Exodus of investors and continued increase in the housing stock

Wall Street investors are selling homes at big losses in an already struggling U.S. housing market. Opendoor Technologies is an online company that is struggling due to current housing trends. Opendoor is a leading player in the sale and purchase of housing inventory through an online resale process once the property has been renovated. Opendoor’s massive home sale at a loss is a huge telltale sign of Wall Street’s sentiment towards the housing market.

The online buyer and seller of residential real estate’s share price has fallen more than 60% since the start of the year. Opendoor announced a projected loss of $150 million over the next three months. The online company also said it will buy fewer homes in the housing market in the future. Another important owner, Sternlicht Starwoodis looking to offload 3,000 homes for $1 billion, or about 20% of its portfolio.

Data from CoreLogic showed that regular home buying for non-investors has declined over the past year or so as investors have supported home buying activity. But now that the tool of investors is pulling out of the market, we will see the continued trend of falling property prices.

Institutional and Wall Street capital is retreating from these markets as we witness quantitative tightening by the Federal Reserve and rising interest rates. Mmortgage applications are at their lowest level in 22 years. According to National Association of Realtorspending home sales are also at 11-year lows, as reported in June.

Cities where there has been huge investor activity in homes are the areas most likely to see the biggest price discounts in the coming months. According to the real estate brokerage firm red fin, the cities with the highest investor activity are Atlanta, Georgia; Miami and Jacksonville, Florida; Charlotte, North Carolina; and Phoenix, Arizona.

As we see investors exiting the housing market, the downward trend in housing prices continues as housing supply increases across the country. July data from real estate agent.com shows that 130,000 houses have been added to the inventory of already unsold homes in the country. Markets such as Las Vegas, Nevada, for example, saw nearly 2,600 homes added in the month of July. This inventory addition surpassed the previous June’s record month amount and is by far the highest number of homes added ever reported in the area.

Additionally, cities such as Colorado Springs, Colorado; Boise, Idaho; Phoenix, Arizona; and Raleigh, North Carolina, view inventory surges greater than 100% from one year to the next. Mortgage lender Fannie Mae has released its monthly housing investigationwho said 75% of Americans believe now is a bad time to buy a home compared to the long-term sentiment median of 30%.

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