An Unexpected Reason Why It Is Hard to Find a Home

The housing market boomed in 2021, and all signs indicate another banner year in 2022. In fact, some projections estimate that housing prices will rise 16 percent nationally during the calendar year. There are a number of reasons for the tremendous growth in markets across the country. For example, labor and materials shortages have restrained the construction of some new homes. Interest rates continue to be low, and rental rates across the country are skyrocketing. Supply has been dwindling behind demand as a result of these and other factors.

This makes it challenging for some buyers to find the right home. However, there may be another reason why finding the right home is more difficult than it historically has been. Investor activity has increased recently. This means that you are competing against institutional investors, mom and pop investors and others when you are searching for a home today.

What impact is their activity having on the housing market? In the third quarter of 2021, they purchased $63.6 billion in single-family homes, and this equates to 90,215 homes. This was 10.1 percent more than they purchased in the previous quarter. This accounts for more than 18 percent of total home purchases for that quarter. Keep in mind that more than three out of four of these purchases was with cash. This can make it more challenging for homebuyers who are taking out a mortgage to make a competitive offer.

If you think that this phenomenon is not taking place where you are, you may want to take a closer look. Two of the hottest metropolitan areas for investor activity are Phoenix and Atlanta. In these markets, roughly a third of all homes sold went to investors. Areas that range from Boise and Charlotte to Jacksonville, Miami and others have also been popular investor markets.

If you plan to buy your next home with a mortgage, one of the best steps that you can take before you make an offer is to get prequalified for a mortgage. When you attach a prequalification letter to your offer, you are strengthening your offer in a sense. Our loan team at MortgageDepot can quickly prequalify you for competitive loan terms. To get the ball rolling, contact us today.

Connect with one of our loan consultants to learn more.