Pretium Partners, one of the country’s largest rental property owners, will acquire Anchor Loans, a major underwriter of small loans to professional home flippers for $1.5 billion, The Wall Street Journal reported on Tuesday.
Maybe it is time to re-watch The Big Short.
Homes Is Where The Money Is
In the second quarter of 2021, investment firms accounted for roughly a quarter of homebuyers in major markets. Petrium, with roughly 70,000 single-family rental homes and about $30 billion in assets under management, is a major player in the trend.
Unconcerned about conforming to stereotypes, Petrium now seems to have the same ambitions as countless successful, HGTV-loving Americans: buying and flipping homes. Enter Anchor Loans, which specializes in short-term loans with high-interest rates — perfect for professional home-flippers and rental landlords.
The acquisition gives Petrium a revenue stream in the rapidly growing industry:
- According to Attom Data Solutions, about 80,000 homes in Q2 were sold less than one year or less after purchase, good for the highest flip rates since (you guessed it) 2006.
- According to Petrium, roughly 64 million existing homes built before 1990 require updates to remain sound long-term investments — making 64 million homes prime candidates for a flip.
While the market may be right for investors to sweep in, the same may not be true for traditional homebuyers. According to the National Association of Realtors, home sale prices jumped nearly 24% in the second quarter of 2021, and the rate of first-time buyers fell to a multi-year low.
Virtual Realty: One firm has flopped in the home-flipping game. Zillow announced Tuesday plans to shutter its algorithm-fueled home-flipping division, Zillow Offers. But first, the house-browsing site is trying to unload roughly 7,000 excess homes, valued at $2.8 billion. The company is so desperate, it’s willing to sell at a loss. But don’t get too excited, wannabe homebuyers: It’s looking to sell in bulk to investment firms.