Wall Street Giants Face Home Buying Challenges

February 23, 2024

Major Wall Street rental firms, including American Homes 4 Rent (AMH) and Invitation Homes (INVH), are struggling to increase their rental portfolios due to high financing costs and tough competition. Soaring home prices are pushing affordability boundaries for these companies. However, market analysts see a prime opportunity for substantial investments in single-family rentals. The current combination of high home prices, rising mortgage rates, and limited housing inventory is fueling demand for rental homes, especially in suburbs where renting is more economical than owning. Wall Street expects companies like AMH and INVH to excel if they manage to expand their rental properties.

 

Bottom Line: Despite facing high costs and stiff competition, Wall Street rental giants are positioned for potential success in the single-family rental market, contingent on their ability to enlarge their property holdings.

 

Neal's take

This was inevitable. Wall Street doesn’t add value, they are predatory and there are just no cheap homes around. Due to the mortgage lock in effect, home prices are unlikely to come down. While Wall Street may expect these companies to excel, they put in a huge IF.

IF they enlarge their holdings – well, how are they going to do that? By building new inventory. I have already seen Amherst (mentioned in the article) partner with BTR developers. Other Wall Street players are going to follow suit. At this point, building units is the only reasonable option for these companies to keep growing.