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.
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