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Cash investor v. the first time homebuyer...when will it become equal?

It all depends.

Invitation Homes owns over 80,000 homes in the US

By 2017, two major players, Invitation Homes and American Homes 4 Rent, controlled nearly 60% of the rsingle family ental housing market. As of 2018, Invitation Homes (majority controlled by the Blackstone Group - investment group) appears to be the largest single-family rental housing owner. after recent mergers (Invitation Homes Inc. and Starwood Waypoint Homes completed their $11 billion merger, creating the largest single-family rental landlord in the U.S.) with 82,000 properties.  Its next largest competitor American Homes 4 Rent (As of December 31, 2020, the company) owned 53,584, homes.  American Homes 4 Rent is a real estate investment trust based in Calabasas, California that invests in single-family rental homes. Cerberus created FirstKey Homes (owns more than 20,000 homes); and GI Partners owns over 15,000 multifamily & single family residential real estate units. Update: 8-29-2021 - Home Partners owns 17,000 homes nationwide.

On  calls with investors, those two companies touted their cost-cutting  measures, which often involved pushing responsibilities onto tenants. In  2016, Jack Corrigan, the chief operating officer of American Homes 4  Rent, told investors that the company hoped to reduce spending on  repairs, maintenance, and “turn costs”

Interesting side notes:  NMHC 50 Largest Apartment Owners own approximately 2.3 million housing units and most are hedge funds.

Sources:  Various internet searches, including but not limited to:

https://www.gipartners.com/real-estate/demographically-advantaged

https://www.housingwire.com/articles/40970-invitation-homes-starwood-waypoint-homes-to-merge-create-nations-largest-single-family-landlord/

http://americanhomes2020rd.q4web.com/press-releases/news-details/2021/American-Homes-4-Rent-to-Build-279-Home-Pine-Grove-Community-in-St.-Cloud-Florida/default.aspx

Redfin Now in 22 states - all cash offers

More Americans are selling their homes online  to real-estate companies like Zillow, who make an offer in 2 days and  can close in a week

Update 5-31-2021:  Fast-cash house flippers flood poor neighborhoods in U.S.

update:  Blackstone to buy Home Partners of America in $6 bln deal (17,000 homes)

7-29-2021:  Real estate giant snaps up dozens of local properties within months

8-7-221:  Why do companies want to buy your house?

What is a 1031 tax exchange?:

According to the Internal Revenue Service, whenever you sell business or investment real estate property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.  The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind. Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate.

Many large real estate residential property owners buy and sell large portfolios of units don't paying any taxes on the gain and wind up merging portfolios and defering taxes indefinitely.

So, do you think this tax law will ever be eliminated?  Probably not.

Reasons:  This probably will never will be done for two basic reasons: (1) hedge funds and other large multi-family and single-family ownership interests pay alot of money to both Democrat and Republican politicians' campaigns, and (2) these same groups have heavy lobbying efforts to put pressure on Congress to continue the tax deferment incentive to "avoid de-stabilization of rental housing in the US" and some other valid investment reasons.

Solution:  Through presidential executive order,  immediately eliminate any current or immediately preceding 1031 tax exchange deferment of capital gains for those owners (with a controlling interest of at least 25%) of real estate with more than 100 units of either multi family or single family residential units....unless...within 90 days they offer 20% of their inventory and within 180 days maintain at least 90% of that offered inventory as “workforce housing” for those whose income falls at or below US median household income (not the prevailing rate of their individual market).  For example, a multi-family complex of 250 apartments must open up 50 of those apartments within 90 days of law as "affordable housing" options and lease at least 45 (i.e., 90%) within 180 days of effective date of law.

What may this action accomplish?

(1) It will immediately open tens of thousands of residence up to those who can least afford it.

(2) it will stop the games that hedge funds and large property owners have of constantly trading higher and higher priced residential units tax free through the 1031 tax exchange "loophole".

(3) Tax revenue from those institutions who don't comply will fund subsidies to the affordable housing efforts in cities and states.

(4) Modify the total ROI on portfolios in the short run, but over the long run, portfolio managers will compensate through streamlined property maintenance and higher rental rates for those 80% who don't qualify for affordable housing.

Update (5-4-2021 - How Biden’s real estate tax plan may hit smaller property investors

Update (5-4-2021 - Biden Targets $41 Billion Tax Break for Rich Real Estate Investors

Love Letters or Liability Letters?

Title VIII of the Civil Rights Act of 1968 is commonly referred to as the Fair Housing Act of 1968. Since 1968 its protections have been expanded significantly by amendment. Under current, updated law, the  Fair Housing Act prohibits this discrimination because of race, color, national origin, religion, sex, familial status, and disability.

Writing a letter to seller to express enjoyment of home including any of this information "violates" fair housing laws.

Sponsored: Pre-emptive purchase offers could lead to Fair Housing Act questions:  

Careless seller representation is a leading cause of post-sale litigation. "An acceptance of a pre-emptive offer could easily be a setting for a Fair Housing violation. For example, the sellers and their seller’s agent are Caucasians. Their house sells after receiving a pre-emptive offer on Wednesday. The buyers are a childless white couple. However, over the previous five days, the seller’s agent had told families of color, a gay couple, a disabled person and a single mother wearing a hijab, “No offers until Friday at 4 p.m.”

Guest column: Local Realtors embrace fair housing efforts: 

"In one case just a few weeks ago, an agent in my office was helping a Black buyer find a home to purchase when she got repeated calls from a seller’s agent asking if the buyer really had the money to buy and what he did for a living. The insinuation was clearly that the seller’s agent suspected the buyer might be earning money illegally. Even after we sent proof of funds and a letter of qualification from the buyers’ lender, the questions kept coming — and the other agent started asking the lender the same questions."

In another case, involving a friend of mine in the San Fernando Valley a couple of years ago — pre-COVID — the discrimination was even more shocking. My friend, a Black agent, accompanied a white couple to inspect a home for sale, but when they got there the owner said the prospective buyers could come in, but the agent could not. The couple, to their credit, said if she can’t come in, we aren’t going to either. But when my friend contacted the seller’s agent, he stood up for his client and refused to educate them about what the law requires.

Update 5-10-2021:  Family photos, handwritten notes: Buying a home in area's real estate market is tough - Violation of Fair Housing Laws?

Update 5-20-2021:  Home buyers should think twice before sending a 'pick me' letter to the seller

Update 5-22-2021:  Buyers resort to 'sympathy' letters in competitive housing market

Update 5-28-2021:  'Love letters' among popular real estate tools for hungry house buyers

Check out my Access Brokerage, Inc. blog post for more details and analysis:  http://abiblog.abuyeragent.com/is-residential-real-estate-heading-for-another-bubble/

YES....for the next 2 years....don't see a repeat of 2007 crash...maybe some form of adjustment...different conditions altogether.

A price bubble is a speculative mania situation in which asset prices appear to be based on implausible or inconsistent views about the future.

How high can local home prices go?  Who knows, but they will stop some day...and flatten out...probably after the hyper-inflation of printing money at the federal government level.

No, we are not in another housing bubble

Credit-worthy borrowers - look at the credit scores for mortgage originations.

Housing supply - The supply of existing home sales on the market is as low as its ever been

U.S. consumer is in better shape than they’ve ever been coming out of a recession.

Yes, Real estate investor who shorted subprime mortgages says this housing boom is in a bubble, too

Recently, Google searches for “When is the housing market going to crash?” have spiked dramatically.

When Will the Housing Market Correct?  In Canada, the price-to-income ratio is at a 40-year high. The  average house price is seven times greater than the average household  income. How is it in the United States? If you’re wondering when the housing market will correct, it may be time to cut your exposure to residential real estate.

America’s Housing Market Is Officially Over-Heating Everywhere. How Long Will It Last? “Prices can’t keep going up forever,” says Redfin’s Marr, “Even when the  fundamentals are sustainable like they are now. Strong increases in  mortgage rates, which are likely coming soon, will inevitably cool home  appreciation and bring prices back in line with wages.”

So...what's the answer?

What did I say in my earlier podcasts...IT ALL DEPENDS!

Financial experts and real estate analysts often use a simple rule  of thumb to decide if real estate is overvalued: the price-to-income ratio. Put simply, the average price of a house in your city should not  exceed four times the average income. If it does, the property market is  overvalued. Ordinary families may struggle to pay their mortgage if the  ratio is too high.  Home Price to Median Household Income Ratio (US)

4-27-2021 update:  When will the real estate bubble burst? It won't, says veteran real estate appraiser

5-2-2021 update:  Is the US headed toward a new housing bubble?

I didn't sleep at a Holiday Inn, I'm not a licensed appraiser, nor am I a bankruptcy attorney, but...they might have something in common in the near future.

Hot housing market puts pressure on appraisers in Northwest Florida

Feel free to contact me about any of your residential real estate needs in or questions about the Metro Atlanta area.

http://abiblog.abuyeragent.com/2021-news-from-access-brokerage-inc-real-estate-services/

Can a real estate agent use your listed home to stage photos for their own self advertising during a scheduled showing, or do you grant permission if you let them show it? (This is the article that prompted me to ask: https://www.al.com/news/birmingham/2021/03/alabama-fire-chief-arrested-in-armed-dispute-with-georgia-real-estate-agent-attorney-says-charges-baseless.html)

Do you watch who roams your house and what they talk about?

Do you think home shoppers are scoping out your home for future burglaries?

Link to my blog post about the subject:  http://abiblog.abuyeragent.com/problems-with-pex-plumbing/

Sources of Inspiration for Podcast...the Polybutelene Plumbing class action lawsuits; someone I know who survived the Texas freeze; and...

https://www.erplumbing.com/blog/problems-with-pex-pipes-with-brass-fittings/

https://www.plasticexpert.com/pex-failures/

A link to my blogpost on this subject: http://abiblog.abuyeragent.com/several-different-types-of-insurance-for-real-estate/