According to MetLife Investment Management, institutional investors could control 40% of US single-family homes by 2030. And a group of lawmakers in Washington, DC, say Wall Street needs to pull out of the market.
“What we’re saying is that private equity isn’t buying single-family homes,” said Rep. Ro Khanna, a Democrat representing California’s 17th congressional district. Khanna is the lead author of the Stop Wall Street Landlords Act of 2022. “What’s outrageous is that your tax dollars are helping Wall Street buy up single-family homes,” he said in an interview with CNBC.
The single-family rental industry started with government support in the aftermath of the 2008 financial crisis. “It was this rare opportunity that prompted institutions to build a portfolio of these foreclosed properties,” said Steven Xiao, an assistant professor of finance and business administration at the university of Texas at Dallas.
Since the early 2010s, Tricon Residential, Progress Residential, American Homes 4 Rent, and Invitation Homes have each purchased thousands of homes. In some cases they have also expanded the housing offer with rental apartments.
Some of these companies are funded by private equity firms like Blackstone and investment managers like Pretium Partners.
“It’s almost a locked market,” said Jordan Ash, director of work, jobs and housing at the Private Equity Stakeholder Project. “They have made it very clear how people will be locked out of the home buying market and become permanent tenants.”
The calls come after savage housing inflation hit many sunbelt states, including Texas, Florida and Georgia, according to the National Association of Realtors.
According to a study compiled by Zumper for CNBC, prices in some Sun Belt markets have exceeded national rental inflation rates. Between January 2020 and January 2023, rents for a two-bedroom single-family home increased about 44% in Tampa, Florida, 43% in Phoenix, and 35% near Atlanta. This compares to a nationwide increase of 24%.
Industry advocates argue that they do not control enough market share to dictate prices in any market. Large institutions owned around 5% of the nation’s 14 million single-family homes as of early 2022, according to analysts.
According to MetLife Investment Management’s 2022 forecast, by 2030 institutions could own around 7.6 million homes, or more than 40% of all single-family homes on the market.
In the near term, however, some companies may exit the real estate market as correction concerns mount. “You’re going to see some of us get sold,” Blackstone’s chief operating officer Jon Gray said in a December 2022 interview with CNBC.
Watch them Video above to learn more about the rise and future of corporate landowners in the United States.