How the Economy Impacts Mortgage Rates

Are you trying to buy a home but you feel like you’re up against deep-pocketed Wall Street investors snatching up everything in sight? Many people believe mega investors are driving up prices and buying up all the homes for sale, and that’s making it hard for regular buyers like you to compete. But here’s the truth. Investor purchases are actually on the decline, and the big players aren’t nearly as active as you might think. Let’s dive into the facts and put this myth to rest. Most Investors Are Small, Not Mega Investors A common misconception is that massive institutional investors are dominating the market. In reality, that’s not the case. The Mortgage Reports explains: “On average, small investors account for around 18% of the market, while mega investors represent only about 1%. ” Most real estate investors are mom-and-pop investors who own just a few properties — not large corporations buying up entire neighborhoods. They’re people like your neighbors who have another home they’re renting out or a vacation getaway. Investor Home Purchases Are Dropping But what about the big investors you hear about in the news? Lately, those institutional investors – the ones that make headlines – have pulled back and aren’t buying as many homes. According to John Burns Research and Consulting (JBREC), at their all-time peak in Q2 2022, institutional investors (those owning 1,000+ single-family homes) only made up 2.4% of home sales. And that number has only come down since then. By Q3 2024, that number had fallen to just 0.3% (see graph below): That’s a major shift, and it means far fewer investors are competing in the market now than just a few years ago. Investors are clearly more reluctant to buy in today’s market, but why? The answer is largely because higher mortgage rates and home prices have made it less attractive for them. The idea that Wall Street investors are buying up all the homes and making it impossible for you to compete is a myth. While some investors are still in the market, they’re not nearly as active as they were in past years. Bottom Line  Big institutional investors aren’t buying up all the homes – if anything they’re buying less than they have been. Let’s connect and talk about what’s happening in our local market. There could be more opportunities than you think. How does knowing investors are buying fewer homes change the way you see your chances in today’s market?

If you’re a member of a younger generation, like Gen Z, you may be asking the question: will I ever be able to buy a home? And chances are, you’re worried that’s not going to be in the cards with inflation, rising home prices , mortgage rates , and more seemingly stacked against you. While there’s no arguing this housing market is challenging for first-time homebuyers , it is still achievable, especially if you have professionals on your side. Here are some helpful tips you may get from a pro. 1. Explore Your Options for a Down Payment If a down payment is your #1 hurdle, you may have options to give your savings a boost. There are over 2,000 down payment assistance programs designed to make homeownership more achievable. And, that’s not the only place you may be able to get a helping hand. While it may not be an option for everyone, 49% of Gen Z homebuyers got money from loved ones that they used toward a down payment, according to LendingTree. And chances are you won’t need to put 20% down (unless specified by your loan type or lender). So be sure to work with a trusted mortgage professional to explore your options, find out how much you’ll really need, and learn about any guidelines on getting a gift from loved ones. 2. Live with Loved Ones To Boost Your Savings Another thing a number of Gen Z buyers are doing is ditching their rental and moving back in with friends or family . This can help cut down your housing costs so you can build your savings a whole lot faster. As Bankrate explains : “. . . many have opted to stop renting and live with family in order to boost their savings. Thirty percent of Gen Z homebuyers move directly from their family member’s home to a home of their own, according to NAR.” 3. Cast a Broad Net for Your Search When you’ve saved up enough, here’s how a pro will help you approach your search. Since the supply of homes for sale is still low and affordability is tight, they’ll give you strategies and avenues you may not have considered to open up your pool of options. For example, it’s usually more affordable if you consider a rural or suburban area versus an urban one. So, while the city may be livelier and more energetic, the cost of living may be reason enough to look at something further out. And if you consider smaller homes and condos or townhouses , you’ll give yourself even more ways to break into the market. As Colby Stout, Research Analyst at Bright MLS, explains : “Being flexible on the types of home (e.g., a condo or townhome versus a single-family home) and exploring more affordable neighborhoods is important for first-time buyers.” 4. Take a Close Look at Your Wants and Needs And lastly, an agent can help you really think about your must-have’s and nice-to-have’s. Remember, your first home doesn’t have to be your forever home. You just need to get your foot in the door to start building equity . If you want to buy , you may find making some compromises is worth it. As Chase says: “An open-minded approach to house-hunting may be one way for Gen Z homebuyers to maintain some edge. This could mean buying in areas that are less expensive. Differentiating needs vs. wants may help in this area as well.” An agent will help you prioritize your list of home features and find houses that can deliver on the top ones. And they’ll be able to explain how equity can benefit you in the long run and make it possible to move into that dream home down the line.  Bottom Line Real estate professionals have expertise on what’s working for other buyers like you. Lean on them for tips and advice along the way. As Directors Mortgage says, with that support you can make it happen: “The path to homeownership may not be a straightforward one for Gen Z, but it’s undoubtedly within reach. By adopting the right strategies, like exploring down payment assistance programs and sharing living costs with relatives, you can bring your dream of owning a home closer to reality.” Let’s connect to get you set up for long-term success.