Mom and pop landlord nation: Small time investors pick up the slack left by large institutional buyers in housing.
ByThe bread and butter of any healthy housing market is having a good amount of first time home buyers. That is what drives new home building and also allows for the homeownership rate to go up. Most of the new household formation since the bubble burst was largely done through new rental households. Institutional investors pulled back from the market starting in 2014. Yet the homeownership rate continued to decline. So who stepped in to fill in this gap? Some of it was filled by first time buyers going in with low down payments thanks to FHA insured loans. But a large percentage was made up by mom and pop investors with a lust for HGTV and their dreams of becoming flippers or landlords. In most manias, once mom and pop are diving in with gusto you really need to think about what is going on. I know Taco Tuesday baby boomers are looking for a little “excitement” in their lives and putting habanero salsa on your Chipotle burrito isn’t going to cut it. So why not take the biggest risk by buying real estate when prices are near a new high?…
