Markets & EconomyRentals

Single-family rental investors target South, Midwest

Home prices have noticeably recovered in major metros and markets hardest hit during recession

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Although overall investor activity in the single-family rental sector is robust, large institutions have pulled back a bit, acquiring nearly 14,700 homes during the first quarter of this year.

According to RealtyTrac, this acquisitions total represents a 6.2 percent decrease in single-family purchases made by large investors like Starwood Waypoint Residential, Silver Bay Realty Trust, Colony American Homes and American Homes 4 Rent.

Because home prices have noticeably recovered in major metros and those markets hardest hit during the recession — Phoenix, Las Vegas and Southern California — these institutions are looking to a number of late recuperating secondary markets in the South and Midwest.

Markets where institutional investors accounted for the largest share of homebuyers during the first quarter included:

  • Memphis, Tennessee, where large buyers purchased 14.1 percent of all homes sold.
  • Charlotte, North Carolina, 12.1 percent.
  • Atlanta, 9.6 percent.
  • Jacksonville, Florida, 8.5 percent.
  • Oklahoma City, Oklahoma, 7.6 percent.

According to analysis from Morgan Stanley, single-family operators report spending more capital on rehabilitation costs for properties in the South and Midwest than they do on houses in the West. This could indicate that the two regions feature lower-quality homes or older properties than in the West. Older homes could equate to higher ongoing expenses.

During the first quarter, the following cities had the most homes sold while in the foreclosure process:

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  • The Chicago metro area led the nation with 15.7 percent of its homes sold during the foreclosure process.
  • Las Vegas had 13.7 percent of its homes sold during the foreclosure process.
  • Jacksonville, Florida, had 12.4 percent of its homes sold during the foreclosure process.
  • Milwaukee, Wisconsin, had 12.3 percent of its homes sold during the foreclosure process.
  • Toledo, Ohio, had 12.3 percent of its homes sold during the foreclosure process.

Florida metros led the nation for REO sales, led by Palm Bay (15.3 percent), Orlando (15.3 percent), Jacksonville (14.1 percent) and Tampa (13.2 percent).

Email Erik Pisor.