High Interest Rates & Home Shortage Impacting Rental Investors

New York, NY, September 20, 2023-"It isn’t just regular Americans who are having trouble buying houses these days,” reports the Wall Street Journal. 

“High borrowing costs and the shortage of properties for sale have slowed home buying by Wall Street’s rental giants as well, limiting their ability to grow at the same time suburban rents are climbing.

“The big landlords’ computers are still poring over listings, scanning for houses they can buy and turn into rentals. But financing has become expensive even for them, and competition is fierce from people willing to pay up for the few homes hitting the market. Prices have pushed past what big landlords can pay and still meet profit targets.

“There has rarely been a better time to own tens of thousands of single-family rentals. Record home prices, the highest mortgage rates in a generation and limited properties for sale are pushing homeownership beyond the reach of many Americans and leave plenty of room for rents to rise and still be cheaper than owning, analysts say.

“‘We write hundreds of offers every week at price points that we’d be willing to transact at,’ Invitation Chief Executive Dallas Tanner told investors this summer. ‘We’re striking out quite a bit.’

“Landlords with 1,000 properties or more accounted for 0.4% of U.S. home purchases during the second quarter, down from a peak of 2.4% in late 2021, according to John Burns Research & Consulting. 

“Suburban America’s mega-landlords have seldom accounted for such a small share of the market since they emerged after the 2008 housing crash. Property moguls, private-equity firms and other big investors started out scooping up foreclosed homes on the courthouse steps, and when those ran out they took to the open market to buy more.”