Wall Street investors bet on single-family rentals as mortgage payments stack up

More than 1 million homeowners have stopped making debt payments

National /
Sep.September 18, 2020 09:00 AM
Wall Street investors are prepared to buy and turn single-family homes into rentals when forbearance programs expire and homeowners look to sell. (iStock)
Wall Street investors are prepared to buy and turn single-family homes into rentals when forbearance programs expire and homeowners look to sell. (iStock)

Wall Street landlords, which emerged during the 2008 downturn, are prepared for windfall as homeowners skip mortgage payments.

Firms including Brookfield Asset Management, Blackstone Group and J.P. Morgan Asset Management have each invested hundreds of millions in single-family rental companies, the Wall Street Journal reported. As the expiration date of the federal forbearance programs draws near, many Americans may look to sell their homes in order to make ends meet.

Shares in the two largest single-family rental companies, Invitation Homes Inc. and American Homes 4 Rent, have beaten the S&P 500, rising 79 and 59 percent, respectively, since the stock market bottomed out on March 23.

Americans have accumulated $10 trillion in home equity, but their ability to continue mortgage payments is unclear. While 3.5 million home loans — 7 percent of the overall market — are in forbearance, according to the Mortgage Bankers Association, more than 1 million have stopped making payments without entering into a deferral program.

Single-family rentals emerged as an asset class in the last recession, but some firms hope to offer options to homeowners which would let them remain in their home after selling it. EasyKnock, a New York-based firm, has bought $187 million in homes to perform sale-leasebacks, a common transaction in commercial real estate, where the homeowner sells to investors and leases the asset from the buyer. [WSJ] — Georgia Kromrei


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