One of the country’s top home investment firms is seeing its business rebound after a big drop caused by the pandemic.
Dallas-based HomeVestors of America Inc. represents investors who buy thousands of houses a year around the country. Most of the buyers are small investors who acquire and resell properties or hold them for rentals.
Before COVID-19, HomeVestors — whose slogan is “We buy ugly houses” — was purchasing more than 10,000 homes a year nationwide.
“We were buying a little bit over 1,000 houses a month” before the pandemic, said CEO David Hicks. “April was when it really hit us — absolutely it hit us.
“We had 622 contracts — we dropped by about a third.”
Hicks said HomeVestors bought about 770 houses in May as it figured out how to navigate in the COVID-19 environment.
“We were trying to figure out our new world,” he said in a Wednesday conference call with the company’s investors. “How do we buy a house if we can’t see it some markets?”
In April, the first full month of the pandemic shutdowns and stay-at-home orders, Hicks said his firm’s franchises still sold $130 million in properties.
But it took more leads to generate each purchase. “We can still sell,” he said. “As long as we can buy we can sell.
“May we are up about 30% from in April, and we are confident we are going to be buying about 900 houses,” Hicks said. “No, we are not back to normal, but we are close.”
HomeVestors sales prices are up 15% to 17%.
“You’re selling everything you are buying and you are selling for a little bit more money,” Hicks said. “We have a franchise group that is very resilient and resourceful.
“You figure out how to do business in this market.”
With volatility in the stock market and uncertainty about the economic outlook, investment homes have more appeal, Texas economist Mark Dotzour said on the HomeVestors call.
“Our government debt is going to skyrocket,” Dotzour said. “People are going to get worried about inflation.
“Real estate is an excellent hedge against inflation,” he said. “Single-family homes in my mind have got to be one of the safest investments you can buy.”
While some forecasters are predicting slight declines in home values in Dallas-Fort Worth and across the country, Dotzour doesn’t see it happening.
“Lack of inventory is going to cause prices to escalate,” he said. “As mortgage rates drop further and further, it’s going to allow prices to go up.”
Dotzour said long-term mortgage rates, which are above 3%, should be lower.
“I anticipate mortgage rates down to 2.5%,” he said. “It should be there right now.”