MSN asks if investors are ruining the housing market. I say no–around me, if it weren’t for the investors, there would be no housing market to speak of.
Let me tell you a story.
I put a for-rent sign out in front of a house in April. People rarely leave that area, and grown adults who grew up in the area are always looking to come back. So I got lots of phone calls. Most said they saw the house for sale a year ago, and asked what was wrong with it.
Only the patio, which I fixed, at a cost of $2,300. But thanks to a sunken patio in the back, it sat for a good 8 months before my wife and I bought it. Aside from that repair, all it needed was a bunch of little things that cost another $2,000 or so. Any house is likely to need that much repair whenever it changes hands, if only due to changing electrical codes and normal wear and tear. The county inspector was actually very impressed with it when he saw it.
There were several windows of opportunity on that house where investors were shut out. No owner-occupants took them up on it. Once I put my for-rent sign out in front, I got lots of inquiries whether the house was for sale. It wasn’t. They had plenty of opportunity to buy it before we did–I drove past it every day for six months before we made an offer on it. Lots of other houses in my neighborhood are available too–and have been for 6, 12, or even 18 months, with no buyer in sight. This one fell to within the range of what we could afford, so we bought it.
It’s very simple, really. In 2009, I was buying stocks because nobody else was. They were cheap. Today, the Dow Jones Industrial Average is at a record high. Stocks aren’t cheap anymore, but houses are well below their record high, so I buy those when I can, now. So do investors with deeper pockets than me. The reason they have deep pockets, in many cases, is because they’ve been buying whatever is undervalued at any given time. You can call it opportunism, but I call it smart.