Too Many "Investors" Owning Homes...Are We Heading For A Whole New Serious R/E Problem?

[Steven M.]

I would like to address a concern I have about the herd-mentality of everyone and their uncle becoming "investors" and how this is likely to have very serious long term implications on housing that few have thought much about. This is my concern:

For the past several years the housing market has been predominantly made up of many thousands of cash-only investors buying up millions of cheap homes across the country. Many drawn by the allure of being real estate "moguls" and by unscrupulous real estate DVDs/Books/Seminars/Mentors/Infomercials come-ons etc. Being circumspect as I am, I ask myself this: I want to know when this country finally gets out this real estate rut in the next couple of years (assumingly), what will happen to the millions of homes owned by most of these starry-eyed investors who want out and aren't in this for the long haul.

I am in fear we will invariably have a whole new set of huge problems (not foreclosures): either the wide-eyed (many) inexperienced investors (now “landlords”) wanting to get out of being a landlord; investors wanting to simply cash-out sooner ("this is not for me") than later or for whatever reason they have to dump/sell their investment homes. Thus creating a potential flood of investor-owned homes in the market diluting home prices further. And here we go again...but now with a whole different set of real estate problems: too many investors selling their homes all at the same time in a short few year time span as soon as they see prices starting to notch up ("sell and take the money and run"). I fear avery large number of these people who got into the foreclosure buying boom will all be dumping their houses on to the market place to get out of this. Look, not all these investors today can be in it for the long haul and want to be in it for years to come. The minute prices go up and the economy picks up, like Wall Street, it will be 'sell, sell, sell'!

Seemingly, this notion will curb future home building with too many investors cashing-out of their investments flooding the market. It's inevitable. I am just concerned we are just shifting one problem (foreclosures) for another (investor dumping) in a few years from now. Am I missing something here? I don't hear much talk about this potential looming problem.

Just a thought.