With home prices steadily rising over the past several years, there is no doubt that it has been a strong real estate market for sellers. Of course, a consistent theme in the market has been a persistently low inventory of homes for sale. With both home prices and mortgage rates rising rapidly over the past few years, many homeowners have opted to stay in place and not sell their homes. Needless to say, this has impacted the inventory of homes for sale on the market. Another factor that has been contributing to this trend is the increasing number of investor-owned homes.
Investor-owned homes as vacation rentals
Investors are buying up homes for a variety of reasons, including to rent them out, to flip them for a profit, or to use as vacation rentals. While this investment activity can provide some benefits, it can also put a strain on the housing market for traditional home buyers. Recently, the vacation rental market and sites such as Airbnb or Vrbo have garnered a lot of attention when it comes to putting strain on the housing inventory. In fact, several major cities have placed stricter regulations on investor-owned homes when used as short-term rentals. Some examples include:
- New York, NY: “Local Law 18” – This law would require Airbnb units to be registered with the city, therefore falling under their legal definition of short-term rentals.
- Atlanta, GA: In addition to requiring registrations for investor-owned homes being used as Airbnb’s, the city is also requiring permits. Also, Airbnb owners in Atlanta are limited to having two units, one of which has to be their primary residence.
- Philadelphia, PA: Vacation home owners are requiring to have two licences and a zoning permit.
There is good reason to believe that investor-owned homes are putting some additional strain on the already low inventory of homes for sale. In fact, a study by the National Association of Realtors® found that the share of homes sold to investors increased from 11% in 2012 to 18% in 2021. The study also found that investor-owned homes were more likely to be located in areas with low inventory and high prices.
Of course, investor-owned homes do play an important role in any market. As always, there is a need for rental housing and these homes play a critical component of this. As for the persistently low inventory of homes for sale, a lack of new construction continues to be an area of great need across most markets.
Are you looking to buy or sell a property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your mobile device.