IRVINE, CA—Counter to the nationwide trend, the institutional-investor share of single-family-home purchases increased from a year ago 31% in 37% of zip codes analyzed in ATTOM Data Solutions' latest report. The zip codes on the rise for single-family-rental purchases include those in secondary and tertiary markets, such as Dayton, OH; Detroit; Memphis; Chattanooga, TN; and Chicago.
“The big-four institutional investors— Invitation Homes/Starwood, American Homes 4 Rent, Progress Residential and Tricon American Homes, who all own tens of thousands of single-family homes—are no longer in full acquisition mode, but are now in portfolio-optimization mode, culling poor-performing rentals from their inventory and selectively adding inventory that they believe will perform well,” Daren Blomquist, SVP for ATTOM Data Solutions, tells GlobeSt.com. Blomquist adds that below that top-tier level of institutional investors, however, many single-family-rental investors who own anywhere from a few dozen to a few thousand single-family rentals are still in full acquisition mode, and these smaller operators are nimbler and more willing and able to shift strategy as the housing market shifts.
Executing this strategy sometimes involves moving into new markets in the Rust Belt and Midwest that still offer good rental returns based on the still-reasonable acquisition cost of single-family homes in those markets, says Blomquist. “Some of the operators are staying in the same markets but shifting to the build-to-rent strategy because of rising prices on existing homes. So, although the giant operators in this industry have settled down in terms of activity, there is still a lot of churn beneath the surface with the small to mid-tier operators.”
Evidence of this churn shows up in the data, where 28% of all single-family homes purchased in the last year are non-owner occupied, up from 27% of all purchases in the previous five years (when the large institutional investors were still more active) and above the long-term of average of 24% of all purchases going to non-owner occupants. “This housing boom is still disproportionately driven by investors: 23% of all single-family homes purchased during the last housing boom (2002 to 2007) went to non-owner occupants,” says Blomquist.
IRVINE, CA—Counter to the nationwide trend, the institutional-investor share of single-family-home purchases increased from a year ago 31% in 37% of zip codes analyzed in ATTOM Data Solutions' latest report. The zip codes on the rise for single-family-rental purchases include those in secondary and tertiary markets, such as Dayton, OH; Detroit; Memphis; Chattanooga, TN; and Chicago.
“The big-four institutional investors— Invitation Homes/Starwood, American Homes 4 Rent, Progress Residential and Tricon American Homes, who all own tens of thousands of single-family homes—are no longer in full acquisition mode, but are now in portfolio-optimization mode, culling poor-performing rentals from their inventory and selectively adding inventory that they believe will perform well,” Daren Blomquist, SVP for ATTOM Data Solutions, tells GlobeSt.com. Blomquist adds that below that top-tier level of institutional investors, however, many single-family-rental investors who own anywhere from a few dozen to a few thousand single-family rentals are still in full acquisition mode, and these smaller operators are nimbler and more willing and able to shift strategy as the housing market shifts.
Executing this strategy sometimes involves moving into new markets in the Rust Belt and Midwest that still offer good rental returns based on the still-reasonable acquisition cost of single-family homes in those markets, says Blomquist. “Some of the operators are staying in the same markets but shifting to the build-to-rent strategy because of rising prices on existing homes. So, although the giant operators in this industry have settled down in terms of activity, there is still a lot of churn beneath the surface with the small to mid-tier operators.”
Evidence of this churn shows up in the data, where 28% of all single-family homes purchased in the last year are non-owner occupied, up from 27% of all purchases in the previous five years (when the large institutional investors were still more active) and above the long-term of average of 24% of all purchases going to non-owner occupants. “This housing boom is still disproportionately driven by investors: 23% of all single-family homes purchased during the last housing boom (2002 to 2007) went to non-owner occupants,” says Blomquist.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
