SFR institutional investors’ homebuying freeze set to thaw

Institutional investors, such as American Homes 4 Rent (AMH) and Invitation Homes, reported net sales in the first half of 2023, but good fundamentals in the SFR market mean that’s unlikely to turn into a full exit.

In Q1 2023, AMH sold 666 single-family homes and bought just 312. In Q2, Invitation Homes also sold off more single-family homes (378) than it bought (276).

On a wider scale, ATTOM Data reports that institutional investors bought just one out of every 19 single-family homes and condos (5.4%) in Q1 2023. In comparison, the purchasing rate was 6.6% in Q4 2022 and 6.1% in Q1 2022.

This buying freeze can be attributed to rising operational costs. House prices, mortgage rates, property taxes, and insurance costs are all near record highs, which isn’t ideal for maximizing rental returns.

However, single-family rentals are still a popular investment choice for institutional investors, and AMH CEO David Singelyn explains why: "The single-family rental sector remains on solid footing with durable and consistent fundamentals driven by the growing demand for single-family rentals, ongoing national housing shortage, and challenging home affordability dynamics.”

Because of this optimism, Invitation Homes is adding nearly 1,900 homes into their portfolio, with these acquisitions expected to reflect in their third-quarter results.

Additionally, in mid-July, SimplyHome, a major SFR developer, secured a $255 million credit facility with JLL Capital Markets to build and buy single-family rentals across Texas.

More institutional investor headlines

American Homes 4 Rent, Invitation Homes strike separate expansion deals – GlobeSt

Wall Street landlords are selling homes back to Main Street – Insider

Build-to-rent housing on the rise across the country – PayProp