Institutional investors could control 40% of US single-family homes by 2030, according to MetLife Investment Management. And a group of lawmakers in Washington, DC believe that Wall Street must withdraw from the market.
“What we’re saying is don’t have private equity buying up single-family homes,” the rep said. 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 industry started with government support in the fallout from the 2008 financial crisis. “It was the rare opportunity that attracted the institutions to build a portfolio of these foreclosed properties,” said Steven Xiao, assistant professor of finance and managerial economics at the University of Texas at Dallas.
Since the early 2010s, Tricon Residential, Progress Residential, American Homes 4 Rent, Invitation Homes have each purchased thousands of homes. They have also added to the housing offer in some cases with build-to-rent communities.
Some of these companies are funded by private equity firms such as Blackstone and investment managers such as Pretium Partners.
“It’s almost a captive market,” said Jordan Ash, director of Labor-Jobs and Housing at the Private Equity Stakeholder Project. “They’ve been very explicit about how people are being locked out of the home buying market and are going to be perpetual renters.”
Those calls come after rampant 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 have outpaced national numbers for rent inflation, according to research prepared by Zumper for CNBC. Between January 2020 and January 2023, rents for a two-bed single-family home increased approximately 44% in Tampa, Florida, 43% in Phoenix, and 35% near Atlanta. This is compared to an increase of 24% nationally.
Industry advocates argue that they do not control enough market share to dictate prices in any market. Large institutions owned about 5% of the 14 million single-family rentals nationally by early 2022, according to analysts.
By 2030, the institutions could have about 7.6 million homes, or more than 40% of all single-family rentals on the market, according to the 2022 forecast from MetLife Investment Management.
In the short term, however, some companies may withdraw from the property market as correction concerns increase. “You will see some selling of us,” Jon Gray, Blackstone’s chief operating officer, said in a December 2022 interview with CNBC.
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