Single-family landlords eager to profit from soaring rents in the U.S. have stepped up their purchases of houses.
Deals by investors — including a smaller portion of flippers — helped push up prices more than 20% on average, squeezing out normal buyers, according to an analysis by Mark Zandi, chief economist for Moody’s Analytics. Investors accounted for 26% of single-family purchases in the third quarter, up from 15% a year earlier, the study shows.
The cities with the biggest surges in investor buying — Atlanta; Jacksonville, Florida; Phoenix; Charlotte, North Carolina; and Las Vegas — have also had some of the biggest price gains, said Zandi, whose analysis included data from CoreLogic.
Investors from mom-and-pop landlords to Wall Street firms are rushing to buy houses that can command premium rents. They’re chasing the same affordable properties that first-time buyers dependent on mortgages are also competing for. And in a market starved of inventory, cash wins.
“Purchases by typical buyers have not risen appreciably,” Zandi said. “But it has risen a lot for investors. The biggest increase is for large investors.”
Deals by institutional investors tripled from a year earlier to 97,684 in the third quarter, according to Zandi. Traditional buyer purchases fell slightly to 1.14 million. A third of the investor purchases involved flippers, down from a half a year earlier.
If investors lose interest, the housing market in areas where they were most active would be vulnerable to price declines, Zandi said. Already,
“This is not a healthy market,” he said. “It feels like it is getting very stretched. Investors will buy until it no longer pencils out. Then what happens with prices?”
