people believe big investors are to blame.
While data shows this isn’t true, nearly half of Americans surveyed (48%) think investors are the main reason why homes feel so expensive (see graph below):
But that theory doesn’t actually hold up when you look at the data.
The truth about investors
Investors do indeed play a role in the housing market, especially in certain areas. But they are not buying up all the houses, as so many people say on social media.
Rural, Realtor.com found that only 2.8% of all home purchases last year were made by large investors (who own more than 50 properties). That means roughly 97% of homes were bought and sold by regular people, not corporate giants. Danielle Hale, chief economist at Realtor.comexplains:
“In some neighborhoods, investors own significant shares of the housing stock, but across the country the share of homes owned by investors is not a major problem.”
So if they’re not investors, why are house prices so high?
What’s really behind current house prices?
The real story behind rising prices has less to do with who’s buying and more to do with what’s missing: enough homes. Robert Dietz, chief economist at the National Association of Home Builders (NAHB), says:
“It has been popular among some to blame investors, but when it comes to housing, the economics of it don’t make much sense. The fundamental cause of housing costs is the shortage itself. It is caused by the fact that there is a discrepancy between the number of households and the actual size of the housing stock.”
There are simply not enough homes for sale to meet buyer demand. And that shortage, not investor activity, has pushed prices up almost everywhere.
In short
It is easy to believe that investors have caused the current housing problems. But the truth isthe market simply needs more housing, and that’s finally starting to happen.
As more options hit the market, buying can feel a little more realistic again.
Connect with a local real estate agent and talk about what’s happening in your market.
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