Is Wall Street Your Landlord?

Is Wall Street Your Landlord?

Residential News » North America Residential News Edition | By Francys Vallecillo | March 7, 2014 8:48 AM ET

The share of homes purchased by institutional investors in the U.S. increased 44 percent from 2011 to 2013, according to a new report from RealtyTrac.

In 2011 investors purchased 219,000 properties nationwide, representing 5.13 percent of all home sales. That grew to 259,000 homes, or 5.82 percent of all sales in 2012, and 354,000, or 7.40 percent of all home sales in 2013. 

In the last three years institutional investors -- those who purchased at least 10 properties in a year -- accounted for 6.14 percent of all sales. 

However, the national number doesn't paint the whole picture since some markets are witnessing more than 20 percent of all home purchases made by institutional investors in the past three years, RealtyTrac reports. 

Years after the property market crash, investors are increasingly attracted to the own-to-rent business, with funds and REITs spending more than $20 billion to purchase as many as 200,000 homes.

Blackstone Group, the largest owner of single-family homes in the U.S., became the first to sell single-family rental securitization last fall. Blackstone also launched a buy-to-rent lending arm to expand the financing available to smaller landlords.  

The new report from RealtyTrac shows institutional investors have helped to accelerate home price gains in the markets they have concentrated. 

In the 1,264 counties evaluated, the median price of homes increased 14 percent in the two years ending December 2013. However, in the markets where institutional investors accounted for more than 20 percent of all sales, home prices grew 31 percent in the same time period. The report points out there are only 14 counties accounting for the high number of investors, representing only 1 percent of the U.S. population. 

In the counties where investor purchases represented 10 percent or more of home sales -- 88 counties, or 12 percent of the population -- home prices increased 23 percent from 2011 to 2013. 

The opposite is true when examining rents in the locations with high investors purchases, according to RealtyTrac. 

Rents for three-bedroom homes for all 1,264 counties increased an average of seven percent in the last two years. However, they only grew by six percent in counties with more than 20 percent of investors purchases, and only five percent in counties with 10 percent or more of investor home purchases.

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