PITTSFORD, NY – Apartment living brought Bill and Jennifer Schumacher together, the two neighbors meeting while living in the same apartment complex in the Philadelphia area.
When Jennifer received a job offer in the Rochester, NY area, the couple were okay with moving, but they didn’t have much time and they knew they didn’t want to live in another apartment.
“We said, ‘There’s no way to go to another apartment’ – we need a bigger space, we wanted a little bit of land outside,” Jennifer said as it was in the living room of the 1,900 square foot Pittsford, NY home. to rent. “It’s a perfect opportunity. It’s kinda perfect.”
Rochester, NY based real estate company Broadstone Real Estate – which has traditionally focused on commercial properties ranging from doctor’s offices to retail spaces – is increasingly diving into the single-family home market.
Earlier this month, she announced under her shingle Broadtree Homes that she had purchased 127 single-family homes in the Atlanta area for around $ 10 million. This purchase more than doubled the portfolio of single-family homes it began amassing in late 2012 around Minneapolis, Palm Beach County, Florida, and the Rochester area.
In the past, large sums of money were relatively scarce in the rental home market. According to an analysis done earlier this year of the single-family home rental market by a New York investment bank Keefe, Bruyette & Woods inc., about half of the country’s 14 million rental units are owned by individuals who own only one rental property. Only about 2 million are owned by investors with 10 or more properties.
Renting single family homes “has always been a family business,” said Amy Tait, CEO of Broadstone.
However, the number of large real estate companies involved in the rental of single family residences is increasing. New York-based financial services giant Blackstone LP Group is now the largest owner of single-family homes, having spent approximately $ 8 billion over the past two years to purchase 43,000 homes. Based in california 4 American houses for rent, the second-largest of its kind, started in 2012 and now has more than 25,000 homes in 22 states.
“Funding for investor-owned properties has not been widely available, (and) the investment and lending opportunities are immense and may be just beginning,” Keefe Bruyette & Woods said in the analysis. .
Falling home prices in recent years have opened the door to the investment opportunity, said Dave Bragg, general manager of the residential research team at Green Street Advisors, a real estate research firm. Meanwhile, the armies of homeowners who saw their homes foreclosed still needed housing. “If you live in a 1,500 square foot house, you probably chose this for a need for space,” Bragg said. “Foreclosure victims… haven’t really moved to apartments.”
Owning your own home has long been synonymous with the American dream. But homeownership rates are dropping nationwide. According to data from the US Census Bureau, the percentage of Americans who own their own homes was about 65% in the first quarter of this year, the lowest since 1995. The rate peaked in 2006, when 69% of Americans were owners of their own homes. .
“People used to think that renting was about stepping into an apartment community,” Tait said.
But the financial crisis brought more tenants as people lost their homes, as well as a glut of foreclosed homes that hit the market, she said. This, coupled with the fact that technology is making it easier than ever to find homes for sale and manage a rental housing portfolio, has opened the door for large investors who view large housing portfolios as an opportunity. she declared.
“Until the crisis, it really didn’t make sense for investors to do this,” Tait said. “It is a management intensive business.”
However, there are concerns that these buyers with deep pockets are excluding individuals from the housing market. In March, a group of 80 organizations – from Greater Cleveland Neighborhood Housing Services to the San Diego Fair Housing Council – has written a range of federal regulatory agencies, asking for rules or advice regarding ongoing large investments in rental properties. They cited concerns ranging from the displacement of owners to “the creation of another real estate bubble”.
That same month, U.S. Representative Mark Takano, D-Calif., Sent letters to the US Department of the Treasury, the Securities and Exchange Commission, the Department of Housing and Urban Development and the Consumer Financial Protection Bureau with many questions about the single-family rental market and the growth of rental income-backed bonds at these properties .
“This is a new area that will potentially grow,” Takano said last week. “We have an obligation to try to understand it better – the financial instruments, the impact on communities, the impact on individual tenants. I’m not entirely comfortable with what I see happening. move on – middle-class wannabes being deprived of their homes, on a chance to get a stake in real estate ownership and what I also see as potentially destabilized neighborhoods as Wall Street extracts their share before they don’t want to go back and sell those homes. “
However, the pace of large companies buying homes has slowed in recent months as house prices have soared across the country, Bragg said. Now these companies are focusing more on consolidating and buying each other’s house portfolios.
After plunging its foot into the market with the purchase of around 100 homes since the end of 2012, Broadtree has “learned enough to start increasing it,” Tait said.
Broadtree is examining other portfolios of homes that were previously taken over by real estate companies now looking to sell. Tait said Broadtree has been offered more than $ 1 billion from various wallets as it appears to gain a foothold in the market.
“There are a lot of wallets for sale,” Tait said. “It is difficult to do this effectively without a few hundred of 300 homes in a given market. “
Eventually, the Schumachers plan to buy their own house. But for now, their two boys each have their own bedroom. Their two dogs enjoy a fenced back yard. They live on the kind of quiet suburban street where everyone is so friendly that neighbors brought the family housewarming gifts when they moved in last December.
There’s only one downside to the house, said Bill Schumacher: “The fact that we don’t have it is the only thing.”
Daneman also reports for the Rochester (NY) Democrat and Chronicle.