Rental-Home Gambit

Investors wager that high prices, higher mortgage rates and skimpy inventory are making homeownership harder for individuals and families

Wall Street is betting that more well-off Americans will want to be renters.

Financiers who loaded up on homes after the housing bust for pennies on the dollar are buying yet more—despite home prices in many markets being at all-time highs.

Their wager: High prices, higher mortgage rates and skimpy inventory are making homeownership harder. Well-to-do families who might have bought a single-family home in another era are willing to rent a house now, especially if it means access to a good school system.

The number of homes purchased by major investors in 2017 was at least 29,000, up 60% from the previous year, estimates Amherst Capital Management LLC, a real-estate investment firm with an affiliated business that made nearly 5,000 of those purchases.

That marked the first time since 2013—when investors like Blackstone Group LP’s Stephen Schwarzman and Barry Sternlicht of Starwood Capital Group gobbled up foreclosed homes—that investors bought more houses year-over-year. Single-family homes have become far more attractive to investors than apartments, where a nationwide glut has driven down rental yields.

This year, investors have raised billions of dollars from bond buyers, pension funds and even wealthy Chinese individuals to purchase more homes. They have been particularly aggressive buyers in places like Atlanta, Phoenix, and other metro areas with good schools and faster-growing economies.

More here…