Miami Real Estate Learning Center

WALL STREET WILL BUY YOUR HOUSE

As the national affordable housing crisis worsens, lawmakers are increasingly targeting corporate Wall Street investors. Since 2020, these investors have been buying thousands of homes across the U.S. with cash offers, converting single-family homes into rental units. Wall Street now purchases one in four houses sold.

In response, Democrats have proposed legislation requiring large owners of single-family homes to sell these properties to family buyers. Critics argue that corporate buyers are undermining the American Dream. They use sophisticated algorithms to identify and secure houses they can convert into rental properties, often making unbeatable cash offers within minutes of a home hitting the market, making it difficult for ordinary buyers to compete. Once they have acquired a significant portion of the neighborhood’s listings, they typically raise rents, contributing to housing inflation.

While Wall Street is an easy target for blame, the issue of home inflation is more complex. As of 2024, institutional investors account for only 5% of all single-family rentals nationwide. Moreover, the buying frenzy by these investors slowed last year due to rising home prices and mortgage rates. I have to say that these corporate investors are not driving Miami prices up, I never had or heard of any corporate offer.



DO I RECOMMEND STAGING YOUR HOUSE?

Home sellers are increasingly investing in staging to attract buyers amid high mortgage rates. Requests for home-staging services rose by 10% in the first quarter, with the average cost increasing 18% to $1,816 compared to pre-pandemic levels, according to Thumbtack.

I think staging helps homes sell faster and at higher prices by allowing buyers to visualize themselves in the space. But it all depends how your place looks. Do you think your style matches what you see on Pinterest? Maybe you don't need it then.

Costs vary widely in Miami. Basic staging can reach a few thousands per month. Most contracts last 60 days and include staging, labor, delivery, and rental fees. It all depends if your realtor thinks he will sell your place fast or not.

Another cheaper version is virtual staging which is only a couple hundred per picture but that will only attract buyers to your place and then they could be disappointed by an empty unit.



HOW DO I KEEP A LOW INTEREST MORTGAGE?

Freddie Mac has proposed a new product allowing homeowners to access their home equity without losing their favorable mortgage rates. This product involves offering second-lien mortgages, enabling homeowners to keep their existing low-interest first mortgage while tapping into their home equity. I think this could be a great way to cash-out, especially given today’s higher interest rates.

For example, a homeowner with a 3% rate on a $300,000 mortgage has a monthly payment of $1,265. If they refinance to access $100,000 for home improvements, the new $400,000 mortgage at 7.25% would increase their payment to $2,729. With Freddie Mac's proposal, the original $1,265 payment remains, and a new 20-year loan at 7.25% for $100,000 adds $965, totaling $2,130 per month.

The Federal Housing Finance Agency (FHFA) is reviewing Freddie Mac’s proposal.



TOP 4 CITIES FOR HOME PRICE INCREASE:

U.S. home prices set a new record, increasing 6.5% year-over-year as the spring buying season kicked off. This surge, is driven by extremely low inventory. Homeowners locked into 2-3% mortgage rates are hesitant to list their homes and take on new loans at the current 7% rate, exacerbating the affordability crisis, especially for first-time buyers.

Although there have been slight increases in listings with the arrival of spring, prices are unlikely to cool significantly soon. The Federal Reserve has indicated no immediate plans to cut interest rates, maintaining pressure on the market.

Among the 20 largest U.S. cities, San Diego saw the highest price gains, with an increase of over 11% year-over-year. New York, Cleveland, and Los Angeles also experienced significant rises. The 20-city index showed a 7.4% annual increase, slightly higher than the previous month's 7.3%.

Regionally, the Northeast led with an 8.3% annual price rise. While COVID-19 initially boosted Sunbelt markets, recent gains have been more pronounced in northern metro areas.