So I have heard a lot of hot takes on how a flood of "retail investors" are completely reshaping the behavior of the stock market. The communities that made 100X gains in GME, AMC and crypto are using their profits to change market psychology.
I have found most of these takes elitist and dismissive, but I recently read an article, The Rise of The California Back House House Hacker claiming that our community at BiggerPockets and the subsequent reddit forums are having a similar impact on the real estate market.
More specifically with the frenzied bidding wars. It speculated that many cash offers are coming from individual investors with 2-10 properties under their belt.
So I figured I would get it straight from the horses mouth and ask you all directly. Do you think that is true? I know from my own experience that many in my social network have done really well from crowd sourcing real estate and stock market investing tricks. I have a friend that is taking the money he made from Game Stop and investing it in a duplex.
I am personally working on saving enough for my first down payment in hopes of building my own portfolio of investment properties, so i'm no where near the point where I could make a cash offer.
But if we do represent a large majority of purchasing behavior, how long do you think that influence will last? And are there any long term investing insights to take from that?
New trends are definitely impacting housing markets. With the vast influence of BiggerPockets, it would be impossible to deny certain markets have benefitted from never-before-seen appreciation and lack of inventory. In the past three years Zillow started ibuying. Then they just sold off all their inventory. BlackRock has gone through phases of buying single family homes and selling them off.
All of these trends effect various housing markets. COVID, though, in my experience is bigger than all the other influences. Here in Omaha, where I invest, housing has appreciated slow and steady for the last 100 years. No joke. Even through the 2008 recession, Omaha slowly appreciated in housing prices, but people's behaviors started changing suddenly and strangely with COVID. My inventory has doubled in value in 20 months.
The thing is, it doesn't matter why or what happens. If you're on the inside, you stand to gain, and if you're on the outside, you stand to lose. My guess is the divide between wealth and poverty will only increase over the coming years and this new social-media-style real estate investing will contribute to that problem.
(One note on cash buying. Don't wait to raise cash. Find private or hard money lenders to back your offers with cash and buy distressed property. If you use your own money, you'll never get into the game.)