Wall Street Is Flipping Starter Homes, and Now No One Can Afford Them
"The additional competition from investors is increasingly pushing starter homes out of the reach of many households"
Investors are clamoring to get in on the real estate market at the starter home level, effectively driving up prices and reshaping the home-buying model.
There are several factors at play in the housing market that are causing it to once again shift in the direction of all but unattainable for many Americans, like rising construction costs, new zoning rules and consumer preferences. But the most frustrating scenario unfolding across the country for those who now can’t afford to buy a house? A slew of Wall Street-backed investors and flippers who buy them cheap and sell them off for much more, The New York Times reported.
“If it weren’t bad enough out there for first-time home buyers, the additional competition from investors is increasingly pushing starter homes out of the reach of many households,” Ralph McLaughlin, deputy chief economist at CoreLogic, a real estate data company, told the Times.
The big boom of single-family home-buying came about in the wake of the Great Recession, when investors snatched up at least two million properties at a discount thanks to the collapse of the residential market. And they haven’t stopped since then. Last year, the Times reported, about one in five houses considered “starter homes” in the United States were bought by investors — a higher rate than what was seen during the recession and double that of 20 years ago.
Buying up affordable homes and flipping them into expensive pieces of property is not only excluding people from certain areas, but it’s also creating a situation where neighborhoods that were once attainable for some are now exclusive and made more expensive for everyone.
“It’s almost like locusts came down and bought everything up,” a neighborhood activist and real estate agent in Atlanta told the Times.
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