Homebuilders in a tight spot with rising mortgage rates and fewer qualified home buyers wanting to buy in this market are selling inventory to home rental firms like $AMH and $INVH. Down here in the Keys, hedge funds have bought entire condos and jacked up rents 2x 3x and 4x since 2008. I got a feeling we’re going to see 5x soon.
The homeless shelter down here is expanding. My wife, a social worker, estimates at least 30% of the inhabitants of that shelter (she does not work there but is in contact with all non-profit agencies)work but still can’t afford a place in Key West or up on the next island, Stock Island. Waiting lists for Section 8 and other affordable housing mean years’ long waits.
Bloomberg headline: Landlords Ready War Chests to Buy in Cooling US Housing Market
Rental companies see potential discounts ahead from homebuilders as higher mortgage rates sideline regular buyers.
American Homes 4 Rent, the third-largest single-family landlord, is taking calls daily from a variety of potential sellers, including national builders, Chief Executive Officer David Singelyn said at an industry conference last week. He said builders are currently offering small concessions on deal terms even as they hold the line on price, but he expects that to change.
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Even before the recent slowdown, the largest US homebuilders have turned to landlords as a way to diversify their sales efforts. Last year, Lennar Corp. teamed up with Centerbridge Partners and Allianz Real Estate to build and acquire more than $4 billion worth of rentals. PulteGroup Inc., meanwhile, agreed to develop 7,500 houses for rental giant Invitation Homes Inc.