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Preserving Our Neighborhoods: The Crucial Role of Realtors and Lenders in the Face of Institutional Investors
Introduction:
The housing market has seen a significant shift in recent years, with institutional investors playing an increasingly dominant role. Single-family home sales to investors have reached an all-time high, surpassing previous records. As we approach the end of the year, it is estimated that investors will represent a staggering 30% of the purchase market. This trend has far-reaching implications for our communities, and it is crucial that realtors and lenders take action to address this growing concern.
The Impact of Institutional Investors:
While not all investors are created equal, it is important to distinguish between local, small-scale investors and large institutional investors. Local investors, who typically own one to three properties, often live in the community and have a vested interest in maintaining the quality of their investments. They are not the primary cause for concern.
On the other hand, institutional investors, such as BlackRock and Vanguard, have immense financial power and influence. BlackRock, for example, has a GDP larger than all countries except for the United States and China, and is now valued at over 10 trillion dollars. These institutional investors prioritize acquisition above all else, showing little regard for the well-being of the communities in which they invest. They are willing to overpay for properties and are not deterred by high interest rates, as their primary goal is to gain control of the market.
The Role of Realtors and Lenders:
As professionals in the housing industry, realtors and lenders have a unique opportunity to shape the future of their communities. By developing strategies to work with local investors, you can help maintain the integrity of your neighborhoods and support the growth of small-scale, community-minded investment.
For realtors, this may involve creating a plan to target local investors as a growing part of your client base. By focusing on these individuals, you can potentially charge your commission without fear of reprisal and create an entirely new income stream. Most importantly, by prioritizing sales to local investors over institutional investors, you can contribute to the well-being of your community.
Lenders also have a significant role to play in this process. Non-QM loans, which are less regulated than agency deals, provide an opportunity to work with local investors while maintaining compliance. These loans allow for greater flexibility in terms of pricing and are less likely to face regulatory scrutiny.
Conclusion:
The increasing influence of institutional investors in the housing market is a pressing issue that demands the attention of realtors and lenders. By working together to support local, community-minded investors, we can help preserve the character and stability of our neighborhoods. It is time to take action and develop strategies that prioritize the well-being of our communities over the interests of large, profit-driven corporations. Together, we can make a difference and shape a better future for the housing market.
