Only 38% of Americans under the age of 35 are able to claim the title of homeowner as of 2021—a figure that will likely continue to decline for the near term just as it has for the noteworthy past few years.
Prospective homebuyers are facing a somewhat unprecedented conundrum in the housing market, one that includes variables ranging from hyper home inflation all the way to a growing debate around wages, or maybe even... a fund snatching up your dream property?
Business is business
D.R. Horton, a massive American construction company big enough to go public and mount a 33 billion dollar market cap, recently built an entire subdivision consisting of 124 properties in Conroe, Texas. They rented the homes out to tenants and then proceeded to put the whole subdivision up for auction, where it was swiftly snatched up by a real estate platform for what D.R. Horton called “50% over gross margin.”
The subdivision was bought by a real estate investment company you may have heard of: Fundrise. The company is privately held and manages over a billion dollars of property on behalf of more than 150,000 individual investors.
The whole lot sold for $32 billion. The median home price in Conroe Texas is about $319,000, meaning Fundrise paid near retail, with a slight discount, to take all these properties under their well-endowed wings.
Impacts on homebuyers
Is it fair to prospective Millennial homeowners that in most neighborhoods, one out of five homes is purchased by an investor who never moves in, such as Fundrise? Hard to say. Business is business of course, and every local township is a different situation with a different amount of big capital being thrown around.
Housing prices climbed 11% last year alone, and many analysts expect similar digits to come in by the end of 2021. Hyperinflation in the housing market obviously makes it harder for your average citizen to buy a home, and in some cases easier for larger investors simply by way of a crowding-out effect of sorts.
Most of this is of course nothing new. Investors have been investing for decades, and the housing market does sometimes go through these white-hot cycles before regressing to the mean. Jokers in the deck seem to be a nationwide student loan crisis, coupled with a highly competitive job market where it seems that everyone and their dog has a bachelor’s degree in something.
What can we do?
Go about your money from a stoic perspective. We can only control what we can control, and even that sometimes seems questionable. If you dream of owning a home, you can’t control the big money wanting to win the game too, or inflation, or the economy, or that something else... you get the gist.
Plan ahead as young as you can and start saving or investing. Our biggest asset as retail buyers is knowledge, consistency, and competency. It may never be an ideal market, but with the right planning and unwavering amounts of persistence, you’ll be hard to stop.