We keep hearing about Wall Steet firms and i-buyers grabbing all the housing inventory with cash purchases in today's housing market, blocking out homeowners and driving up prices. And that there is less inventory to meet the demand, also fueling the steep rise in prices. Is this the case? My research shows that there is not much truth to this.
As you likely heard, the Zillow home purchase/ resell program failed last year, although similar models are still in motion. In St Louis, the 2 largest are OpenDoor and OfferPad. YTD in St Louis City, County, and St Charles County, OpenDoor has resold 157 homes, representing 1.44% of the market share. OfferPad has sold 54 homes for .56%, totaling 2% of the metro market. They typically buy these homes with cash before they hit the market, for a below-market net price. In addition to a relatively low market percentage, the i-buyers and many of the national companies buying homes for investment, turn right around and sell them, thereby not taking away from the mid-to-long-term market at all, but resupplying what they buy.
The real story is the number of individuals like you and me buying one or two homes and renting them out, that has seen a substantial increase the last few years as mortgage rates stayed so low and rents spiked up. The entrance of Airbnb type properties in our area added to the new paradigm of rental properties, again owned mainly by individual investors. Add in higher demand from first time buyers wanting to be homeowners, who held off for several years after the 2008-2011 debacle, and came out in force starting 2020; plus pandemic related moves also starting in 2020. The perfect storm of demand if you will. I can corroborate this by reviewing purchasers on the offers on all my listings the last 24 months, almost all were from owner-occupants. Buyers on my last 24 months of sales: 49 owner occupants, 3 individual investors, and one corporate investor; making it roughly 92% homeowners, 6% small investors and 2% large investor.
Comparing the last 4 years of sales in the areas above (stats from our MLS) shows that inventory has not shrunk: 2018 had 32,078 homes sell; 2019 had 31,821 sell, a .8% decrease; 2020 saw 34,655, a 9.0% INcrease; and 2021 had 36,911, another 6.5% INcrease. A small percentage of the market stats may be misleading, with the increase in flipping properties, but I believe the main driver is simply an outburst of demand as outlined above. All of which will correct itself in time. While I do not believe home prices will drop anytime soon, I do believe the price increases will moderate before long.
Announcing Barb Stanek, my Office Administrator! She started working for HRE in February this year, and is handling various office procedures. You may hear from her now and then on needed paperwork and misc items.
Hoeferkamp Real Estate has cracked the Top 100 brokerage firms of St Louis Realtors, now at #86 YTD out of over 800! We are having a very busy year, and looking to add 2 agents to the firm this summer. Watch for an announcement in June on a new company program that may interest you!
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