How does a first-time homebuyer compete with an all-cash offer from an investment firm?!


This graph tells 2 very different stories -


On the one hand, it tells the story of higher investment yields in the single-family rental space. For those seeking yield, it gets your attention and may attract your capital.


On the other hand, it is the poster child for the affordable housing crisis in our country. See below.


The question is: Is this an example of market success?

OR…. A market failure-based unintended consequence?

OR…. both?


Perhaps it matters which side of the trade you are on?!


Affordable housing - another brick in the wall -

  1. This yield-seeking activity is at the heart of the U.S.'s home affordability crisis. On the other side of this trade are often low-to-moderate income (LMI) homeowners paying higher rent. Can’t blame anyone for yield-seeking … but important to recognize that those paying higher rent every year may be our children or our poor.

  2. Large investment firms got a big gravity assist during the 2008-09 financial crisis. 10s of millions of homes were available for purchase out of federal government-assisted bank REO inventory. Interesting how that “purchase to rent or flip” infrastructure has persisted and the U.S. is becoming a “Rentor Nation!”

How does a first-time homebuyer compete with an all-cash offer from an investment firm?!


To learn more about the interesting economics of affordable housing, check out our article:


The affordable housing paradox and complex credit policy decisions.

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