Wall Street’s Big Landlords Are So Hungry for Houses They’re Building Them
Companies that once gobbled up foreclosed suburban homes are now acquiring new ones for the rental market
Millennials aren’t the only ones having a hard time finding houses to buy. So is Wall Street.
A shortage of houses in the entry-level price range where first-time buyers and big rental-home companies both shop is prompting some institutional landlords to start building new ones themselves.
These companies are racing to meet demand for rental homes from a wave of young families too saddled with student debt to buy, as well as from investors wagering that the suburban renter class that swelled after last decade’s housing crash is here to stay.
Acquiring newly constructed homes represents a sharp turn for institutional landlords such as American Homes 4 Rent and Tricon American Homes. Those companies and others like them emerged as bargain hunters at the depths of the housing crisis, when they gobbled up foreclosed homes by the thousands for far less than it would cost to build new ones.
The idea then was to accumulate enough homes in specific cities to make maintenance efficient and rent them to families who wanted to maintain suburban lifestyles and keep their children in good schools, but who couldn’t buy because of beaten-down credit and meager savings.
Surging property values since the recession have made bargains on houses harder to find. Yet those higher home prices have also improved the outlook for the rental business by making homeownership more difficult for millions of millennials.