Invitation Homes (83,000 single family homes, America's largest single family homeowner) stops buying homes

Founded in 2012 Invitation Homes does not won big rental complexes.
They own single-family homes and rent them out as landlords.
Year 1 they bought 12,000 homes and they have bought, on average 9,000 homes a year every year . . . until now.

They are (or rather, were) 0.1% of the market for single-family homes and they are buying no more. (In fact they actually sold 100 more homes than they bought last month, but that is just a wiggle in the course of regular business.)

Related:

Tejas Joshi, director of single-family residential at Yieldstreet, which owns over 700 single-family homes, recently told Fortune. “I don’t think [house] prices have bottomed yet… On average, we have another 5% decline nationally, and it’ll vary by market. Peak-to-trough, [we’re expecting] 12% to 15% [national] decline.”

Link 1

and

Starwood Real Estate Income Trust is looking to sell more than 2,000 single-family rentals, Bloomberg reported. People familiar with the matter told the outlet many of the homes being marketed were part of the 2,300-home portfolio Starwood snagged from Pretium Partners in 2021.

Link 2

I don’t know how many single-family homes Blackstone owns (a lot I imagine), anyway they own enough when they announced last Aug that they have stopped purchasing homes in 38 major markets it mage the news. (Link 3(

I frankly don’t understand how young people can begin to own homes with prices as they are.
And every home I’ve seen built in years is (relatively) huge; does anyone build 1200 SF houses anymore?
Even an old (50’s-70’s) 1200 SF home in my area is $500K.

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American homes 4 Rent is another big player in the Single Family home market
(That market is absolutely NOT dominated by big players. It is hard to find information like this)

They were also founded in 2012 and own 56,000+ homes.
They had been a net-buyer of homes of over 5,000 homes per year, and like Invitation Homes they have stopped buying and through attrition became a net-seller of 354 homes last quarter.

This is not some sort of massive portfolio dump.
This is not 2008, and I don’t think the housing market will get that bad this time, but demand is drying up.

For context:
Blue line below is Case-Shiller Home Price Index. It is a super-accurate, but 6-month delayed index of (resale) home prices.

Green line is CPI for rent. Unless something very unusual happens, logically the blue and green line should periodically meet.

The red line is real per capita GDP. One might expect that the blue and green lines would periodically meet the red line. The fact that it doesn’t, could mean many things such as

  • More people are divorced these days, and/or
  • Homes are larger these days, and/or
  • People use to spend more for gas and computer printers but less for homes.

Anyway. The slight uptick in Case shiller (blue) is real but I don’t expect it to last. Logically the blue and green lines should meet periodically.

tenor

You’d think with all of the illegals flooding the country, demand for rentals would be increasing.

This is a 1,000 sq ft townhome in a stable part of Harrisburg PA.
image

It costs $135,000 taxes are huge compared to price
At today’s interest rates (7.5%) The total monthly payments are about $1,400.

Two people making $15/hour each, and with almost zero debt, can qualify for the mortgage. (starting wages at local Walmarts and McDonalds is $13.85/hr so, $15/hr is probably what such an employee would make after a few years experience.)

There are a lot of homes just like these in Harrisburg. They were built just after WW2.

  • Affordable to a clean-living clean-credit married couple of retail clerks then.
  • Affordable to a clean-living clean-credit married couple of retail clerks now.

What’s different?

  • Then it was new. Now it is newly-renovated.
  • Then crime was lower and city schools were better.
  • Then clean-living clean-credit married retail clerks were normal, not rare.
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