Wall Street is quietly cashing out of real estate
Institutional investors are divesting from residential real estate at an increasing pace, suggesting a possible structural shift in the housing market amid falling rents.
New data from Parcl Labs, shared by ResiClub co-founder Lance Lambert, shows that seven of the eight largest institutional single-family rental landlords have become net sellers in the U.S.
Among them, FirstKey Homes, a landlord owned by private equity firm Cerberus Capital Management, has the most single-family homes listed for sale, with 904 properties on the market as of Oct. 16.
That figure represents about 1.9% of FirstKey’s total portfolio of 47,366 single-family rental homes across the United States.
Parcl Labs’ data shows that FirstKey’s listings are concentrated in previously hot rental markets such as Atlanta, Georgia, and Florida, with additional clusters in Dallas and Chicago.
Other major landlords unloading homes include Invitation Homes, which has been selling properties since around 2022, which was roughly when the housing market peaked, according to analyst Wolf Richter.
American Homes 4 Rent offloaded 370 scatter-site properties in the second quarter, realizing gains on homes it acquired more than a decade ago.
Meanwhile, The Amherst Group had 418 homes listed for sale as of September, with concentrations in Atlanta, Miami, and Houston.
As InvestorsObserver reported, the institutional sell-offs come as rent prices have fallen sharply in key markets, pointing to a growing oversupply of rental homes.
At the same time, these sales could bring some relief to prospective homebuyers, who have long faced stiff competition from private equity firms and other Wall Street investors since the aftermath of the global financial crisis.
Home sales remain weak
Even as institutional competition in the housing market cools, Americans aren’t rushing back to buy homes just yet.
Existing home sales slipped in August, capping off a sluggish summer season, according to data from the National Association of Realtors (NAR). While sales rebounded slightly in September, rising 1.5%, the uptick was modest even as mortgage rates declined sharply.
Real estate agents told MarketWatch that many sellers may regret listing their homes this fall, pointing to signs of buyer hesitation and what some described as “a lot of buyer’s remorse.”
Corey Burr, a Washington-based real estate agent, told The Wall Street Journal that “Everything is dictated right now by affordability and having the 30-year fixed get below 6%.”
As of mid-October, the average 30-year fixed mortgage rate stood at 6.19%, according to Freddie Mac.
Property investor John Chapin also told the Journal that sluggish home sales are being weighed down by strained household finances.
“I think it’s caused a lot of people to be unwilling to pull the trigger on buying a house. They’re indecisive because they’re unsure of their personal finances or they’re hoping interest rates are coming down,” he said.