The median price of an American house has increased by 28 percent over the last two years, as pandemic-driven demand and long-term demographic changes

Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.

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2021-06-20 00:00:04

The median price of an American house has increased by 28 percent over the last two years, as pandemic-driven demand and long-term demographic changes send buyers into crazed bidding wars.

Might the fact that corporate investors snapped up 15 percent of U.S. homes for sale in the first quarter of this year have something to do with it? The Wall Street Journal reported in April that an investment firm won a bidding war to purchase an entire neighborhood worth of single-family homes in Conroe, Texas—part of a cycle of stories drumming up panic over Wall Street’s increasing stake in residential real estate. Then came the backlash, as cool-headed analysts reassured us that big investors like BlackRock remain insignificant players in the housing market compared with regular old American families.

The truth is between the two: We can panic and acknowledge Wall Street’s small role at the same time. Although the number of houses being purchased by mega-investors is currently not enough to move the market in most parts of the country, these firms’ underlying structural advantage is profound and growing.