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By Brandon Moseley
According to a study by Seattle-based Redfin Corp., real estate investors bought 90,215 homes worth a combined $63.6 billion during the third quarter of this year. The number of homes purchased in the U.S. by investors marks 18.2 percent of total homes sold during the quarter. According to Redfin, that is an all-time high and up over 80% from last year.
Economic developer and commercial real estate broker Dr. Nicole Jones told 1819 News, “Rental homes allow occupants to settle in to new jobs in an uncertain pandemic environment. Tenants can rent on a year-to-year basis without the legal responsibilities, long-term commitment, and additional upkeep costs associated with home ownership. If a family makes a move across the country for employment and the job opportunity is stable, renting temporarily gives them time to work with a real estate professional, assess the new market, and purchase a home in an area and with features they want.”
This trend is even more pronounced in the Sun Belt states. Redfin reports that 32% of home sales in Atlanta during the third quarter were investor purchases.
Chey Garrigan is a real estate broker with Great Southern Realty in Gulf Shores. Garrigan told 1819 News that the trend has become common in southern Baldwin County – on the Alabama Gulf Coast.
“The last three homes that I sold in this area were all to investors,” Garrigan said.
Garrigan credited the generation of new wealth for contributing to this trend.
“The stock market has been thriving since 2010,” Garrigan said. “Many investors have an excess of cash to buy condos and houses along the gulf coast.”
The Dow Jones Index at the end of the second quarter in 2010 was 9,662. At the close of trading on Wednesday it was at 35,812 – a 271% increase (Friday, the Dow dropped 2.53% following news of a new strain of COVID-19).
Garrigan said that investors are seeking to minimize their exposure to stock market volatility by adding real estate to their investment portfolios.
Garrigan said that government has also helped by enhancements to the airports in the area. The Gulf Shores Airport recently completed work on a new control tower.
“The improvements of the aviation facilities has made the Gulf Coast more accessible for more people across the country,” Garrigan said.
U.S. Sen. Richard Shelby (R-Alabama) said on Twitter that he was, “Very pleased that the new Air Traffic Control Tower for the Gulf Shores JKA Airport has officially been completed. This is great for the #GulfShores area and will contribute to increased economic development opportunities for our state.”
Jones said the move may be the result of two factors.
“The dynamic is two-fold'' she said "Investors with cash on-hand see opportunity (and) occupants are being wiser with their decisions in a COVID-19 environment that is unprecedented in history.”
(Original reporting by the Bloomberg News contributed to this report.)