Connect with us

The rise of high-tech real estate investing platforms and their effect on housing affordability

Real estate tech startups are making it easier for people to invest and manage property. But critics argue that these software companies and their business…

Published

2 years ago

on

An example of a multifamily housing in Seattle’s Ballard neighborhood. (Sightline Institute Photo / Creative Commons)

Real estate tech startups are making it easier for people to invest and manage property. But critics argue that these software companies and their business models are gobbling up the limited amount of available housing in the process, driving up costs and pushing out first-time buyers. 

These investing services encourage users to invest in multiple properties, taking away already scarce housing inventory, said Tram Tran-Larson, a community engagement manager for the Housing Justice Project, a Seattle-based legal aid clinic that provides eviction defense for low income tenants and is part of the King County Bar Association. This drives up costs for available housing, she added.

But researchers argue that the lack of affordable housing has more to do with the limited supply, not the proliferation of tech-enabled real estate investing platforms.

Sheharyar Bokhari. (Redfin Photo)

“Housing supply is the fundamental problem long-term,” said Sheharyar Bokhari, a senior economist with real estate giant Redfin. “If you had homes for everybody, maybe the investors wouldn’t even be in the market because they wouldn’t have to bank on so much demand.”

Arrived Homes, a Seattle-based startup that offers fractional ownership of rental properties, has funded about $50 million worth of real estate. That equates to about 150 properties in about 20 American cities, said Ryan Frazier, CEO and co-founder. 

“I definitely understand their criticism, especially as housing prices are going up,” he said about the pushback against real estate investing platforms. “We certainly don’t want to take inventory away from people who are looking to buy homes that they want to live in.”

Arrived currently has about 100,000 people signed up for its service, with about 10,000 users actively investing. On average, there are about 200-300 investors per house. 

Frazier added that there is an “equal interest and demand in having quality rental housing,” especially as the cost of borrowing is rising and more homebuyers are moving more frequently, he said.

The demand from investors interested in purchasing real estate as an alternative asset has always been high, regardless of the presence of real estate investing apps, said James Young, director of the Washington Center for Real Estate Research at the University of Washington. 

He asked: “Should we blame the personal computer for high house prices?”

Factors such as stagnating incomes that haven’t kept up with housing cost increases and a slowdown in housing construction are making it difficult for many Americans to afford homes. There was also a flurry of property investment during the pandemic, when investors took advantage of record-low mortgage interest rates.  

About 70% of Americans say they have a harder time purchasing a home than their parents did, according to a survey by Pew Research. The median home price for the first quarter of 2022 was $428,700, according to data from the Federal Reserve.

Investors accounted for a record 28% of U.S. single-family home sales in the first quarter of 2022, up from 19% from the same quarter last year, according to a recent report by the Harvard Joint Center for Housing Studies. That is “well above” the 16% market share averaged between 2017 and 2019, the report said.

The market share of homes owned by investors has been steadily growing in Seattle and Portland, according to data provided by Redfin, which classifies such investors as a person or business that owns at least four properties.

In the first quarter of 2022, investors owned roughly 10% of the overall Seattle housing supply, compared to 3% in the first quarter of 2000. Investor market share in Portland rose from 7% to 12%.

The growth in market share in the Pacific Northwest is relatively subtle when compared to investor activity in the Southeast, where investors accounted for more than 30% of home sales in Atlanta, Jacksonville and Charlotte in the first quarter of the year. 

Bokhari, the Redfin economist, said investors are driving up costs in places such as the Southeast, where private equity and Wall Street firms are buying up large swaths of property. In contrast, he said, the impact that real estate investing startups have on supply is relatively small. 

He said he hears the most frustrations toward real estate investing startups on the micro-scale. These investing platforms often bring cash to the table and they are capable of outbidding first-time buyers, he added. 

“That basically gives them an unfair advantage because they’re pooling so much money, and have bargaining power,” he said. “Given the state of the market, it creates frustration for average American buyers.” 

In King County, home buyers are sometimes paying $100,000 to $200,000 over asking price, Tram-Larson said. 

Asked about competing with first-time home buyers, Frazier said Arrived often avoids bidding on properties that would otherwise be owner-occupied. 

Young, the UW director, said investing in real estate is different from investing in other assets, like stocks or bonds, because of the homogeneity between assets. Each property comes with its own set of problems, takes up physical space, and has utility. This means real estate assets are not easily liquidated, he said.

Shkelqim Kelmendi, executive director of Housing Connector

“In real estate markets, you can raise all the capital you want through an app,” he said. “But it still doesn’t mean you’re gonna be able to close any faster than anybody else.”

Shkelqim Kelmendi, executive director of Housing Connector, a nonprofit that provides housing assistance to those experiencing homelessness, said that he does not see real estate investing startups as a threat to affordable housing. 

“Innovation is not bad,” said Kelmendi, who recently partnered with Zillow to launch an instrument to help private property owners and landlords rent to those experiencing houselessness.

He said that as real estate investing startups scale and have more bandwidth to commit to social impact causes, his company would be interested in exploring opportunities to work with them to tackle the vast housing issues in our country.

He asked, “Are there ways that we can leverage or collaborate with some of these new companies and this new innovation to still meet the demand that we have on the streets?”

Read More

Related Topics:
Continue Reading

Government

Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

Published

4 hours ago

on

March 9, 2024

By

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

Read More

Continue Reading

Uncategorized

February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

Published

5 hours ago

on

March 9, 2024

By

By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

Read More

Continue Reading

Spread & Containment

Another beloved brewery files Chapter 11 bankruptcy

The beer industry has been devastated by covid, changing tastes, and maybe fallout from the Bud Light scandal.

Published

6 hours ago

on

March 9, 2024

By

Before the covid pandemic, craft beer was having a moment. Most cities had multiple breweries and taprooms with some having so many that people put together the brewery version of a pub crawl.

It was a period where beer snobbery ruled the day and it was not uncommon to hear bar patrons discuss the makeup of the beer the beer they were drinking. This boom period always seemed destined for failure, or at least a retraction as many markets seemed to have more craft breweries than they could support.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

The pandemic, however, hastened that downfall. Many of these local and regional craft breweries counted on in-person sales to drive their business. 

And while many had local and regional distribution, selling through a third party comes with much lower margins. Direct sales drove their business and the pandemic forced many breweries to shut down their taprooms during the period where social distancing rules were in effect.

During those months the breweries still had rent and employees to pay while little money was coming in. That led to a number of popular beermakers including San Francisco's nationally-known Anchor Brewing as well as many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing filing bankruptcy.

Some of these brands hope to survive, but others, including Anchor Brewing, fell into Chapter 7 liquidation. Now, another domino has fallen as a popular regional brewery has filed for Chapter 11 bankruptcy protection.

Overall beer sales have fallen.

Image source: Shutterstock

Covid is not the only reason for brewery bankruptcies

While covid deserves some of the blame for brewery failures, it's not the only reason why so many have filed for bankruptcy protection. Overall beer sales have fallen driven by younger people embracing non-alcoholic cocktails, and the rise in popularity of non-beer alcoholic offerings,

Beer sales have fallen to their lowest levels since 1999 and some industry analysts

"Sales declined by more than 5% in the first nine months of the year, dragged down not only by the backlash and boycotts against Anheuser-Busch-owned Bud Light but the changing habits of younger drinkers," according to data from Beer Marketer’s Insights published by the New York Post.

Bud Light parent Anheuser Busch InBev (BUD) faced massive boycotts after it partnered with transgender social media influencer Dylan Mulvaney. It was a very small partnership but it led to a right-wing backlash spurred on by Kid Rock, who posted a video on social media where he chastised the company before shooting up cases of Bud Light with an automatic weapon.

Another brewery files Chapter 11 bankruptcy

Gizmo Brew Works, which does business under the name Roth Brewing Company LLC, filed for Chapter 11 bankruptcy protection on March 8. In its filing, the company checked the box that indicates that its debts are less than $7.5 million and it chooses to proceed under Subchapter V of Chapter 11. 

"Both small business and subchapter V cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed," USCourts.gov explained. 

Roth Brewing/Gizmo Brew Works shared that it has 50-99 creditors and assets $100,000 and $500,000. The filing noted that the company does expect to have funds available for unsecured creditors. 

The popular brewery operates three taprooms and sells its beer to go at those locations.

"Join us at Gizmo Brew Works Craft Brewery and Taprooms located in Raleigh, Durham, and Chapel Hill, North Carolina. Find us for entertainment, live music, food trucks, beer specials, and most importantly, great-tasting craft beer by Gizmo Brew Works," the company shared on its website.

The company estimates that it has between $1 and $10 million in liabilities (a broad range as the bankruptcy form does not provide a space to be more specific).

Gizmo Brew Works/Roth Brewing did not share a reorganization or funding plan in its bankruptcy filing. An email request for comment sent through the company's contact page was not immediately returned.

 

Read More

Continue Reading

Trending