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What Happens When Wall Street Owns the Neighborhood? 

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Big residential property investors are switching gears from buying to building new neighborhoods as purchasing existing homes becomes increasingly challenging due to high interest rates and limited availability. 
Investor shift: Wall Street investors, traditionally involved in buying existing homes, are now focusing on constructing new neighborhoods. This shift is driven by the current economic climate where high interest rates and a record-high spike in home prices have made purchasing existing homes less feasible. Data from John Burns Research and Consulting indicates a decline in large investor purchases from 3% in 2022 to just 1% in the third quarter of 2023. 

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The new strategy: Despite owning 55% of U.S. apartment units, institutional investors are now eyeing single-family homes, attracted by stronger rent growth and longer tenant stays, especially for families with school-going children. 


Efficiency in new developments: The traditional model of acquiring scattered individual houses is becoming inefficient and expensive. The focus is shifting towards "build-to-rent" communities, which are more efficient in terms of management and maintenance. This approach also allows for the design of homes with durability and cost-effectiveness in mind, such as wide hallways and hard-wearing materials. 


The rise of BTR communities: "Build-to-rent" communities, though still a small fraction of the market, are expanding rapidly. The Urban Institute reports about 900 such neighborhoods nationwide, and the National Association of Home Builders estimates that around 10% of new housing construction is for these rental communities. As of June 2023, Phoenix, Dallas, and Atlanta rank as the top three markets for BTR properties under construction – and by a wide margin. 

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The new strategy: Despite owning 55% of U.S. apartment units, institutional investors are now eyeing single-family homes, attracted by stronger rent growth and longer tenant stays, especially for families with school-going children. 


Efficiency in new developments: The traditional model of acquiring scattered individual houses is becoming inefficient and expensive. The focus is shifting towards "build-to-rent" communities, which are more efficient in terms of management and maintenance. This approach also allows for the design of homes with durability and cost-effectiveness in mind, such as wide hallways and hard-wearing materials. 


The rise of BTR communities: "Build-to-rent" communities, though still a small fraction of the market, are expanding rapidly. The Urban Institute reports about 900 such neighborhoods nationwide, and the National Association of Home Builders estimates that around 10% of new housing construction is for these rental communities. As of June 2023, Phoenix, Dallas, and Atlanta rank as the top three markets for BTR properties under construction – and by a wide margin. 

READ MORE: https://newsletter.credaily.com/p/happens-wall-street-owns-neighborhood

REFERENCES : CRE Daily, January 4, 2024 -

[www.https://newsletter.credaily.com]

Disclaimer: The article content above is derived from CRE Daily  JAN 4, 2024 newsletter and is used here for informational purposes. [DSPrecapital.com] is an independent entity and not officially affiliated with Housingwire.

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