The U.S. has seen a sharp rise in the number of institutional investors buying single-family homes over the past decade, giving corporate landlords much more power over the housing market. This, in turn, has made it harder for many Americans to own a home, mainly because they have to compete against entities with a lot more buying power.
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A report published last year by the Government Accountability Office revealed that as recently as 2011, no investor owned 1,000 or more single-family rental homes in the U.S. By 2015, institutional investors collectively owned an estimated 170,000 to 300,000 homes. Seven years later, that figure had ballooned to 450,000 single-family homes, according to the National Low Income Housing Coalition.
This rapid increase in corporate landlords has created a challenging environment for both tenants and house hunters, according to a recent survey of 1,000 Americans from JW Surety Bonds. The report, released in late March, found that more than 9 out of 10 (93%) Americans believe corporate ownership of homes makes homeownership less accessible. One in 20 lost a bid to a corporate landlord, while roughly 20% know someone who has.
So, how can house hunters improve their chances of owning a home in the current environment? Here are two things you can do.
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Research the Market
As JW Surety Bonds noted, there’s a general lack of awareness on the part of many Americans about the scale of corporate home ownership. About 10% of those surveyed didn’t know that businesses managing multiple rental properties were acquiring single-family homes.
One of the best moves you can make is to research the housing market and learn where corporate ownership tends to be highest. This will at least let you know where you’re likely to run up against institutional investors, which means you could face stiff competition and inflated home prices. Avoiding markets with a high concentration of corporate landlords makes it easier to find affordable homes.
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Avoid Bidding Wars
Bidding wars against corporate buyers are “pushing many people out of the market,” according to JW Surety, because they can’t compete on price. Keep in mind that corporate landlords have a lot of financial might, so getting into a bidding war puts you in a tough position.
No matter who you compete against for a home, make it a point to stick to your budget. Going above your comfort zone on price could lead to years of financial stress if you spend more on a home than you can afford. It’s better to avoid bidding wars with corporate landlords altogether so you’re not tempted to pay more than you should.
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This article originally appeared on GOBankingRates.com: More Than 9 in 10 Americans Say Corporate Landlords Make Home Ownership Harder — and Two Things Homebuyers Can Do
