DR Horton started transitioning resources to its Express brand early, while most other builders were still focusing on high- and middle-tier homes. In fact, many are still focused there. For example, Atlanta-based Pulte Group is just now starting to investigate starter-build options as its high-end margins tighten. DR Horton, however, has some padding built in thanks to its early start now that its luxury-home brand, Emerald, is starting to falter.
So what does this mean for you and your wholesale deals?
It means that right now, in 2016, there is a shortage of “starter homes” available for first-time buyers. There is a reason that a dominant number of successful investors refer to these “little” three-bedroom, two-bathroom homes as their bread and butter: these homes are in demand, often come with easier financing than larger homes, and are proven in short supply at this time.
Lesson: If you’re looking to wholesale properties fast, then give your buyers (be they investors or homeowners) what the market wants, and what the market wants at present is entry-level homes.
Point to Ponder:
National Association of Realtors (NAR) chief economist Lawrence Yun and CNBC real estate reporter Diana Olick both think that DR Horton has set itself up for success by investing in starter homes thanks to the 2 million new households that will likely be attempting to transition to home ownership in 2016.
Would you invest in starter homes?
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Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.