Institutional Buyers: Temporary Sideline Stint in Housing Market

Institutional buyers in the housing market experienced a slowdown in Q1 2023, with a 90% decrease in home purchases compared to the previous year. However, recent developments suggest that this pause may be temporary. Companies like MetLife Single Family Rental Fund and J.P. Morgan Asset Management have secured significant capital for future investments, and Invitation Homes has made a large acquisition. The key factors that could spur another surge in institutional homebuying include stabilization in the debt markets and an increase in the supply of resale homes. The single-family rental space and the build-for-rent space have different dynamics, with the latter benefiting from cheaper debt and the ability to create their own supply. Despite concerns about institutional buyers driving up home prices, experts argue that they fill a need in the market and provide well-maintained homes to renters. The housing finance system is seen as broken, and private investors are crucial for building and renovating housing stock.