The Future of Homeownership

Homeownership is crucial for building strong communities, fostering family stability, and promoting the growth and development of young people. Unfortunately, many aspiring homeowners are facing a bleak future, particularly first-time buyers. Those looking to upgrade or downsize are also finding it increasingly difficult to do so due to the current market conditions. To keep up with the demand, there is a need for more single-family, multi-family, and rental units to be built across the country. However, the future of housing faces a greater challenge than new home building. Large Lead Generation companies like Zillow Group, Inc., iBuyers such as Opendoor Technologies Inc, and hedge fund companies Tricon Residential Inc are hurting the future of homeownership.

For those seeking to purchase a home, the best advice is to contact local brokers or real estate agents directly. It is recommended to stay away from large Lead Generation sites like Zillow.com, as they make money by selling users’ information and collecting data to push up home prices. Despite what they advertised, no organization has exclusivity on homes listed for sale in any local or national market. Real Estate Brokers and Agents have direct access to all available MLS listings (homes for sale) and the listing agents in their local and national markets. Any active listings found on these Lead Generation sites can also be found on local broker’s or agent’s websites, which are more frequently updated. Renters should also avoid large institutional investors who buy single-family homes and turn them into rental properties, as they are taking houses away from families who should purchase and own them, contributing to the lack of inventory, and driving up purchase and rental costs.

iBuyers hurt the housing market by buying up large numbers of houses and warehousing them, hoping to sell them at a later date for a higher price. This practice contributes to inventory issues, abnormal price increases, and market confusion, which forces many potential home buyers to pay high housing prices or be forced out of the housing market. Sellers who would have normally sold their homes to upgrade or downsize choose not to put their houses on the market in fear of not being able to find a suitable replacement home, prices going up too fast, high-interest rates, and low inventory.

While iBuyers offer convenience, such convenience comes at a cost to sellers. They typically receive less than Fair Market Value (FMV) for their home and are required to pay for repair costs they may disagree with. For some of the largest iBuyers, service fees average between eight and nine percent, and can reach up to 12 percent in some markets. Therefore, outside of the convenience, iBuyers cost sellers more than working with a real estate agent. Real estate agents are highly skilled at setting up secure and convenient showings and working with other real estates professionals such as loan officers, closing attorneys, home inspectors, and others to make the selling of homes a smooth transaction. It is recommended that sellers talk to a local real estate agent before signing any agreement with an iBuyer.

Organizations such as Zillow, Tricon Residential Inc, and Opendoor Technologies Inc are not only hurting homeownership, but they also put pressure on the overall economy. High housing prices are a major contributor to inflation, leading to high rents which force employers to pay higher wages. As wages increase, the price of other goods and services also increases. To combat high inflation, the Federal Government raises interest rates, creating a disincentive for builders to build new homes due to the high borrowing costs and homes staying on the market longer. Higher interest rates also lower demand for goods and services, hurting jobs and business growth. The interest rate will continue to rise until inflation cools down. The danger of all of this is that the economy can go into a recession, leading to job losses and people losing their homes due to Foreclosure and other economic problems.

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