NASHVILLE, Tenn. (WKRN) – The housing market in Middle Tennessee is on fire, but potential home buyers are pretty steamed about a shortage of homes.
Partially to blame are long-distance landlords from New York and California buying up hundreds of properties and then renting them.
Some home buyers are finding themselves driving around in circles looking for that perfect home.
Call it a sign of the times, ‘Coming Soon,’ ‘For Rent,’ ‘For Lease’ are popping up in yards all over.
“Inventory continues to be a steady problem in the area,” said Crye-Leike Realtor Michael Osborne.
“Some would call it the perfect storm,” the realtor said. “We’ve had extraordinarily low interest rates, we’ve got new buyers coming into the market, and we’ve got people who lost their homes back in 2008 and 2009 that had to set out for seven years that are just now eligible to buy a home because they had their homes foreclosed.”
Osborne said also to blame are out of state home rental companies, like American Homes 4 Rent and Progress Residential, that are buying up homes as fast as they can.
“The enticing thing for a seller from a hedge fund buyer is the fact that there is a light home inspection, there is no appraiser, and it’s an all cash deal that’s almost guaranteed to close,” he said.
The hottest area for rental homes surrounds Davidson County.
“Anything that lies in the donut, as Davidson County is the center of the donut, anything that touches that highest probability of where you’re going to find the hedge funds buying these homes,” said Obsorne.
American Homes 4 Rent has purchased 396 houses and Progress Residential 472 houses in Rutherford County.
In Davidson County, the two companies owns more than 200 homes combined.
They’ve purchased more than about 190 homes in Williamson County.
In Wilson County, there are long-distant landlords for more than 130 rental properties.
Potential home buyers are not happy.
“Clients are frustrated because of fast rising home prices, highly competitive bid processes, just not being able to have options,” Osborne said.
Osborne also told News 2 the hedge fund plan is to buy, to rent, to hold, and then to resell and capture the gains on the back end.