Is Wall Street To Be Blamed For Ruining The Housing Market For Buyers?

housing market

By now, we all know that 2022 is a seller’s year in the housing market. Ever since COVID-19 began, prices for homes and rental markets just kept exceeding. The frustration is real as demand keeps exceeding, prices keep skyrocketing, and the housing shortage still prevails. 

We don’t even have to talk about not being able to own the dream home. That is a different story. A lot of people are suffering, paying even the basic rent, which just won’t stop increasing. On the other hand, those who own properties continue to get wealthier. It’s like the saying goes: The rich keep getting richer. 

Who is to blame for all this? There’s one answer that a lot will agree on. Wall Street. But is it, though? Let’s dive deeper to find out if Wall Street is really behind, causing a chaotic housing market.

1- Why Do People Blame Wall Street?

One factor to blame for all the chaos in the housing market is institutional investors. These include mostly private equity firms. People are blaming them for causing a spike in prices as they raise demand. There is a sort of competitive environment where consumers feel themselves competing against investors. 

2- The Shortage In Housing Market Adds To The Frustration

The shortage of supply is making the housing market brutal for buyers. The increase in competition is driving up demand and pieces at the same time. The competition has spread from urban to rural areas as well. Thanks to Covid-19’s work-from-home policies, people are flocking to the suburbs and rural areas to enjoy a lower cost of living.

According to Forbes, Wall Street and institutional investors aren’t the villains behind this competition. Investors only make up a small fragment of the real estate market. Even though it appears that investors are buying a lot, they are buying only a little in reality, which is hardly that big to move the market. 

The real problem? The US is just not building enough homes. Last year the National Association of Realtors (NAR) reported the US had an underbuilding gap of 5.5 million housing units over the last two decades, including 2 million single-family houses. According to the report, it will still take 20 years to cover this gap at the current pace. 

3- Single-Family Rental Market Is Suffering

Earlier in 2021, a Wall Street Journal article commented, “Yield-chasing investors are buying up single-family dwellings.” The bidders are being outbid numerous times by all-cash bids. Let’s take a dig at the background of the rental market in the US. 

Before 2010, the single-family rental market was mostly ignored by investors. Ever since the financial crisis, it has been a different picture. J.P. Morgan Asset Management, Blackstone, and Goldman Sachs Asset Management are among the financial heavyweights that have caused a boom in the rental market. They are buying up properties and building new ones as well. The motive? Definitely profit. 

4- Why is the housing market so attractive?

A number of factors contribute to making the housing market so attractive to investors. One reason owes to the monetary easing done by the Federal Reserve as it inflated real estate prices. The second reason owes it to advancements in big data. Big data continues to increase the ability to forecast trends for investors. Investors are successful as they know how to manage and grow their portfolios intelligently. From conducting market research and evaluating to making good judgments, they’re doing it right.

5- Regentology Is Here To Take Care Of Your Needs

Regentology understands that the housing market can be a bit chaotic if you’re in the shoes of a buyer. However, we can cater to all your home-buying needs with the best offer and that too quickly. We have a team of professionals who are ready to connect you with the best agents in your area. Whether you’re concerned about affordability or buying quickly, we have got your back. Simply fill out the form to know more!


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