Wall Street Pours Billions Into Build-To-Rent Communities, Betting Big Against Home Ownership Amid High Prices and Interest Rates

Benzinga2024-12-16

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. High home prices and stubbornly steep mortgage interest rates have put homeownership out of reach ...

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Wall Street has seized upon this, funding large swathes of luxury single-family suburban homes with everything an owner could want except a large down payment, mortgage and a deed in their name.For generations, the norm in American towns and cities was that the best suburban communities, with the best schools, where affluent homeowners dominated, did not have many – if any – rental properties. That is now changing as millennials with decent jobs have found themselves priced out of homeownership in the neighborhoods where they want to live. Real estate investment trusts such as AvalonBay Communities have taken up the slack, building large master-planned rental communities that replicate towny suburban neighborhoods.According to a CBRE report from earlier in the year, the a","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4195":"互助储蓄与抵押信贷金融服务","BK4585":"ETF&股票定投概念","AVB":"阿湾物产","HBCP":"Home合众银行","BK4588":"碎股","BK4211":"区域性银行","BGSX":"Build Acquisition Corp","BK4215":"住宅房地产投资信托"},"translate_title":"华尔街向建租社区投入数十亿美元，在高房价和高利率的情况下大力反对住房所有权","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BGSX":1,"HBCP":1,"AVB":0.9},"content_text":"Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.\nHigh home prices and stubbornly steep mortgage interest rates have put homeownership out of reach for many Americans. Wall Street has seized upon this, funding large swathes of luxury single-family suburban homes with everything an owner could want except a large down payment, mortgage and a deed in their name. \nFor generations, the norm in American towns and cities was that the best suburban communities, with the best schools, where affluent homeowners dominated, did not have many – if any – rental properties. That is now changing as millennials with decent jobs have found themselves priced out of homeownership in the neighborhoods where they want to live. Real estate investment trusts such as AvalonBay Communities have taken up the slack, building large master-planned rental communities that replicate towny suburban neighborhoods. \nDon't Miss:\n\nThis Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100 for properties like the Byer House from Stranger Things.\nMaker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — you can become an investor for $0.80 per share today.\n\nAccording to the Wall Street Journal, AvalonBay purchased 126 build-to-rent townhomes in Bee Cave, Texas, for $49 million. The firm plans to invest over $1 billion in the build-to-rent sector.\nA Renter Nation Beckons\n\"We think we're really in the early stages of what could be a pretty significant, almost new asset class,\" AvalonBay Chief Investment Officer Matt Birenbaum told the Wall Street Journal.\nAvalonBay is part of a growing group of investors that includes Blackstone, Invitation Homes and Pretium Partners, who have realized that amid a housing crisis, renting is a far more affordable option for many would-be younger homeowners. The data backs them up: \nSee Also: During market downturns, investors are learning that unlike equities, these high-yield real estate notes that pay 7.5% – 9% are protected by resilient assets, buffering against losses.\nThe Renter Pool Outpaces Home Ownership\nFor the first time in over twenty years, the growth of the U.S. renter pool has outpaced that of homeowner households for the past four quarters, according to a Redfin analysis of U.S. census data. Additionally, the National Association of Realtors' analysis of U.S. Census Bureau data shows that from 2021 to 2023, the share of build-to-rent housing starts doubled to 10% of overall single-family housing. In the third quarter of 2024, new renter households increased at three times the rate of homeowner households.\nAccording to a CBRE report from earlier in the year, the average monthly mortgage payment for a new home is 38% more expensive than apartment rent. Although homeowners have the added advantage of building equity while they live in a home, much of the initial mortgage payment period goes toward interest. With an unstable job market, many Americans feel insecure about getting hitched to a long-term financial commitment.\nTrending: Unlock the hidden potential of commercial real estate — This platform allows individuals to invest in commercial real estate offering a 12% target yield with a bonus 1% return boost today!\nAll The Trappings Of An Upscale Suburban Community\nLand availability in the Sunbelt states has made them a favorite for developers and investors. There is space to create suburban neighborhoods with backyards, balconies, patios, a communal pool and a gym. An on-site maintenance team makes for a resort-like living experience. Security and cameras make tenants feel secure about leaving for trips. However, mass rental communities do come with a downside. In August, the DOJ sued rental management software company RealPage for its algorithmic pricing, which the government alleged monopolized the market and decreased competition, forcing prices up. However, the case has now been dropped as President-elect Trump is expected to de-emphasize antitrust enforcement.\nWith interest rates showing no marked decrease, investors and developers behind the build-to-rent communities feel they have an open floor with little competition.\n\"We are not competing with individuals trying to buy individual homes in the private market,\" Matt Birenbaum said.\nRead Next:\n\nArrived Home's Private Credit Fund’s has historically paid an annualized dividend yield of 8.1%*, which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. \nCommercial real estate has historically outperformed the stock market, and this platform allows individuals to invest in commercial real estate with as little as $5,000 offering a 12% target yield with a bonus 1% return boost today!\n\nThis article Wall Street Pours Billions Into Build-To-Rent Communities, Betting Big Against Home Ownership Amid High Prices and Interest Rates originally appeared on Benzinga.com\n© 2024 Benzinga.com. Benzinga does not provide investment advice. 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