Institutional Investors Buying 10 Percent of all iBuyer Homes in U.S.
According to ATTOM Data Solutions, nearly one in 10 U.S. homes sold so far in 2018 by the nation's two leading iBuyers -- Opendoor and Offerpad -- were purchased by institutional investor entities buying at least 10 homes.
According to the analysis, a total of 743 homes sold by the two iBuyers -- companies that buy directly from homeowners via all-cash offers -- were purchased by institutional investors so far in 2018, representing 9.6 percent of all sales by those two iBuyers combined. That is up from 293 institutional investor purchases representing 6.6 percent of the iBuyer sales in 2017, and 65 institutional investor purchases representing 3.9 percent of the iBuyer sales in 2016.
"Tight inventory is a common challenge facing both individual and institutional single family rental investors across the country," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "Meanwhile the appetite for more SFR inventory continues to grow as a new wave of institutional capital builds. Industry innovators are rising to meet this challenge through a variety of inventory-inducing channels, including off-market, build-to-rent, and iBuyer initiatives."
Top Three Buying Entities
The top three institutional buying entities -- CERBERUS SFR HOLDINGS LP, CSH PROPERTY ONE LLC, and TAH HOLDING LP -- all appear to be related to companies purchasing single family homes as rentals.
These institutional investors may be turning to iBuyers as a source of inventory even as other sources of inventory such as foreclosures have largely dried up in recent years. Institutional investor purchases represented just 2.3 percent of all U.S. home sales so far in 2018, down from 2.9 percent in 2017 and down from a peak of 7.4 percent in 2012, according to the ATTOM analysis.
"There are a lot of buyers, both big and small, looking to grow their SFR portfolios and inventory is very tight. This is leading to creative ways to find new product -- from build-to-rent programs, off-market inventory programs and iBuyer initiatives," said Kevin Ortner, CEO with Renters Warehouse, a company that manages more than 22,000 SFR properties in 42 states. "There are several firms positioning themselves to be able to help bring supply to meet the demands of investors, and I expect that will continue to grow. I'm also seeing investment in technology and data across the space allowing greater scale, efficiencies and insights."
"A properly priced rental home today, there is almost limitless demand for it," said Gary Beasley, CEO and co-founder with Roofstock, an online marketplace for SFR properties that itself is working on ways to create SFR inventory for both retail buyers and institutional buyers. "We have to get creative about how to attract this inventory, and if it isn't available to create it."