Investors bought 25% shares of U.S. Affordable Housing stock in the fourth quarter, after news broke that the stock had bounced back in surprising places.

Americans looking for affordable housing have become accustomed to bad news about the real estate market.

A recent Redfin report shows that investors purchased 26% of the U.S. affordable housing stock in the fourth quarter of 2023. This is a blow to homebuyers whose purchasing power has been severely eroded by a lack of inventory, soaring housing prices, and high interest rates.

Redfin's report paints a stark picture of the crisis facing many potential homebuyers in the U.S. and shows that the problem is getting worse. Not only is the investor share of the U.S. affordable housing stock a record 26.11 TP3T, but it also shows that investor purchasing activity has increased by 241 TP3T over the previous year. comparing these figures to investor purchasing activity in other housing sectors reveals an even greater disparity.

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Redfin categorizes homes into three price categories: low-priced, medium-priced, and high-priced. Over the same period in 2023, investors purchased 13.11 TP3T of mid-priced home inventory and just under 161 TP3T of high-priced home inventory. This means they are specifically targeting homes that the average American is looking for. The difference is that John Q. Citizen's offer was contingent on financing, whereas the large investors' offer was paid in cash.

Potential home buyers find themselves 'shot at'

If you happen to be one of the millions of Americans out there, you know that it's not a fair fight by any stretch of the imagination, and worse, no one seems to be able to reverse the trend. As far as the sellers are concerned, they're doing what they've always done, which is to take the best offer and move on to bigger and better things.

Long-term trends suggest that investors will be in the real estate market for the long term, with Redfin's research showing that investors purchased 20% of the homes sold in the fourth quarter, of which 68% were single-family homes. Investors are focusing on lower-priced properties because of their upside potential. The key to real estate investing is buying low and selling high.

"I get tons of emails every day from investors looking for properties, but unfortunately they only want below-market-value homes, which are hard to come by," said Carrie Carruthers of Riverside, Redfin's premier mat broker." When they find these properties, they flock to them."

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Another issue to consider is that it's not necessarily the REITs and big Wall Street investors that are buying homes.

Investors have always been in the real estate market, but this time it's different.

Home remodeling and speculation have become popular themes on dozens of popular real estate TV shows, and the average investor has been making money from speculating on homes for decades before HGTV came on the scene. So, if home-translators and small and medium-sized home-translating businesses have always existed, what is the difference between the last 20 years and the last quarter of 2023?

It's not just money that's changing the rules of the game, it's also big data and analytics.

There are several answers to this question. The ability of REITs and other investment entities to swallow up large amounts of housing inventory is an important factor. However, their access to data and analysis of home sales and buying trends may change the rules of the game. REITs and other investment funds can use analytics to interpret forecasts in ways that were not previously possible.

This enables them to identify hot markets before they become hot, and to enter these markets aggressively, purchasing large amounts of inventory. The capital and banking relationships available to REITs also allow them to maintain close ties with real estate developers. Funds can now buy some or all of the homes being built by developers before construction is complete. They can buy and hold turnkey inventory until the market improves.

By contrast, the traditional flipper is a slick operator who scours foreclosure lists or county tax auctions and conducts covert, case-by-case scouting of potential acquisitions. They can only buy a few homes at a time, and they need to translate relatively quickly to make a profit. Today, the situation is different, and politicians from both parties are taking notice.

Even conservatives are fighting back.

One of the legislative counterattacks against the massive residential acquisitions by REITs and investment funds that are underway is raising eyebrows because it comes from one of the most conservative states in the country: Texas. Governor Greg Abbott has publicly called for legislative action to combat Wall Street's presence in the housing market. It's no secret that keeping the market free and unregulated is one of the most sacred and inviolable principles of conservatism.

Abbott recently posted this on X: "I am a strong supporter of the free market. But this corporate buying spree seems to be distorting the market and making it harder for average Texans to buy a home. This needs to be on the legislative agenda to protect Texas families."

Abbott is a 耑 conservative, and Texas is one of the hottest real estate markets in the country, largely due to the low cost of housing in the "Lone Star State." Where conservatives like him make legislative calls, the likelihood of significant action increases dramatically, no matter how vague the call may be. If you're on the side of homebuyers on this issue, now is a good time to remember that the "squeaky wheel gets the grease" and make your voice heard.

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This article originally appeared on Benzinga.com and was published on Benzinga.com after news broke that investors had purchased 25% shares of U.S. Affordable Housing stock in the fourth quarter, bouncing back in some surprising places.

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