Institutions Rev Up Their SFR Game

Single-family rental homes; the National Rental Home Council has estimated institutional ownership at less than 2%. (Photo courtesy of NRHC)

IRVINE, CA—Institutions are stepping up their game again in the single-family rental arena, ATTOM Data Solutions said Thursday. That’s the case even as average returns in the sector have reached a nine-year low in 473 US counties.

“After a drop-off in single family purchases by both individual and institutional investors over the past two years, we’re starting to see investor acquisition activity pick up again,” says Daren Blomquist, SVP at Attom. Given shifting attitudes toward homeownership that are showing up in stubbornly low homeownership rates and our data showing more than 18 million non-owner occupied single-family homes”—comprising about 25% of the total—“these SFR investors will be an important and likely growing force in the real estate market for years to come.”

While larger-scale investors—those acquiring 10 or more SFR properties at a time—still account for a small share of investment activity, on a percentage basis they’ve come backstrong from two years of lower volume. Nationwide, 2.7% of all single-family homes that sold in the first seven months of 2016 were purchased by institutional investors, a 29% year-over-year increase. Over the past 10 years, the peak in institutional investor share of SFR purchases nationwide was 8.4% in the first seven months of 2008, according to ATTOM.