Builders reportedly are warming up to deeply funded investors who buy and rent homes—lots of them all at once. As builders grow concerned about the market turning due to higher costs, they are reportedly exploring more opportunities to welcome investors who like to buy in bulk.
Investors are showing plenty of interest, too.
Large investors have increased their cash flow to devote to housing. They have accumulated about $89 billion in capital to spend on building or buying new rental homes. To date, they’ve used about a quarter of that amount, according to Zelman & Associates, a real estate research and advisory firm, as reported by The Wall Street Journal.
Investors can close on a large number of homes n a single transaction For homebuilders, that means selling in bulk can help them turn a profit on new homes more quickly.
While the majority of homes built are sold to individuals and families, builders are growing concerned that the rising costs could lead to a pullback in demand.
As such, selling to rental investors could become more attractive to builders, especially those who otherwise sell to entry-level buyers and who may be at the most risk of becoming priced out of the market, Robert Dietz, chief economist at the National Association of Home Builders, told The Wall Street Journal.
“Those potential buyers still want more space,” Dietz told WSJ. “And so single-family rental is likely to continue to show some strength.”
Investors remain bullish on single-family rental growth. An all-new home may be even more enticing to renters.
In the fourth quarter of last year, more than one in every four houses purchased by a professional rental investor was a new-construction house, according to John Burns Real Estate Consulting LLC and the National Rental Home Council.