Although large investors made only 4.3 percent of single-family home purchases in 2014, they may be reducing the competitiveness of traditional buyers. With ready cash and sophisticated algorithms, investors get there first and make better bids.
Post-recession, regular buyers have reentered a home market long dominated by investors. The landscape, some observers say, has changed. "'Investors are winning over the first-time buyers in some bidding processes because investors are all cash,' says Lawrence Yun, a chief economist at the National Association of Realtors. For a seller that means a smoother deal: no waiting around on financing, loan approvals or other inconveniences that traditional buyers bring to the table."
As a result, the best deals get snapped up before regular buyers have a chance to mobilize. "Lots of investor activity is concentrated in markets where homes are still available at reasonable enough prices that purchasers can turn a profit."
Although investors do not dominate numerically, their tendency to monopolize the best markets can impact neighborhood demographics. "In some areas, investors buying up homes and turning them into rental properties means a shifting demographic for neighborhoods—from long-term residents to a flurry of short-term renters—which can be an unappealing prospect for some."
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