Fed-Forced Housing Crash Could Allow Institutions To Snag Bigger Share Of The Housing Market

Zinger Key Points
  • Yardi Matrix says institutions would hold 40% of all single-family homes in the U.S. by 2030.
  • In 2012, Invitation Houses spent $4 billion to purchase 24,000 single-family homes.
Fed-Forced Housing Crash Could Allow Institutions To Snag Bigger Share Of The Housing Market

It's reasonable to assume that institutional home ownership is a more recent trend. Its causes can be traced back to the surge of defaults that followed the subprime mortgage crisis in 2006–2008.

Despite being a recent trend, it is extremely popular. By the end of the decade, according to market intelligence firm Yardi Matrix, institutions will hold 40% of all single-family rental homes in the United States.
Also read: 'Housing Is the Canary In The Coal Mine' Hey Jerome Powell, Are You Listening?

Large-scale investors grabbed the chance presented by this wave and the ensuing increase in rental demand from displaced former homeowners in the years following the 2008 crash.

Investment firms started purchasing single-family houses that were in foreclosure in 2012 and 2013, many of them in large quantities directly from banks. Invitation Homes Inc INVH, at the time a division of Blackstone Inc BX, was leading the charge.

In 2012, Invitation Homes spent $4 billion to purchase 24,000 single-family homes, quickly rising to the top of the market for rental homes in the U.S.

The trend will likely intensify if there is a correction in the housing market as most institutions are cash-ready buyers.

Individual investors likely cannot purchase 24,000 single-family homes, but they can get in on the action with as little as $100 (or more, depending on your appetite), and buy shares of individual rental properties across the country. Here’s how you’d do that.

Since 2012, similar firms have followed suit, and Invitation Homes itself owns more than 80,000 homes, making it the largest landlord of single-family homes in the United States.

While today’s housing market is unlike the 2008 crisis, there are similarities as current housing prices are inflated, and mortgage rates are at 20-year highs due to the Fed’s rate hikes, causing some analysts to call for a 20% correction in home prices as early as next year.
To read about the latest developments in the industry, check out Benzinga's real estate home page.

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