DENVER — Young buyers hunting a house are finding lots of competition — and much of it isn't from other first-timers.
Investors are hogging the market for low-price homes in some cities, muscling aside entry-level buyers looking for affordable houses.
"The investor is starting to gobble up pretty much anything under $200,000," said Dennis Cisterna, chief revenue officer for Investability Real Estate, a company that markets rental homes and services. "We are not adding any new supply to the market to serve that first-time homebuyer."
The supply of homes for sale across the U.S. is at its lowest level in 30 years. And the shortage of housing is even more acute at the low and middle price ranges.
In the Dallas-Fort Worth area, fewer than 3,000 houses are listed for sale with real estate agents at prices below the area median price of about $240,000.
That price range appeals to many apartment renters who want to buy a home. And it's the type of house investors buy to turn into rental properties — and many of the investors pay cash.
"Investors accounted for 33 percent of all single-family or condo sales in 2016, which is the highest number we have ever seen," Daren Blomquist, an economist with ATTOM Data Solutions, told real estate journalists meeting in Denver this week. "The homeownership rate is at near a 50-year low.
"This is setting the stage for the boom in single-family rentals."
Blomquist told journalists at a National Association of Real Estate Editors conference in Denver that institutional investors dominated the rental housing market just after the housing crash.
"Those guys were as high as 8 percent of all sales in 2012," he said. "They have dropped down to 3 percent as of 2016.
"The big guys have been priced out of the markets like Denver and Dallas," Blomquist said.
Smaller mom-and-pop home investors have more than made up for the pullback of big Wall Street and hedge fund homebuyers, he said.
"The investors are competing for those starter homes," Bloomquist said. "Sixty-one percent of their purchases are between 1,000 and 2,000 square feet."
Bloomquist said 19 million single-family homes in America are now owned by investors. "Only 3 percent of those are owned by investors who own 100 or more properties."
While big institutional homebuyers have gotten lots of headlines, most of the properties are being sold to small, local investors who want a second income or nest egg, said David Hicks of Dallas-based HomeVestors.
"The investors who have five or less properties own 10.8 million houses," Hicks said. "That's who the investor is — the person buying a few properties in their area."
Steve Hovland of HomeUnion said Austin, Dallas, Charlotte, Raleigh-Durham and parts of Florida and Georgia are on home investors' radars these days.
"Most of our investors are moving money away from the wealthy coasts and into those areas," Hovland said. "The great deals are not totally gone but not easy to find."
Whether you're buying as an investor or looking for a starter home, there's just not much to choose from.
"This year we have hit a historic low," said Javier Vivas, an analyst with Realtor.com. "We officially have the lowest level of supply in more than two decades.
"We have about 200,000 fewer homes for sale out there."
Vivas said the U.S. home market is particularly tight at the lower price ranges.
"We are losing inventory at a record pace an in the segment of the market with the most demand."
Steve Brown is the 2017 chairman of the board of directors of the National Association of Real Estate Editors.
