Blackstone Homes’ subsidiary Invitation Homes, American Homes for Rent, and FREO Washington are three large institutional investors scooping up a significant share of the vacant foreclosed homes in Pierce County, Washington. The purchases that these companies are making might artificially inflate local home prices, say some. Others believe that the area is poised for a housing price comeback.
Blackstone Homes and the other corporate investors that are purchasing large numbers of homes claim that they are in the business to serve as a long-term landlords, but local experts are skeptical. They think that the institutional investors are really planning to wait for prices to rise a bit before dumping the houses for a tidy net profit, according to Kathleen Cooper’s article in the real estate section of the Tacoma News Tribune on October 27, 2013 “This is no different from institutional investors being bullish in other commodities,” says Jody McNamer, a Gig Harbor-based real estate investor who has focused on the South Puget Sound region for 20 years. “They run those commodities up and dump their holdings after they make their profits. And little guys are all, um, what happened?”
What does this mean for the rest of us?
It could signal that these well-informed corporate investors are confident that the Pierce County housing market is likely at its price low point now, and that they expect prices and rents to rise soon. If the big corporate investors are correct, then it means that those pondering whether to buy a home can trust that some well-informed corporate investors also believe that now is a good time to buy.
How many houses are these big investment companies purchasing? Between September 2012 and October 2013, almost 1,000 homes were purchased by Invitation Homes, American Homes for Rent, and FREO Washington. There are also additional regional and local companies making investment purchases, so at least 1 in 12 homes purchased in Pierce County over the past year was purchased by a big investor.
Some people think that these institutional big investors have miscalculated and are skewing the market upwards, and that the temporary upswing in housing prices will decline again once the big investors quit pumping money into local purchases. The skeptics could point out that the median home price in Pierce County peaked at $285,000 in August 2007, then plummeted to about $160,000 in February 2012. Since big firms moved into the area as early as October 2012 to buy homes, the median price has risen to $220,000 as of September 2013. These naysayers could claim that housing prices are moving up too fast, given the otherwise generally flat or low-growth local and national economies.
Substantial numbers of purchases by large real estate investment firms are being made all over the country. In Washington, investors are concentrating on properties in Snohomish, King and Pierce counties, according to the Tacoma News Tribune. Is the present house price increase another housing price “mini-bubble”, or are these price increases here to stay? Only time will tell.
So, What Can I Do To Prepare To Invest In Pierce County Real Estate?
If you want to buy a home, but you either have rocky credit or perhaps you had a your home foreclosed upon in the recent Great Recession, then preparing to buy another home soon to avoid potential steep increases in housing prices could be timely. In some cases, filing bankruptcy is a prudent step towards eventual home ownership. Bankruptcy can eradicate debt and improve your debt to income ratio, making it clear to home mortgage lenders that you do not owe any further debts and you are a safe bet for a new home loan.
You or someone you know may want to turn over a new leaf, and get started towards a brighter financial future now. Call us at (253) 383-1001, or contact us through the form on our web site, in order to schedule a free, no obligation, personal consultation with me. During our meeting, I will listen to your situation, examine your options with you, and explain how and why bankruptcy may be the right choice for you. Don’t wait; stop procrastinating! Act now to regain your peace of mind right away.