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Housing Activists Say Investors Are Ruining the Recovery

King Solomon had harsh words for selfish people who deal unfairly with others. “An unfriendly man pursues selfish ends; he defies all good judgment,” says the King in Proverb 18:1, with similar sentiments in many other Proverbs. Today, housing activist groups, who advocate for fair and equitable housing opportunities in cities across the country, are claiming that income property investors are exactly what the ancient King had in mind – greedy, selfish individuals and companies that threaten to undermine the recovering US housing market.

The housing market’s rebound from the collapse of a few years ago is due to a combination of many factors, including low mortgage interest rates and a dwindling supply of homes to meet the demand. Purchases by inventors have played a major role in this scenario, which also supports a growing demand for rental housing.

A recent survey by data collectors DataQuick found that in many markets around the country, investor activity is now topping a ten year average, due largely to those low interest rates and the continued availability of foreclosures in some areas. Homeowner support programs and refinancing options are now available to investors, too, which in some cases can help to keep the small landlord/entrepreneur in business.

But housing activists claim that the uptick in investor activity is shutting residential buyers out of the market. Investors snap up available homes for cash, they say, turning them into short-term rentals that blight neighborhoods and bring in questionable tenants that cause problems. And with a limited supply of houses available, they claim, investor activity creates hardships for those seeking a stable home for their families.

But housing industry experts point out that not all investors are alike. “Investors” can range from large investment companies, both foreign and domestic, to individual entrepreneurs who own a few properties. Some are absentee landlords working with property managers, and others are hands-on business people who manage all aspects of the property themselves. Although one claim is that investors beat out residential buyers because of their ability to buy homes and multiplexes with cash, not all investors do pay cash – many, acting on Jason Hartman’s recommendations, work with mortgage lenders to finance and refinance properties.

Homeowners and activists fear that investor owned rental properties will affect the quality of neighborhoods. But investors also buy and generally maintain foreclosures and distressed homes that would otherwise sit empty and fall to ruin. And in today’s expanding rental market, the pool of available renters makes it possible to keep homes rented with responsible, reliable tenants who can make a contribution to the area.

The housing recovery depends on many factors, and investor involvement is only one of them. Since investors come in all types and sizes, with varying motivations for buying property, their impact on the market is as varied as they are. Unlike King Solomon’s unfriendly and selfish men, independent investors committed to long-term gains from their investments may be able to boost the housing rebound in more ways than one. (Top image: Flickr/lbdesjardins)

The Solomon Success Team

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