Wall Street Landlords Flip To Selling Amid Housing Law

The 21st Century Road to Housing Act doesn’t force Wall Street landlords to sell the properties they already own, but that’s not stopping many from testing the market.

For-sale listings from institutional investors have more than doubled in the last six months, according to analysis by Parcl Labs reported by CNBC. At the start of February, there were more than 4,100 homes for sale by these companies, which has skyrocketed to more than 9,400 homes for sale.

Listings don’t always equate to sales, as Parcl co-founder Jason Lewris noted to the outlet.

“These numbers won’t materialize into actual dispositions for months given how long the sales cycle can be, but it’s the fastest read into institutional behavior,” said Lewris.

While the combined price tag of the available homes is a staggering $3.1 billion, it’s not a massive share of the properties they own. Institutional investors — which are companies owning 350 or more homes — still boast 589,000 properties, according to the analysis, or about 4 percent of the nation’s single-family housing stock.

Nevertheless, they account for 40 percent of net sales this year. Several of the top companies in the space are each net sellers this year, combining to sell nearly 3,200 homes since January. VineBrook is the most active among the cohorts, listing 10 percent of its portfolio for a cumulative asking price of $285 million.

Savvy buyers paying attention to the listings of institutional investors may be able to score a deal. Nearly 39 percent of all listings across the country have faced a price cut at one point, according to Parcl, but that’s true of 54 percent of the Wall Street landlord active listings.

The law that went into effect this month ostensibly bars institutional investors from buying single-family houses, though those landlords can still buy rental houses if they make significant renovations or give tenants a chance to buy the properties.

Institutions can also buy and sell homes to each other, or purchase properties developed exclusively for renting — a “built-to-rent” model that’s now the industry’s preferred path to growth; landlords’ movement to sell may reflect a desire to reallocate capital towards that sector.

— Holden Walter-Warner