Investor strategies may artificially drive up home prices

Since the end of the economic recession, home prices have been on the rise.  Home prices rose across Florida last year by 20 percent or more.  Not everyone is pleased as middle-class buyers have still not always had a place to turn.

Many real estate investors have been moving into the residential market and buying distressed properties in bulk.  These investors are aiming at properties that are subject to short sales or foreclosures.  Investors have been spending billions on these properties and then often placing the homes back on the market as rentals.

The intent of an investor is to attempt to buy properties at discount and rent the homes out until property values rise.  The homes may actually only go up for sale when the investor feels that they can make a profit.  Meanwhile, homeowners that have gone through foreclosure find themselves renting properties in the same neighborhood.

However, other home buyers may feel left out of the market.  Mortgages can be hard to come by when credit is so tight.  And the bargain homes are usually bought up by investors who can pay cash.  In some circumstances these investors are paying 25 to 50 percent more than the asking price on property.  This obviously will drive up prices.

Due to such circumstances we now have a substantial portion of our population paying at least 50 percent of their income towards housing expenses.  This could result in problems down the road when homeowners are no longer able to make such payments.

Homeowners often need the aggressive representation of lawyers who will look out for their interests.  When a homeowner finds himself in trouble in making house payments, certain foreclosure alternatives are needed.  Please speak to an experienced real estate lawyer to find out what those options could be.

If you have questions or need more information about Investor Strategies, contact the Law Offices of Daryl L. Jones, P.A.

Source: NPR, “Big Investors Boosting Home Prices, and Not Everyone’s Pleased,” Greg Allen, March 10, 2014

Leave a Reply

Your email address will not be published. Required fields are marked *