Investors bet $64 billion on US homes in record buying spree

Bloomberg

Real estate investors acquired a record 18% of US homes sold in the third quarter of 2021, wagering $64 billion that home prices and rents will continue to surge.
Investors bought more than 90,000 homes in three months through September, up 10% from the prior quarter and 80% from a year earlier, according to a report by Redfin Corp.
Low interest rates and a persistent shortage of affordable properties have pushed investors to stomach higher prices as they bank on rent growth and price appreciation. The record surge of capital into the housing market comes as soaring home prices have made it harder for many families to buy a house.
“I largely attribute this to the decline of the middle class in America,” said Daryl Fairweather, chief economist at Redfin. “The more the rich get richer, the more opportunity there is for investors to buy homes and rent them out.”
Investors have typically focused on lower-priced homes, but in the third-quarter they ramped up their purchases of higher-end properties, reflecting increased competition and confidence that the housing boom will continue.
The median price of investor purchases was $438,770, the highest on record. Three quarters of the homes were single-family residences, while the balance was a combination of condominiums, co-ops and other property types.
For the purposes of the report, Redfin defined investors as any buyer whose name included “LLC,” “Inc.,” “Corp.” or other keywords that indicate professional ownership.

Tightest US job market since 1950s set to drive inflation
Fuelled by a persistent shortage of available workers, wage pressures will take over as the dominant driver of US inflation in the second half of next year, according to Jefferies Group LLC.
“We believe the US is entering the tightest labour market conditions since the 1950s,” Aneta Markowska, chief financial economist at Jefferies, wrote in a note. As a result, wage pressures are unlikely to ease next year, keeping inflation elevated even as supply chain bottlenecks abate.
While transitory factors have accounted for about 1.5 percentage points of the core consumer price index increase over the past year, tightness in the labour market is contributing nearly 1 percentage point and that “is unlikely to change,” Markowska said. Excluding food and energy, consumer inflation is up 4.6% from a year earlier, the most since 1991.
“We recognise that pandemic-related distortions have contributed to the recent wage strength by temporarily depressing labour supply, we no longer expect wage pressures to ease meaningfully,” Markowska said. The US is still six million jobs away from returning to the pre-pandemic employment-to-population ratio, a goal Markowska says is “no longer attainable” in part due to retirements.
Policy makers, including many at the White House and the Federal Reserve, have attributed recent high inflation readings to snarled supply chains. The general expectation is that as those pressures ease, inflation will subside.
But with inflation accelerating further in the final three months of this year, “there is mounting pressure on the Fed to respond,” Markowska said. “The most logical response in our view is accelerating the pace of tapering, which we expect to be announced at the December meeting.”