{"id":177119,"date":"2024-08-30T11:56:08","date_gmt":"2024-08-30T17:56:08","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=177119"},"modified":"2024-10-11T08:41:39","modified_gmt":"2024-10-11T14:41:39","slug":"five-ways-investors-impact-a-housing-market","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/five-ways-investors-impact-a-housing-market","title":{"rendered":"5 Ways Real Estate Investors Influence Housing Market Health"},"content":{"rendered":"\n

People have much to say about real estate investors, but not all <\/span>of it<\/span> is positive. While we can understand where some of the complaints come from, such as those about institutional investors, real estate investors play an integral role in the modern housing market. There may be valid criticisms out there, but by and large, investors\u2014especially individual investors\u2014play a significant role in maintaining the health and viability of real estate at large. <\/span><\/p>\n\n\n\n

The truth is that real estate investment benefits both the individual and the market, influencing local and national trends. Here\u2019s how investors <\/span>influence<\/span> the market the most.<\/span><\/p>\n\n\n\n

1. Property Upkeep and Values<\/span><\/h2>\n\n\n\n

Investors often purchase distressed or outdated properties and renovate them. <\/span>This<\/span> not only improves the quality of the housing but raises local property values. Investors are also diligent in protecting the condition of these properties, <\/span>preventing occurrences<\/span><\/a> of abandoned or neglected properties that hurt neighborhood safety and value. <\/span><\/p>\n\n\n\n

Now, before the comments start about lousy landlords, slumlords, and overgrown weeds at rental houses, there are always going to be <\/span>bad<\/span> investors who do a poor job of keeping up their properties. However, when properties sit abandoned and neighborhoods become blighted, real estate investors are the ones who step in and take the risks of reinvigorating properties.  Yes, investors expect to make a profit, but those profits come with risk, and without investors, there is no progress, no revitalization, and no improvement to the neighborhoods.<\/span><\/p>\n\n\n\n

2. Alternative Housing Solutions<\/span><\/h2>\n\n\n\n

Some people would <\/span>bemoan<\/span> how reliant our housing market is on rentals. But the truth is, rentals are a pillar of the modern market and have remained a stable percentage of total home inventory for the past 60 years. Rentals are not a recent phenomenon, regardless of the popular narrative.<\/span><\/p>\n\n\n\n

Rental properties remain more accessible than buying and provide the flexibility our society demands. Additionally, the <\/span>build-to-rent (BTR) model<\/span><\/a> also increases the housing supply. When homeownership is increasingly inaccessible, single-family rentals offer long-term alternatives. <\/span><\/p>\n\n\n\n

3. Community Involvement<\/span><\/h2>\n\n\n\n

Even <\/span>out-of-state investors<\/span><\/a> have an impact on their investment markets. No matter where you invest, you will no doubt utilize the assets found in that market. <\/span><\/p>\n\n\n\n

Investors provide work for local businesses like contractors, builders, real estate agents, and property managers. When you consider the number of homes that are rentals in a given area, multiply that number by thousands of dollars, and you get a sense of the <\/span>real<\/span> economic impact that investors have on a community. <\/span><\/p>\n\n\n\n

By investors taking the risk of investing in a community, thousands of dollars <\/span>are transferred<\/span> through the economy into the pockets of small, local businesses that often wouldn\u2019t exist otherwise. These investors provide more housing options to support a growing population and may participate in community development. Ideally, investors contribute to the value of an individual property and the community <\/span>as a whole<\/span>.<\/span><\/p>\n\n\n\n

Further Reading: <\/span>8 Reasons Investors Flock to SFRs in a Tough Economy<\/span><\/a><\/em><\/p>\n\n\n\n

4. Market Recovery<\/span><\/h2>\n\n\n\n

Let\u2019s talk about the Great Recession. Though conditions vary from market to market, there\u2019s no denying that real estate recovery would\u2019ve been much slower if not for investor activity. <\/span><\/p>\n\n\n\n

Here\u2019s how investors contributed:<\/span><\/p>\n\n\n\n