Another pressure in the market is driven by the sales market.
Dan Gutfreund, estate agent at Signature Sotheby’s, also in Birmingham, said the adage “buy low, sell high” is at work in some areas of the luxury rental market.
As low home inventories drive up prices across the spectrum, high-end home sellers leveraging their edge need a place to live. But they may not want to enter the sales market and choose to rent until prices cool down, Gutfreund said.
“You have all these high-end sellers who are now becoming buyers, but they can’t find anything,” Gutfreund said. “They have to bridge the gap with a rental and what they are used to would be a high-end rental.”
The majority of owners are small investors. According to data from the National Rental Housing Council, a trade association, nearly 60% of owners of single-family rental homes own only one or two properties, and about 20% own only three to five.
“I have clients in Mobile, Alabama, and a client as far away as Australia who has a house in Birmingham that I manage,” said Gutfreund. “As little as two and nothing more than six or seven. It’s more manageable for them.
Nonetheless, the rental housing market has changed dramatically since the Great Recession, when the federal government allowed large corporations to buy foreclosed single-family homes from Fannie Mae and Freddie Mac, creating a new category of single-family homeowners: institutional investors. . (The National Rental Housing Council, which started in 2014, says the industry has grown 30% since 2007.)
Beyond that, Redfin, a Seattle-based online housing company, said in a May report that institutional investors had spent a record $ 77 billion on single-family homes in the previous six months, a record. Among the home buyers were Invitation Homes and American Homes 4 Rent, according to The Real Deal.
The report notes that in the first quarter of this year, 16.2% of homes in the Detroit market were bought by investors, an increase of 33.8% year-on-year.
It was the second largest gain nationally, behind San Jose, Calif. (44% year-over-year increase) and above Chicago (27.2% increase year over year), Riverside, Calif. (24.5% year-over-year increase). per year), Oakland, California (24.4% year-over-year increase) and Seattle (23.3% year-over-year increase).