Institutional investors could own 40% of U.S. single-family homes by 2030, according to MetLife Investment Management. And a group of lawmakers in Washington, DC believe Wall Street should pull out of the market.
“What we’re saying is we don’t have private equity to buy up single family homes,” said Rep. Ro Khanna, a Democrat representing California’s 17th congressional district. Khanna is the lead author of the Stop Wall Street Landlords Act of 2022. “What’s outrageous is that your tax dollars are helping Wall Street buy up single-family homes,” he said in an interview with CNBC.
The single-family rental sector began with government support in the aftermath of the 2008 financial crisis. “It was that rare opportunity that attracted the institutions to build a portfolio out of these foreclosed properties,” said Steven Xiao, assistant professor of finance and management economics at the University of Texas at Dallas.
Since the early 2010s, Tricon Residential, Progress Residential, American Homes 4 Rent, and Invitation Homes have each purchased thousands of homes. In some cases they have also added something to the housing supply with rental properties.
Some of these companies are funded by private equity firms such as Blackstone and investment managers such as Pretium Partners.
“It’s almost a single market,” said Jordan Ash, director of Labor-Jobs and Housing at the Private Equity Stakeholder Project. “They’ve been very explicit about how people get shut out of the housing market and become perpetual renters.”
These calls come after fierce housing inflation hit many Sun Belt states, including Texas, Florida and Georgia, according to the National Association of Realtors.
Prices in their Sun Belt markets are higher than national rental inflation rates, according to research Zumper compiled for CNBC. Between January 2020 and January 2023, rents for a two-bedroom detached home increased about 44% in Tampa, Florida, 43% in Phoenix, and 35% near Atlanta. That compares to a nationwide increase of 24%.
Industry advocates claim they don’t have enough market share to dictate prices in any market. In early 2022, large institutions owned about 5% of the 14 million single-family homes nationwide, according to analysts.
According to MetLife Investment Management’s 2022 forecast, institutions will own some 7.6 million homes by 2030, or more than 40% of all single-family homes on the market.
In the short term, however, some companies may pull out of the real estate market as concerns about corrections mount. “You’re going to see some sales by us,” Jon Gray, Blackstone’s chief operating officer, said in a December 2022 interview with CNBC.
Look the video above to learn more about the rise and future of corporate landlords in the United States.
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