Taking a look back at the history of the real estate market, initiating with burst of the housing bubble around 2007, it was a tumultuous time for everyone.
Considering the record high in 2009 where almost 3 million homeowners received at least one foreclosure filing. The total number of households receiving a foreclosure notice in 2009 were 2,824,674, which was almost double the number from 2007.
We all realize there were many reasons for those filings. No matter what the reason of the filing, the economic crisis, declining values, falling rents and job losses were all piling on top of one another and leading to owners and investors alike having to make tough choices.
The real estate market’s downturn was a massive blow to the U.S. economy as a whole. The cycle was a repetitive and viscous.
Even now in 2014, we’re still feeling the effects leftover from the crash. Recovery is still in progress.
There is one common theme throughout many markets around the country
Real Estate Investors Jump-Started Recovery
In the beginning of 2010, real estate investors started to hit the real estate market en mass. real estate investors had been buying in large numbers beginning during the boom times and they only sped up with the housing downturn and foreclosure uptick.
With mortgage rates at the time at an all-time low and demand sky-high, real estate investors took the market by even bigger storm in the end of 2010, purchasing homes in foreclosure and converting them into rental properties.
In 2011, real estate investors were responsible for the 64% increase in investment home sales, which contributed hugely to helping the real estate market get back on its feet. Real estate investors experienced solid profit, while also stimulating the real estate market.
The rental market flourished. It was largely instrumental to the beginnings of the recovery that are still going on today. In some markets, investors accounted for over 50% of the home sales in some years, and often those transactions were closed as cash transactions. That allowed for quick closings and faster turn-around of dilapidated properties.
Why Investors Matter
Beyond their contribution to the recovery of the real estate market, investors are part of everyday services and exchanges that are helpful not only to the market locally, but to individuals in need.
There are times when real estate investors and the people working with them get a bad rap. Some complain that the all-cash investor offers on properties push home buyers out of the market. While there are stories that support these points of view, many real estate investors also provide services that people need and want. When an honest investor enters the real estate investment business, great things can happen.
Too often, there is a story that is not told about investors. Most hire local labor and purchase materials from local stores.
Imagine the impact that hundreds of investors have on a market when they are buying thousands of properties in a year!
Some of those properties are held for longterm rentals, and others are put back on the market and sold to homeowners. All are refurbished at some level, which is a tremendous benefit to neighborhoods and communities.
These storylines are often ignored by the critics of real estate investing.
Alternatives to Homeownership
In the wake of the housing crisis, combined with changing priorities and economic situations, real estate investors offer an alternative to purchasing a home. Whether it is former homeowners still hurting from foreclosure or millennial struggling to find employment, rental properties have become an integral part of the real estate landscape.
Homeownership nationwide has fallen to what have been historic lows and estimated at roughly 64% of the households occupied by homeowners. That tells us that 3.5 out of every 10 properties are owned by investors and occupied by renters.
Despite the fears of some investors that they (and renting) would become irrelevant as the real estate market recovered, all signs points to the opposite. more and more people are finding that they prefer renting over homeownership for any number of reasons:
- Fear of foreclosure
- Inability to find mortgage approval
- Transient lifestyle
- Urban preference
- No maintenance responsibilities
- Avoiding further debt
A Solid Solution
Apart from offering an alternative lifestyle to homeownership, investors are enormously helpful to buyers and sellers alike. Investors have helped many a seller escape foreclosure and consequently a devastating blow to their credit. Real estate investors often present quick solutions for sellers that are ready for a break.
Seasoned investors are skilled in preparing and closing deals. Additionally, real estate investors, unlike traditional home buyers, aren’t looking for their properties to be immaculate. For buyers and sellers in need of a quick sale, real estate investors are often the solution. — whether by bringing new opportunities to the table for those who feel like they’re out of options, a rescue from a foreclosure or simply providing people with a place to call home.
Know that real estate investors are helping you and the people around you — individual buyers, sellers and the local economy. Real estate investors have tremendous impact on the people and homes of their communities.
The positive story is not always told, yet investors operating in the market today can absolutely have a positive impact.