What Happens When Wall Street Owns the Neighborhood?
.png)
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.
.png)
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.
.png)
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.