From Investors to Landlords

The housing market has been seeing ups and downs for years now. Lately, it looks like the market is stabilizing. Even still, the market is flooded with a huge inventory of houses. Many economists think that house prices will not go back up until inventory is liquidated. Supply vastly outstrips demand as the rental market has been heating up. Some even think the rental market is slowly forming a bubble. Until the economy improves and home buying increases, supply will remain high and prices depressed.

Fannie Mae has been selling homes one at a time while trying to keep every penny of value in their hands. They own hundreds of thousands of homes with no surefire way of getting rid of them soon. A new idea has formed on Wall Street which could make many investors into landlords. In the idea, Fannie Mae would sell homes in bulk to investors. Investors would then have to rent out these homes for a specified period of time before they could sell them. Many think that this could significantly reduce the number of houses on the market. Reducing the supply is only half of the equation. There is still a demand factor that has yet to return.

With the rental market hitting the price increases that it has over the past year, a huge supply of rentals could quickly inflate a bubble or it could kill price increases. Either way, housing prices are looking to remain stable for years to come as the economy continues to fight its way forward. Getting investors to buy homes and rent them out would help out the supply. It is going to take a lot more to get demand back up. On a side note, bulk sales by Fannie Mae would have to be sold at a discount which would only hurt the taxpayer since we pretty much bought all those homes, but that is another story.