Investors Slowing Down on Buying Spree

March 20, 2014

Big institutional investors are getting away from buying single-family rental homes in bulk and are narrowing their focus to only a few markets for future purchases, CoStar Group reports.

The Blackstone Group, the largest institutional investor in the single-family rental market, announced that its acquisition pace has decreased 70 percent from its peak last year. Blackstone also said that it would be narrowing its future purchases to markets such as Seattle, Atlanta, Miami, Orlando, and Tampa, Fla. Blackstone’s portfolio includes 43,000 homes in 14 cities.

National home-price rises the past year are the main reason for the slowdown in buying, many institutional investors say. Investors are being more choosy about where they continue to buy.

"The housing recovery has been uneven across the nation, and we are no longer able to buy in some of our Western markets, although we remain excited about many others, where we can still acquire homes at a discount to replacement cost and attractive rental yields," says David Miller, president and CEO of Silver Bay Realty Trust, the first company to convert to single-family REIT. "Florida, for example, leads the nation with the highest foreclosure inventory, which should provide a continuing supply of distressed inventory in 2014."

Silver Bay, which owns 5,642 single-family properties, says it is narrowing its future purchases to markets in Texas and Atlanta, too.

American Residential Properties Inc., which has 6,073 single-family homes in its portfolio, says it would like to add at least 1,000 homes to its portfolio from four markets: Houston, Dallas, Atlanta, and Phoenix. 

Source: “New Year Brings New Strategies for Single-Family Rental Giants,” CoStar Group (March 19, 2014)

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