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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 44 November 2023 F E A T U R E S T O R Y THE INDEPENDENT INVESTOR IMPACT Could real estate investors be the answer to the housing shortage? B y K U R T C A R L T O N T he headline that is currently dominating media coverage of the housing market is clearly the housing shortage. And that theme isn't all that different from the end of 2022 when low inventory, high mortgage rates, and inflation were the hot topics. Consumers have become accustomed to mortgage rates hovering around 6%, and the Fed has backed off on an aggres- sive plan to knock back inflation. But the housing shortage isn't budg- ing and is far from improving. In May 2023, Redfin reported that the number of homes for sale in the United States fell 7.1% year over year to 1.4 million—the lowest level on Redfin's records, which date back to 2012. To add to the grid- lock, 90% of homeowners who have a mortgage, have an interest rate under 6%. Nobody is moving, unless they have to. Enter the local investor. Investors Deliver Inventory Even in a Housing Shortage I n a recent study of nearly 1,400 inves- tors, results of which can be found in our Flip Side report from June 2023, we found that individual investors leaned into the market and saw their business- es grow despite the negative news and trends in the traditional housing market. The United States is lacking about 320,000 listings just to satisfy middle-in- come buyers' most critical category of af- fordable homes. Fortunately, the interests of independent investors align with this critical need, and that means the benefit will be greater than the income made on each home, as those fix-and-flips are put back into the market. The National Association of Home- builders projects the construction of 830,000 homes this year, but what goes unnoticed is the forecasted 350,000 home flips involving vacant and uninhabitable properties revitalized by independent rehabbers. Independent investors are taking matters into their own hands and strategically filling in the gaps in housing inventory where the government and new home builders fall short. Rather than looking for new construction opportunities, however, independent investors are looking for old, distressed, and uninhabitable homes that are overlooked by most homebuyers. In fact, 93% of surveyed investors planned to purchase property in 2023, and many of those properties will be distressed and in need of serious repair. Investor Markets Grow Where Traditional Markets Decline W hen comparing the Redfin tradi- tional market data to investor data, it becomes evident that investors are mov- ing the needle. Five markets experienced double-digit growth whereas the same traditional markets saw more than a 40% decline in homes sold. While Boston is the big leader for investor-sold homes with 88% growth in sales volume from Q1 2023 to Q2 2023, Houston experienced a 46% growth in sales volume and Dallas saw a 28% growth. Business continues on an upward trajec- tory for independent investors, which is great news for the housing market. So What is the Investor Edge? L ocal, independent investors focus on specific neighborhoods. They know contractors, have better access to materials, and truly understand the home K U R T C A R LT O N An expert in the real estate space, Kurt Carlton is a solution-oriented, innovative leader who operates with a refreshing, candid perspective. As the Co-Founder and President of New Western, Carlton currently oversees the New Western portfolio of companies, including the company's consumer brand HomeGo and its lending platform, Sherman Bridge. Along with the CEO, he establishes and oversees the short- and long-term goals, planning efforts, and overall strategies for all aspects of the businesses. Carlton has spent the last two decades in the real estate industry. During the 2008 recession, he saw an opportunity to help rewrite the playbook for the investment real estate industry, thus co-founding New Western. That vision has led to the largest private marketplace for fix-and-flip and fix-and-rent residential investment properties in the U.S., operating in over 40 markets and supplying homes to more than 150,000 investors. Prior to founding New Western, Carlton worked in the mortgage industry and with real estate developments in the U.S. Virgin Islands. He is a licensed real estate agent and mortgage broker in multiple states.