Bifurcated home price correction: Some markets have fallen sharply, others have barely moved.
February 6, 2023
Long-term housing trends remain strong. Looking back at historical price increases, COVID was a pull forward in pricing for coastal markets with a subsequent correction over the last year. Despite this, regional markets with strong fundamentals have held up well and are back to their long-term positive trends.
Wall Street has $110B for homebuying spree. Blackstone, KKR among firms gearing up to purchase single-family rentals
December 23, 2022
Institutional real-estate investors have earmarked as much as $110 billion to purchase or build single-family-rental homes in the coming years, according to an estimate by Zelman & Associates, a real-estate-research and investment-banking firm. The sum is the largest ever amassed by investors to acquire American houses — enough to add almost 400,000 homes to the already expansive inventory of roughly 700,000 single-family properties now controlled by corporate landlords.
The investors eyeing homes include public companies that focus specifically on single-family-rental investments, such as Invitation Homes and Tricon Residential; major alternative-asset firms like Blackstone and KKR; and a growing number of wealth managers, insurance companies, and pension funds, including CalPERS, Invesco, and Pacific Life.
Institutional investors now own about 3% of the roughly 20 million single-family-rental homes in the US, according to Roofstock, an online marketplace for single-family investment properties. By 2030, MetLife Investment Management predicts that share will grow to 40%, or about 7.6 million homes. That would be nearly 9% of the roughly 88 million single-family homes in the US, according to the Census Bureau's most recent statistics from 2020.
The pending investment is the next chapter in the remarkable rise of single-family rentals, or SFRs, as a major asset class among institutional investors, according to people who track the industry. Large buyers are mostly on the sidelines for now, but their quest for market share is set to resume as home prices drop and interest rates stabilize. If they achieve their ambitions, they'll radically reshape housing in America.
"It's the biggest mountain of capital we've ever seen to acquire homes," said Rick Palacios Jr., the director of research at John Burns Real Estate Consulting, a housing analysis and data firm that tracks SFR investment.
Millennials shut out of the housing market, again
November 30, 2022
Millennials have always lagged behind other generations in homeownership. Despite the increase in ownership prior to and during COVID in 20019 and 2021, now higher prices, decreasing inventory and higher mortgage rates have shut out the next generation.
Millennials started their careers in the shadow of the Great Recession, when highly paid work was hard to find. Lower earnings, high student debts and reduced wealth have followed them ever since.
There is little respite in sight for those hoping to buy their first home. The housing market is cooling, but mortgage rates are expected to remain high as the Federal Reserve raises borrowing costs to combat inflation. And the high costs of rent, food and other necessities make it more difficult to save for a first-time down payment.
As Mortgage Rates Rise, More People Choose to Rent Single-Family Homes
November 27, 2022
Increasingly, U.S. consumers faced with inflation and the high price of homes are pressing the pause button on home buying.
The rate on an average 30-year fixed mortgage is now 6.61%, more than double what it was in October 2021, according to housing-finance agency Freddie Mac. As a result, single-family home rentals, or SFRs, are now a hot area in the real-estate market.
“We are in the midst of a housing-affordability crisis and people are suffering from sticker shock,” says Gary Berman, CEO of Tricon Residential, a major developer, builder, and operator of single-family homes for rent across the U.S. and Canada.
Real Estate 3.0 – The Ownership Revolution
September 30, 2022
Major Real Estate Revolutions
Real Estate 1.0 = Information Revolution
Real Estate 2.0 = Transaction Revolution
Real Estate 3.0 = Ownership Revolution
Real Estate 3.0 driven by lack of access and affordability in home ownership. Evolution of single family rental models moving to hybrid models led by the likes of Divvy, Landis, Pathway, Hawkhill who are leading the charge; and addressing a critical need for new innovative solutions for the next generation of millennial and gen z owners.
Our nation has a housing crisis.
August 15, 2022
by Marc Andreessen
The demographic trends driving America’s housing market are impossible to ignore:
Our country is creating households faster than we’re building houses. Structural shortages in available homes for sale push housing prices higher, while young people are staying single for longer and increasingly concentrating in highly desirable urban centers.
These factors put enormous pressure on rents in the nation’s most dynamic cities, starkly revealing the troubling realities of both sides of the housing market’s two historical models.
Now drop the impact of the post-COVID world into this. Many people will live in places far away from where they work and many more will shift to a hybrid environment.
At the same time, in the last two years, we have seen a shift in life priorities.
Many people are voting with their feet and moving away from traditional economic hub cities to different cities, towns, or rural areas with no diminishment of economic opportunity.
The residential real estate world needs to address these changing dynamics.
And yet virtually no aspect of the modern housing market is ready for these changes.
Millennials and Gen Zers do want to buy homes—they just can’t afford it, even as adults
June 12, 2022
Most members of the Gen Z and millennial generations – U.S. adults between the ages of 18-25 and 26-41, respectively – do want to own a home someday, or even right now. Their biggest roadblock is affordability, respondents said in a March Bankrate survey conducted by research firm YouGov.
The findings: Nearly three-quarters (74%) of American adults still view homeownership as a top hallmark of achieving the so-called American Dream, beating out the ability to retire (66%), a successful career (60%) and having children (40%). Only 35% of respondents named obtaining a college degree as a key sign of economic success.
Specifically among millennials, 65% identified homeownership as a top sign of success. That number fell to 59% for Gen Zers — still a large figure, and neck-and-neck with that generation’s top choice of having a successful career (60%).
First-Time Home Buyers Are Simply Walking Away: ‘We’ve Been Backed Into a Corner’
April 1, 2022
National Association of Realtors senior economist Nadia Evangelou estimates that 1.9 million first-time home buyers will be shut out of the market this year.
A historic run-up in home prices, a recent surge in mortgage rates, and a stubbornly low inventory of available homes are pushing this slice of the American dream out of the grasp of an increasing number of buyers, with more likely to join in the coming months.
The challenges facing home hunters without cash reserves, such as younger buyers and historically disadvantaged groups of people, are particularly daunting.
These would-be buyers are stuck with a difficult choice: compete in a hot and increasingly expensive housing market or opt for a rental, the cost of which has similarly jumped by double digits, year over year.
That choice has economic implications that go beyond where to live.
“It’s likely that these issues around wealth and home equity disparities are going to be exacerbated as more folks are locked out of homeownership,” says Raheem Hanifa, a research analyst at Harvard’s Joint Center for Housing Studies.