Neil Shekhter 1 – Landlords Are Taking Over the Housing Market

neil shekhter 1
 March 1, 2017 Neil Shekhter

While once the United States was a country of homeowners, it is now slowly changing into a country of renters and landlords. In 2016, 37% of houses sold were acquired by buyers who didn’t live in them, according to a report published by Attom Data solutions and ClearCapital.com Inc.

Single-family housing investors aren’t new – following the financial meltdown, private equity and institutional investors acquired inexpensive houses. But while increasing home prices meant larger investors sowed their purchases, smaller investors have come in to buy, instead.

It’s not certain if an increase in rental landlords is a good thing. While these landlords are filling the demand for rentals, they might be also crowding out those who want to be homeowners, but who can’t compete, price-wise, with investors. Neil Shekhter

 

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As rising home prices, slow new home construction, and demographic shifts push homeownership rates to 50-year lows, the U.S. is increasingly a country of renters—and landlords.

Last year, 37 percent of homes sold were acquired by buyers who didn’t live in them, according to tax-assessment data compiled in a new report published by Attom Data Solutions and ClearCapital.com Inc.

That number may include second homes, or properties acquired by investors who seek to fix up old homes and resell them at a profit. But it’s also a strong indication that landlords are playing a larger role in the U.S. housing market.

In the years following the foreclosure crisis, Wall Street drove a rise in the share of homes purchased by landlords, as private equity firms bought thousands of cheap homes. In 2012, institutional investors accounted for 7.8 percent of home sales, according to the report.

Rising home prices led big investors to curtail their purchases, and the share of homes acquired by institutional investors fell to 2.9 percent last year. But as Wall Street backed off, smaller investors picked up the slack, aided by tools developed to help big investors find, finance, and manage rental properties.

Smaller investors—particularly those who have already paid off their mortgages on the homes they live in—see rental properties as an attractive way to save for retirement.

To some extent, they’re focusing their resources on cheaper markets, because the profit margins are better at lower price points, said Daren Blomquist, senior vice president at Attom Data Solutions.