Amid pandemic-induced demand for larger living spaces, Institutional investors are channeling money into single-family rentals and “inventing a new kind of suburban living that’s easier to afford, but where the financial benefits of homeownership go to Wall Street firms.” This according to a recent article in Bloomberg.
The article notes that Wall Street “won big” in the wake of the financial crisis of 2008-2009 by purchasing homes and renting them out. Now, the article reports, the backdrop of rising Covid cases has led firms like Blackstone, Brookfield Asset Management and JPMorgan Chase to make “fresh bets on the industry” as “publicly traded single-family landlords outperformed apartment owners, and social-distancing efforts make traditional commercial real estate, including hotels and retail properties, less appealing.”
But the path isn’t necessarily an easy one, the article says: “Competition for construction workers, building materials and land could hold back rental developers, while low mortgage rates are helping boost home prices, making it harder to buy properties to convert for tenants.” It cites data from John Burns Real Estate Consulting showing that mom-and-pop landlords still own most single-family rentals, with larger investors accounting for about 2% of all rental homes.
“Still,” the article concludes, “the industry has become a popular way for Wall Street to capitalize on the surging demand for housing, particularly as millennials look for more space and struggle to find homes they can afford to buy.”