"This is important in that they'd stop them from buying properties but not necessarily saying sell off.' It's not banning them from owning properties. How it would do that is anyone's guess. What properties exactly are they talking about? I believe it's single-family, but it's also not exactly clear, because when people say single-family, they're often just talking about single-family detached homes. Single-family attached also exists, i.e., townhomes, so it could include those."
"The theoretical impact would be that and you can go back to Econ 101 for this investors, like anyone else buying homes, are additional demand in the market. If they stop buying homes, that would reduce demand. And that might reduce prices. But the construction sector could also respond to this by pulling back. Demand for their product could decrease, so it could also restrict supply, and that could somewhat blunt the effects of the drop in demand."
Proposal aims to stop institutional investors from buying properties, though 'institutional' and the property types are not defined. The measure would block future purchases rather than force divestment, and may cover single-family detached and attached homes, including townhomes. Institutional buyers account for roughly 2% of the market, so removing their purchases would slightly reduce demand and could lower prices. Homebuilders might respond by reducing construction, which would constrain supply and mute price effects. Localized impacts could occur in markets with higher institutional activity, such as Atlanta, where such buyers exceed 10% of single-family purchases.
Read at www.housingwire.com
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