Nancy Braun was quoted three times by The Mecklenburg Times in the last several weeks. The first one, “South End by Southwest” was covered in a previous blog post. The two most recent articles
The article in September 27th issue of The Mecklenburg Times covers the investor activity in Charlotte, titled “Reits: Industry Insiders are Wondering Where the Phenomenon Will Lead.” During May, June and July, one in every five homes were sold to investors. One the surface this seems like a good thing. Large companies purchase distressed properties, fix them up and then rent them out. This demand lowers the supply and increasing competition.
But the clarity dissipates and the fog of uncertainty begins to cloud the issues when real estate professionals start to consider what that means for the market, now and in the long term.
Pretty much everyone agrees that the real estate investment trusts and other institutional investment firms that since the recession have bought thousands of homes in the Charlotte market – nearly 2,000 in May, June and July – have “jump-started the Charlotte real estate market,” in the words of Nancy Braun, owner and broker-in-charge of Showcase Realty.
They agree that many of the homes were distressed, financially and structurally, and that Wall Street has helped clean up some of the mess left by Wall Street in the mortgage-bundling fiasco.
And they agree that institutional investors are helping the market meet a demand for rental homes, as more former homeowners and more likely first-time buyers are either forced or are choosing to lead more liquid lifestyles.
The article published in the September 17th edition of The Mecklenburg Times covered foreclosure activity which is closely tied to influx of investors. The article, titled “Foreclosure Activity Down from Last Year” discussed the amount of foreclosures on the market and it’s general downward trend over the passed year. However August presented interesting numbers — an increase in foreclosures. Nancy gave her thoughts on one possible explanation for this increase.
One possible explanation is that because housing prices are climbing, inventory is shrinking, and institutional investors are buying houses at a rate never seen before, lenders have decided to initiate the foreclosure process. Or the lenders may have just begun the process after unsuccessfully working with homeowners on loan modifications, which have been stressed by President Barack Obama’s administration.
Braun said she recently worked on a short sale in which the homeowner hadn’t made a payment in 30 months before being notified that the lender was starting the foreclosure process.
“Maybe it makes sense to pull the trigger and foreclose on the properties they’ve been sitting on,” she said. “I don’t think anyone truly has a handle on what the shadow inventory is, but there is a shadow inventory.”
Shadow inventory includes homes that may be in default or in the foreclosure process that have not been placed on the market.
Investor presence and bank activities on foreclosures definitely have effected the market. Short term it has seemed to jumpstart the market and result in stronger prices and quicker sales. While no one can know what the future holds or how the market will react in the long term, Nancy will continue to share her insights as things unfold.