Corporate Buying for Rent

David Blitzer
Chairman of the Index Committee
S&P Dow Jones Indices
December 6, 2013 - 4:16 pm
Comments: 0

The Federal Reserve published a short research note on companies and investors buying single family homes to offer them as rental properties. The report shows that activity rose from virtually nothing in 2000 to over 6% of the market currently.  Activity is concentrated in a handful of cities with low price-to-rent ratios.  Three real estate investment trusts focused on the buy-to-rent market went public in the past year.

Charts are from the Fed’s web site:

This figure is a scatter plot of total business investor home purchase shares across 20 MSAs in 2012 relative to the price-to-rent ratio in these MSAs. A regression line is plotted which shows a negative relationship between investor home purchase share and price-to-rent ratio. The business investor purchase share data come from Amherst Holdings. The price-to-rent ratio data from Zillow.

 

 

This figure plots the share of homes purchased by business investors by size and by year over the period 2004 to 2012. Business investors are defined as business entities identified as purchasing homes for primarily for the purpose of earning a financial return. Large investors have purchased 200 or more homes since 2000. Medium investors have purchased between 25 and 199 homes. Small investors have purchased between 3 and 24 homes. Source data are transactions data from CoreLogic which are filtered by Amherst Holdings.

 

 

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