“You May Want to Invest in Real Estate While You Still Can” was Yahoo!finance’s doubletake-inducing lead article last Friday—although would-be real estate investors weren’t immediately seen scrambling to closings in response. Local investors are a sophisticated bunch who tend to take high-pressure warnings with a grain of salt, anyway—and given the recent glut of dire prognostications on many fronts, Yahoo’s hint of an impending end for area real estate investment opportunities wasn’t likely to be taken very seriously.
Still…they did have a point.
There is renewed evidence that the incursion of large institutional players into the single-family and small multifamily realms is gaining steam. Their buying activity so far this year “makes it clear that there’s no plan of slowing down.” The extreme housing shortfall has upped the demand for rental units—even as institutional investors’ deep pockets position them better to deal with rising interest rates. One result of their growing influence over the rental market might give them “a greater ability to control rent prices”—and the value of their assets.
The idea that although real estate investors “still can” find properties for sale—but that the situation may not last long—may seem overblown, but less so after Yahoo points out the ‘earlier similars’ from other industries. Examples include how corporate farming has taken control of U.S. food production, while Walmart and Amazon (with its Whole Foods acquisition) have “practically obliterated smaller grocery stores.”
Some large companies have been announcing proportionately large plans. Swiss investment firm Partners Group recently acquired a portfolio of 3,500 U.S. homes—a billion-dollar deal. American Homes 4 Rent expects to build 2,400 new homes by year’s end. Invitation Homes Inc. plans to acquire nearly 2,000 newly constructed homes—and they already are the largest owner of single-family homes in the U.S.