Investor to NAR: We aren’t competing with first-time homebuyers
OwnAmerica CEO says the needs of renters are important, too
The National Association of Realtors drew a line in the sand between homebuyers and investors, but one investor says he’s had enough.
NAR made its stance on investors clear on several occasions: Investors are creating more competition for first-time homebuyers, possibly even keeping them from homeownership.
Back in January, the initial public offering for Blackstone Group’s single-family rental operator, Invitation Homes, became one step closer to reality, as the company disclosed the terms of its initial public offering.
What was unusual about this deal was the fact that it happened with the backing of mortgage giant Fannie Mae, as noted in the Wall Street Journal.
NAR did not wait long to criticize the GSE, sending a letter to Mel Watt, director of the Federal Housing Finance Agency, according to an article by Lorraine Woellert for POLITICO.
“Rather than focusing on allowing well-qualified Americans to build wealth through affordable mortgages options, Fannie Mae is actively financing large institutions to compete with them,” NAR President William Brown wrote in the letter.
“These investors do not expand the affordable housing stock,” Brown wrote. “Rather, in this limited market they drive up the price of rents and remove affordable inventory from the hands of American homeowners.”
But that was far from the end. In January’s Existing Home Sales report, which came out on Feb. 22, Brown once again mentioned the challenge investors pose to first-time homebuyers.
"Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm's investment in single-family rentals," he said. "This will only further hamper tight supply and put major investors in direct competition with traditional buyers."
But now, one investor says he’s had enough. Greg Rand, CEO of OwnAmerica, a broker in the single-family residential space, explained that in NAR’s quest to protect homebuyers, it forgot another important housing secgment – renters.
“They shouldn’t necessarily be considered second-class to a homebuyer,” Rand explained in an interview with HousingWire.
Rand questions why the idea of homeownership is limited to owner-occupied homeowners, saying that investors such as Blackstone are some of the largest homeowners in the U.S.
“If you’re not a homeowner or a homebuyer who’s going to occupy the property, you don’t belong in [NAR's} world and it’s just strange to see,” Rand said.
Rand pointed out that NAR’s numbers show about 20% of home sales are non-owner occupied, noting that is a large segment of the market to simply dismiss.
In fact, Rand said homebuyers are not competing with investors at all, but are actually competing with home renters.
“If a first-time homebuyer loses a house to an investor, that means that a renter family is going to live in that house, and they’re people too,” Rand said. “So I don’t think they’re right to carve them out, but it’s simply them drawing a competitive line where investors are on one side and homebuyers and [NAR] are on the other.”
“I would say homebuyers are competing with renters, and that’s life,” he said. “You don’t have a right to own a home if somebody else wants to own it more.”
Rand says that while it is ultimately a free-market situation, many in the market benefit from the presence of investors.
“The existing homeowner benefits from the competition because it helps support their price,” he said. “For the people who are already owners in the marketplace, it’s a good thing; for the people who are renters in the market place it’s a good thing; and for folks who are first-time homebuyers they’ve got some competition that they didn’t have before.”
Rand concluded by saying that instead of drawing a line in the sand between homeowners and investors, NAR should be more inclusive of the needs of tenants.