Institutional homebuyer Yieldstreet cuts buying levels by 90% as it waits for a sharper house price correction

the continued downturn in the housing market saw everyone from family owners to Home Partners of America, owned by Blackstone withdraw their plans to acquire more homes.

It makes sense. Climbing, the pandemic real estate boom– which has seen rents and house prices skyrocket – was amazing for everyone to Airbnb hosts at home pinball machines to institutional buyers on Wall Street. However, last year historical mortgage rate shock saw the domestic market shift from inflation mode to deflation mode. Fear of further price declines underpins many investors’ decision to sit on the sidelines.

“From December, I expect we will see another drop of 10% to 15% [in home prices] nationwide,” said Tejas Joshi, director of single-family residences at Yieldstreet. Fortune.

Yieldstreet, which owns more than 600 homes in the United States, has put its money where its mouth is. In the second half of 2022, Joshi says Yieldstreet cut home buying levels by more than 90% in the face of falling home prices.

“We are pretty much on hiatus in all [home buying] strategies”, says Joshi Fortune.

See this interactive chart on

Until November, the Case-Shiller National Home Price Index has US home prices down 2.4% from June 2022 peak. However, Joshi says the lagged Case-Shiller reading underestimates the actual decline. According to him, once his forecast of a further 10-15% house price correction materializes, U.S. house prices in the second or third quarter of 2023 will be about 20% lower than their peak of 2022.

See this interactive chart on

“Obviously some markets will be less impacted. Markets that will be impacted more are those where you have a lot of new home inventory, like Phoenix, Las Vegas, Dallas and Boise. Those are markets with a lot of construction, with a lot of new homes…These are the markets that will be the leaders in terms of lower home prices.There will be markets in the northeast, which haven’t had a lot of new construction, where the house is going. expecting prices to fare better in terms of the downside,” says Joshi.

Unless a home seller is going through a major life event, such as a divorce or moving house, they are generally reluctant to sell below previous market highs. However, it’s a different story for home builders: they lose money for every additional day a completed home appears on their balance sheet. That’s why markets with lots of new construction, Joshi says, will be the most prone to falling home prices in 2023.

Homebuilders continue to untie their historical pipeline of unfinished houses should continue to drive down new home prices in the first half of 2023, said Zonda chief economist Ali Wolf Fortune. Knowing this, some institutional investors who have been sidelined are already trying to convince manufacturers to offer them advantageous offers. While some manufacturers, like Lennaractively buying unsold homes from large investors.

“What’s an interesting dynamic with institutional investors is that a lot of them have been sitting on the sidelines waiting for that moment to strike… [they’re thinking] ‘Hey, I want to buy these houses from you [the builder]but I want to have a discount for doing it. Ali Wolf tells Fortune. These institutional investors don’t just want markdowns on the order of 10%, they’re hoping for price drops of “20% and 30%,” says Wolf.

As home prices begin to decline, Joshi says Yieldstreet will slowly increase home buying levels.

“Personally, I think [home prices will bottom in] in the second or third quarter of 2023,” says Joshi. ” At this moment [when mortgage rates come back down closer to 5%] you’ll see some demand coming back, and that will basically set a floor for lower house prices.”

More real estate search companiesincluding Zonda and John Burns Real Estate Consultingthink house prices will continue to fall in 2023. However, some companies like CoreLogic and real estate agent.combelieve that the decline in house prices is already behind us.

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