Investors Snapping up Single Family Homes Across U.S. — $49.9B in Last 3 Months of 2021

MAYWOOD, CA - MAY 17: An American flag hangs on a single-family home in this Latino neighborhood May 17, 2006 in the Los Angeles-area city of Maywood, California. In November, voters, angered that city police were stopping and seizing hundreds of cars whose unlicensed drivers frequently turned out to be …
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The real estate market is still in the throes of coronavirus-pandemic challenges, including supply chain issues. And now reports show that investors snapping up record amounts of single family homes is making it even more difficult for people shopping for a home.

In the last three months of 2021, investors spent $49.9 billion on buying homes, according to a report in The Business Journals:

In total, investors — which includes anyone from so-called mom-and-pop, part-time landlords to private equity giants — made up a full 18.4 percent  of home sales in the fourth quarter, which is a record, according to Seattle-based Redfin Corp. Though not solely responsible for today’s ultra-competitive housing market, the growing dominance of cash-heavy investors in Q4 is making buying a house more challenging.

Billions have been raised to deploy into the single-family rental market — and related, but somewhat different, the build-to-rent business — but it’s not clear yet whether investors will keep seeing quarter-over-quarter gains in market share in 2022, said Daryl Fairweather, chief economist at Redfin. There are a lot of variables at play, especially with the Federal Reserve expected to raise interest rates this year.

“That will cool down demand for housing,” Fairweather said. “At the same time, rents are going up, which makes it attractive for investors to buy houses (to rent).”

But the report also cited Newport Beach, California-based commercial real estate analytics firm Green Street, which in January reported that institutions own about three percent of total single-family rental stock, “meaning individual owners of one to two homes continue to represent the majority of single-family rental owners in the U.S.”

The Green Street report also said the four biggest single-family rental owners are Invitation Homes Inc., which owned 81,550 such units as of January; Progress Residential LLC, which owned about 75,000; American Homes 4 Rent, which owned 56,100; and Tricon Residential Inc., which owned 27,500.

“It’s expected institutional ownership of single-family rentals will continue to grow, especially as more capital enters the single-family rental sector,” the Journals report said.

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