Investors gobble up homes to list them on Airbnb

The Future. Large investment firms are snapping up homes at alarming rates, driving up prices and preventing regular people from buying homes. The goal here is to offer the properties on short-term rental platforms, which is sure to rankle local governments. The practice has become so pervasive that experts are recommending that it may be best for wannabe-first-time owners to avoid the market for the time being.

Rent the neighborhood
Americans have been making financial dreams come true by buying and renting properties for years… and now large investment firms are doing it at scale.

• Firms such as Blackstone and Invitation Homes are buying properties to rent them out on platforms such as Airbnb and VRBO.
• They sometimes offer below market price by paying cash, overpay to get homes they want, and buy the properties without even looking at them.
• Reportedly, pension funds and foreign-government-run funds are also following a similar playbook.

One investment company in Ohio, ReAlpha, plans to spend $1.5 billion on short-term rentals, which CEO Giri Devanaur says will cover the cost of about 5,000 homes. It’s making strategic purchases by using AI software to scoop properties in hot markets such as Miami and Austin.

American pipe dream

2020 was a migration year for a lot of people, thanks to remote work and the normalization of remote work and low mortgage rates… and those factors don’t seem to be going away anytime soon.

But it’s the influx of these investment firms that may keep normal people from finally becoming homeowners, especially as supply dwindles. The National Association of Realtors found that the market could dry up in almost three months at this rate. Additionally, in the past year, the median home price in the U.S. went up 23.6% because of demand, reaching a current high of $350,300 (an impossibility to find in southern California).