17 July 2018

Great Demand for Home Rentals

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According to an analysis earlier this year on the single-family rental market by New York investment banking firm Keefe, Bruyette & Woods Inc., about half the nation's 14 million rental homes are owned by individuals who own just one rental property. Only about 2 million are owned by investors with 10 or more properties. However, the number of big real estate companies involved in renting single-family residences is growing.

Rochester, N.Y.-based real estate company Broadstone Real Estate — which traditionally has focused on commercial properties ranging from medical offices to retail space — is increasingly diving into the single-family home market. Earlier this month, it had purchased 127 single-family residences in the Atlanta area for roughly $10 million which more than doubled the portfolio of single-family homes it began amassing in late 2012 around Minneapolis, Palm Beach County, Fla., and the Rochester area.

Broadtree is looking at other portfolios of homes that had been previously snapped up by real estate companies now looking to sell. It offered well in excess of $1 billion worth of various portfolios as it looks to get more heavily into the market.

Plummeting home prices in recent years opened the door to the investment opportunity. Meanwhile, the armies of homeowners who saw their residences foreclosed still needed housing. According to U.S. Census Bureau data, the percent of Americans who own their own home was roughly 65% in the first quarter of this year, the lowest it's been since 1995.

The financial crisis meant more renters as people lost their homes, plus a glut of foreclosed homes that came onto the market. That, coupled with the fact of technology making it easier than ever to research homes for sale and to manage a portfolio of rental homes, opened the door to big investors looking at big portfolios of homes as an opportunity.

However, some worry those deep-pocket buyers are pricing individuals out of the housing market. In March, a group of 80 organizations — from Neighborhood Housing Services of Greater Cleveland to the Fair Housing Council of San Diego — wrote an array of federal regulatory agencies, asking for rules or guidance regarding the big investments going on in rental properties. They cited concerns ranging from displacement of homeowners to the creation of another housing bubble.

The pace of big firms buying houses has slowed in recent months as housing prices have climbed around the nation. Now those firms are more focused on consolidation and buying portfolios of homes from each other.

Click here to access the full article on USA Today. 

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