This is an interesting article. I had no idea.
According to a new report by RealtyTrac, if you rent a single-family home in the U.S., the probability is pretty good that Wall Street is your landlord now.
Residential News » Atlanta Edition | By Michael Gerrity | January 8, 2015 – See more at: http://www.worldpropertyjournal.com/real-estate-news/united-states/atlanta-real-estate-news/wall-street-renter-homes
RealtyTrac analyzed nearly 9.6 million sales of single family homes from January 2012 to October 2014, and found that nearly 500,000 of those homes sold to institutional investors backed by Wall Street.
This analysis is a follow-up to an analysis RealtyTrac released last month titled “Where Wall Street is Most Likely to Cash Out of the Single Family Rental Market” that looked at the estimated equity gained by some of the big Wall Street and private equity firms who have purchased tens of thousands of single family homes as rentals over the past three years.
RealtyTrac first looked at all institutional investors — which they defines as any entity that purchases more than 10 properties in a calendar year. The total number of single family homes purchased by all institutional investors from January 2012 through October 2014 was 460,840, 4.92 percent of all single family sales during that time period but 0.63 percent of all single family homes in those counties.
The following heat map shows the percentage of single family homes sold to these institutional investors in each of the 1,804 counties where they purchased properties nationwide in each year from 2012 to 2013.
Counties with most institutional investor purchases
Counties with the most institutional investor purchases during this time period were Maricopa County, Ariz., in the Phoenix metro area (19,133), Harris County, Texas in the Houston metro area (14,990), Mecklenburg County, N.C., in the Charlotte metro area (8,852), Tarrant County, Texas, in the Dallas metro area (8,387), Wayne County, Mich., in the Detroit metro area (8,153), and Clark County, Nev., in the Las Vegas metro area (7,991).
“The institutional investors kick-started the housing recovery by buying homes in bulk at the lowest point and holding them as rentals,” said Chris Pollinger, senior vice president of sales at First Team Real Estate, covering the Southern California market. Los Angeles County was among the top 10 for most purchases by institutional investors over the past three years, with 6,152. “As the market continues to climb, we expect these investors to start to sell off their inventory to capture the gains made in the past couple of years.”
Counties with highest percentage of institutional investor purchases
Counties with a population of at least 100,000 and the highest percentage of all single family homes in the county that were purchased by institutional investors between 2012 and 2014 included counties in Atlanta, Charlotte, Shreveport, La., Memphis, Oklahoma City, Dallas, Boise, Macon, Ga., Kansas City, Jacksonville, Fla., Flint, Mich., Houston, Phoenix, Indianapolis and Omaha.
Counties with most purchases by the four largest institutional investors
Secondly, we looked at purchases just by entities associated with the four largest institutional investors: Invitation Homes (owned by Blackstone), American Homes 4 Rent, Colony American Homes and Fundamental REO.
The total number of single family homes purchased by the top four institutional investors from January 2012 through October 2014 was 45,747, 0.14 percent of all single family homes in the 234 counties where the top four buyers purchased homes during that same time period.
Counties with the most purchases by the top four institutional investors were Maricopa County, Ariz., (4,851), Mecklenburg County, N.C., (2,548), Harris County, Texas (1,694), Cook County, Ill. (1,598), Gwinnett County, Ga. (1,496), Pierce County, Wash., (1,227), Clark County, Nev., (1,054), Wake County, N.C. (1,012), Hillsborough County, Fla., (982), and Tarrant County, Texas (980).
Counties with highest share of purchases by four largest institutional investors
The top 25 counties with a population of at least 100,000 and the highest percentage of purchases by the four largest institutional investors included counties in Atlanta, Charlotte, Seattle, Chicago, Nashville, Winston-Salem, N.C., Phoenix, Lakeland, Fla., Tampa, Sarasota, Cincinnati, Raleigh, N.C. and Charleston, S.C.
“The moon, sun and stars all aligned for large institutional investors to buy South Florida properties the past few years. Our limited land — squeezed between the everglades and ocean — growing population enticed by a no state income tax, strengthening economy and bargain priced properties that had dropped 50 percent in value, made it a compelling bet that is paying off handsomely for these bold buyers,” said Mike Pappas, CEO and president of the Keyes Company, covering the South Florida market. “The institutional investors positively impacted our market as they gobbled up much of our distressed inventory. With the expanding economy and size of our market their eventual exit will be handled and absorbed reasonably well.”
The average estimated 2014 median household income in these 25 counties was $56,153 compared to national average of $54,948 among all 589 counties with a population of 100,000 or more and sufficient income data.
The average fair market rent for a three-bedroom property in these 25 counties was $1,192 in 2014 compared to average $1,203 among all 557 counties nationwide with a population over 100,000 and sufficient rental data.
The average median sales price in October 2014 for these 25 counties was $149,168 compared to $193,380 among all 519 counties nationwide with a population over 100,000 and sufficient home price data.
Zip codes with highest share of purchases by four largest institutional investors
Among the 2,490 zip codes nationwide with at least one single family purchase by the top four institutional investors between January 2012 and October 2014, the top 50 zip codes with the highest percentage of purchases by the four largest institutional investors were in Seattle, Charlotte, Phoenix, Atlanta, Tampa, Cincinnati, Raleigh, N.C., Houston, Denver, Columbus, Ohio, Sarasota-Bradenton, Fla., Raleigh, N.C., Chicago, and Winston-Salem, N.C.
“Whilst in the short term this might seem good for the health of the housing market and current home owners enjoying their equity grow, in the long run it will impact the neighborhoods where there are a higher number of rental properties,” said Andre Mazur, broker at RE/MAX Alliance, covering the Denver market. “Because of the transient nature of rental property, this might lead to communities that don’t connect and flourish as well as at the expense of corporate American making even more money. The practice of large investment companies buying up real estate is at the expense of the American Dream to own your own home.”
“Our members represent the largest institutional owners of single family rental homes in the U.S. and their goal is, and has always been, to build a long-term, sustainable industry that professionalizes the traditionally fragmented single family market much the same way the multi-family market was transformed over 30 years ago,” said Matthew Beck, spokesman for the National Rental Home Council. “Our members provide high-quality housing alternatives to families who may not want or be able to purchase a home. Our residents are good neighbors and upstanding members of the community, helping to build stable neighborhoods. Recent studies have shown a growing percentage of renters are families who typically stay in their homes for an average of five years, and we’ve heard from residents that they’re active participants in their communities, sending their children to local schools, getting involved with their HOAs, coaching little league and volunteering with local civic organizations and projects among other engagements.”
The average estimated 2014 median household income for these 50 zip codes was $55,882 while the average fair market rent for a three-bedroom in 2014 in these 50 zip codes was $1,344. – See more at: http://www.worldpropertyjournal.com/real-estate-news/united-states/atlanta-real-estate-news/wall-street-renter-homes