Investor Exodus and the Continued Increase of Housing Inventory

Investor Exodus and the Continued Increase of Housing Inventory
Rahul Tora

Wall street investors are selling homes at big losses into an already struggling U.S. housing market. One online company that is having difficulties due to the current housing trends is Opendoor Technologies. Opendoor is a prominent player in the selling and buying of housing inventory through an online resale process once the property has been refurbished. Opendoor’s massive selloff of homes at a loss is a huge telltale sign of Wall Street’s sentiment toward the housing market.

The stock price of the online buyer and seller of residential real estate has fallen more than 60 percent year to date. Opendoor announced a projected $150 million loss over the next three months. The online company also stated that it will be purchasing fewer homes in the housing market in the future. Another substantial property owner, Sternlicht Starwood, is looking to unload 3,000 homes for $1 billion, which is approximately 20 percent of its portfolio.
Data from CoreLogic have shown that regular home-buying for non-investors has declined for about the past year, whereby investors have been propping up the home purchase activity. But now that investors tool are withdrawing from the market, we will witness the continued trend of falling housing prices.
The institutional and Wall Street capital is being withdrawn from these markets as we witness the Federal Reserve’s quantitative tightening and hiking of interest rates. Mortgage applications are at their lowest levels in 22 years. According to the National Association of Realtors, pending home sales are also at the lowest levels in 11 years, as reported in the month of June.
The cities where there has been a tremendous amount of investor activity in homes are the areas very likely to see the most significant price discounts in the coming months. According to real estate brokerage firm Redfin, the cities with the highest investor activity include Atlanta, Georgia; Miami and Jacksonville, Florida; Charlotte, N. Carolina; and Phoenix, Arizona.
As we see investors exit the housing market, the trend of declining housing prices continues, as housing supply increases throughout the country. July data from shows that 130,000 homes were added to the already unsold housing inventory in the country. Markets such Las Vegas, Nevada, for example, saw nearly 2,600 homes added in the month of July. This inventory add-on surpassed the previous June record month amount, and is by far the most homes ever added reported in the area.
Further, cities such as Colorado Springs, Colorado; Boise, Idaho; Phoenix, Arizona; and Raleigh, N. Carolina, are seeing inventory surges above 100 percent year over year. Mortgage lender Fannie Mae released its monthly housing survey, which stated that 75 percent of Americans feel it is a bad time to buy a home compared to the long-term sentiment median of 30 percent.
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Rahul Tora is a New York-based writer focusing on the economy, business, and world events. He has 6 years of experience in various roles within the financial services industry working for JPMorgan and Citigroup. He has served in bank functions ranging from risk management, regulatory reporting, and internal audits.
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