Wednesday, June 02, 2021

Big-dollar investors squeeze into San Antonio's tight housing market

By Richard Webner. From The San Antonio Express-News. Excerpts:

"In 2019, Lennar Homes of Texas finished construction of Escondido North, a subdivision of 334 one- and two-story homes packed onto thin lots in one of the few remaining wedges of undeveloped land within Loop 1604 in Converse.

By the end of the year, all the Northeast Side homes had been sold — and it’s easy to see why.

With listings in the high $100,000s, the subdivision offered a rare window of affordability in a market where high demand and a tight supply of homes for sale had driven prices to record highs, outside the reach of many middle-class families.

Yet more than 1 in 8 of the homes in Escondido North were not sold to families or individual owners. Thirty-five were purchased by Tricon Residential, a publicly traded company based in Toronto, Canada, which paid for them with cash, property records show. Three homes were purchased by an affiliate of Man Group, a global investment firm headquartered in London — again, with cash. Another four went to Amherst Residential, of Austin. American Homes 4 Rent, a real estate investment trust from Calabasas, Calif., bought three more."

"They and other investors — ranging from individual owners to Silicon Valley home-flipping companies such as OpenDoor — currently account for 23 percent of home purchases in San Antonio, according to a report published in March by John Burns Real Estate Consulting."

"The companies commonly use their own algorithms to identify homes to purchase based on factors such as location, age and price point, Palacios said. Many of them are focusing on San Antonio and other Texas cities because of the state’s relatively low home prices and fast-growing population, he said."

"the supply of available homes is tighter than it has ever been and home prices are climbing 12 percent year-over-year."

"Rich Rodriguez, Amherst’s executive vice president and head of real estate operations, argues that single-family rental companies provide a service to consumers who prefer to rent or cannot get a mortgage.

He pointed out that the inventory of single-family rentals in San Antonio is at a record low as many consumers choose to rent rather than buy — or have no choice because they don’t meet credit standards or carry a lot of student debt. The “vast majority” of the company’s tenants are “essentially shut out of the mortgage market,” he said."

"the company spends an average of $30,000 renovating each home it buys, improving neighborhood aesthetics and contributing to economic growth."

"less than 0.2 percent of homes in the U.S. are owned by rental home companies."

"Investors have been buying single-family homes in San Antonio and other U.S. cities for many decades. A surge of investment in the sector was largely responsible for the price bubble that burst in 2007, decimating the U.S. housing market.

Flournoy, the broker of record at Keller Williams, recalls that investors used to come by bus to look at single-family homes in the local market. Today, some of them buy properties sight unseen."

"Investors are now seeking to diversify their holdings so they aren’t too reliant on the roaring stock market, Palacios said. They are looking for products with higher yields than the bond market, which is hampered by low interest rates.

On top of that, the single-family housing market has come to be seen as a “safe haven” as the retail and hospitality sectors have struggled through the COVID-19 pandemic."

"The investors buying single-family homes are responsible for a large part of the steep rise in home prices across the U.S., especially at lower price ranges, where they tend to focus their investments"

"In Houston, 24 percent of home sales are to investors, according to his report. In Austin, it is 23 percent, the same as in San Antonio.

Investors are drawn to Texas for its relatively low housing prices, its strong population growth and its fast-growing economy, he said."

1 comment:

Anonymous said...

i would probably do the same thing with a couple of million dollars of cash flow on hand. If i bought the houses out right then i can wait for them to appreciate enough to get a profit years down the road. Now i just need to figure out how to amass that much cash on hand.