Investors bought 1 in 5 homes in Boston area with no intention of living in them, report says
BOSTON - Owning a home in Boston is a reality to some people, but to others it is a seemingly unreachable goal. According to new research, there is an emerging obstacle preventing some people from becoming a homeowner.
"The big headline is that one in five properties in Greater Boston has been sold to an investor in the period between 2004 and 2018," said Jessie Partridge Guerrero, Interim Director of Data Service with The Metropolitan Area Planning Council (MAPC).
In a new report, MAPC defines an investor as an LLC, someone who purchased three or more properties in five years, or someone who bought a building with four or more units. Their research shows the investors are more likely to pay with cash, but the home at a discount, or flip it for profit.
"The rate of investor activity is highest in lower income communities of color. They are able to scoop up any naturally occurring affordable housing with cash, which is often more attractive to sellers," said Partridge Guerrero. "Their tenants have experienced that when investors come and buy property from a previous owner, they are often either outright just serving notices to quit, or to clear the building, or they're raising rents by rates that are so high that folks are unable to stay."
She says often investors are targeting high density urban areas with lower priced homes. These neighborhoods often have a higher population of immigrants or people of color. When investors come with cash, sometimes they are getting deals $100,000 less than someone looking to buy with a mortgage.
"This is really a problem for first-time homebuyers or low or moderate income home buyers, who are looking to buy their first home but can't compete even for these lower priced properties," said Partridge Guerrero.
MAPC will present their research in a webinar Thursday. They are suggesting ways to discourage speculation buying from investors, or to find ways to generate revenue from it. The profits would go toward creating more affordable housing.
