Institutional investors owning 350 or more single-family rental homes have doubled their property listings since Feb. 1, following newly enacted US housing legislation that bans them from purchasing additional single-family rentals. As of this month, 9,447 homes representing $3.1 billion in total asking price are listed for sale, up from 4,166 properties on Feb. 1, according to Parcl Labs real estate data. The legislation targets investors controlling roughly 589,000 homes, or 3.9% of the 14 million single-family rental homes in the United States. The ban does not require forced sales of currently owned properties but prohibits future purchases unless qualifying for specific exceptions including build-to-rent developments. Lawmakers from both parties supported the measure, citing concerns that all-cash institutional purchases inflated home prices and disadvantaged individual owner-occupant buyers.
Investor Selling Activity Accelerates
The number of institutional investor-owned homes listed for sale has increased 127% in the period tracked by Parcl Labs. "The rate of for-sale change is something to keep an eye on," said Jason Lewris, co-founder at Parcl Labs. "These numbers won't materialize into actual dispositions for months given how long the sales cycle can be, but it's the fastest read into institutional behavior." The legislation defined institutional investors as those owning 350 or more homes, a threshold lower than the industry's traditional benchmark of 1,000 homes. Investors in this category account for roughly 40% of net selling year-to-date.
Largest Landlords Lead Disposition Wave
The seven largest single-family rental operators --- Progress Residential, Invitation Homes, AMH, Tricon, FirstKey, Amherst and VineBrook --- sold 3,180 more homes than they purchased since Jan. 1. These companies collectively own approximately 400,000 homes. VineBrook currently has nearly 10% of its portfolio on the market, with roughly 1,900 homes carrying a total asking price of $285 million. Invitation Homes and AMH, the two publicly traded single-family rental REITs, have 549 and 536 homes listed for sale, respectively. Progress Residential, the largest landlord in the sector, has 143 properties for sale.
Build-to-Rent Emerges as Strategic Alternative
Industry executives are redirecting capital toward investment categories permitted under the new legislation. "We can buy build-to-rent, which is a predominant component of new housing. We can buy under various other exceptions including rent-to-renovate, where we improve the housing stock or we buy under a homeownership boost, where we give people an opportunity to transition where they want from renters to owners," said Stephen Scherr, co-president of Pretium, in an interview on CNBC's "Squawk on the Street." Pretium is the parent company of Progress Residential. AMH began developing build-to-rent properties in 2017 and has constructed more than 14,000 homes for rent across 180 communities. Invitation Homes purchased Atlanta-based homebuilder ResiBuilt at the beginning of this year. "The financing case has materially changed with the forced disposition mandate removed. Lenders can underwrite [build-to-rent] again, and we're starting to see this happen," wrote Chris Nebenzahl, vice president of rental research at John Burns Research and Consulting.
Price Discounts Signal Market Adjustment
Institutional sellers are offering price reductions on listed properties at higher rates than the broader market. Nationally, 38.7% of all listings for sale carry price cuts, compared with 54% of properties in the institutional single-family rental cohort owning 350 or more homes, according to Parcl Labs. Since early May, markdowns have deepened from approximately 3.1% to 4% of asking value. "From what we can tell, given where U.S. home prices are, some of this is attributed to shifts in strategy --- collect high dollar values off of top U.S. home values by culling underperforming assets and redirect that capital towards growth areas, i.e. build-to-rent, for example," Lewris said in a statement.
FAQ
What did the new US housing legislation ban institutional investors from doing?
The newly enacted legislation prohibits institutional investors defined as those owning 350 or more homes from purchasing additional single-family rental properties. The ban does not force investors to sell homes they currently own but prevents future acquisitions unless they qualify for specific exceptions including build-to-rent developments, rent-to-renovate projects, and homeownership transition programs.
How many homes do institutional investors affected by the ban currently own?
Investors owning 350 or more homes control approximately 589,000 single-family rental properties, representing 3.9% of the 14 million single-family rental homes in the United States. The seven largest landlords in this category own roughly 400,000 homes combined and have sold 3,180 more properties than they purchased since Jan. 1.
