You might have heard that housing prices are hot. And it’s true, the market for single-family homes is the frothiest it’s been in 14 years.
The narrative has been straightforward — an exodus from cities and demand for backyard green space has caused prices to soar.
While that has played a role, foreign institutional investors are increasingly scooping up single-family homes and driving up prices for hopeful buyers.
Institutional capital has played a role in the housing market for years. In the wake of the financial crisis, firms like Blackstone scooped up foreclosed homes by the thousands (and made billions as housing prices eventually recovered).
But international investors have largely stuck to commercial properties (like office space or industrial facilities) or multifamily complexes — due to the ease of transacting at scale. That reality is changing:
- German insurer Allianz announced last month a venture to buy more than $4 billion of U.S. rentals.
- Singapore’s GIC, one of the largest sovereign wealth funds in the world, is backing a plan by Quinn Residences to buy single-family rental homes throughout the Southeast.
The Industrial Logic: Unlike office leases, home leases often reset every year. In an environment of rising inflation expectations, single-family homes afford more protection and are typically more closely tied to consumer prices than longer-dated leases.
Nothing but frustration for homebuyers.