According to reports, as of February 2022 there were nearly 800,000 single-family homes under construction in the United States. This represents a 28% increase over 2021 according to US government figures. Despite the rising mortgage rates, and the general shortage of inventory, it appears that single-family homes are an ideal investment target for some institutional investors that have bucketloads of cash on hand.
These rental properties allow individuals to live in desirable single-family home neighborhoods where the school districts are good, and where the crime rates are lower. It also gives individuals a chance to put away additional capital for their own home purchase.
According to the Wall Street Journal, more than one in every four homes purchased was by a professional rental investor in the fourth quarter of 2021. The estimated available capital is placed at $89 billion.
According to the National Association of Homebuilders, this single-family rental market is likely to continue to show strength. The rentals also allow renters to have a living-single-family experience prior to their own home purchase.
One such investment firm, Haven Realty Capital, has acquired over $1.1 billion worth of new construction rental homes from builders since late 2020. The Arizona construction company Keystone Homes in 2021 made the decision to exclusively focus on the construction of rental homes for purchase. Right now, Keystone according to the Wall Street Journal article, has an 800-house construction pipeline.
This clearly creates another hurdle for first-time buyers as prices and land are bid up, especially in the hot markets such as the Carolinas, Tennessee and Arizona. The higher the land prices go, the more difficult it is for the first-time buyer to get into their first house. The impact of this surge is also spilling over into significantly higher rents, some of which are growing at double digits for the last few years, especially in such places as the Southwest.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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