Chris Jeffries – HR NEWS
Dec 4, 2023
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Private equity firms have been making significant inroads into the residential property market, a trend that has led to some shocking statistics.
According to a study by Business Insider, during the third quarter, these firms accounted for 44% of the purchases of single-family homes, compared to independent operations.
This increasing presence of private equity in the residential property market has raised concerns about its impact on housing prices and the ability of individual homebuyers to compete.
The latest version of the housing-villain story targets private-equity firms and hedge funds, broadly “institutional investors” that have supposedly been outcompeting regular homebuyers and are therefore responsible for the skyrocketing rents and home prices of 2020 and 2021.
Private equity has been rapidly growing its share of the housing market, taking advantage of a housing crisis and in some cases exacerbating it.
According to census data analyzed by the National Multifamily Housing Council, a lobby representing landlords who own multifamily properties, 38 percent of multifamily units were owned by individual investors in 2021, and investors bought 24 percent of single-family homes sold in 2021.
Before the Great Recession of 2009, financial institutions and investment firms focused on purchasing multi-family dwellings like apartments and essentially ignored single-family homes. But, when a ton of homes were suddenly being sold at incredibly low prices with low interest rates, these investors jumped at the opportunity to scoop up these homes.
Over the last decade, the number of investors purchasing single-family homes increased from 10% to 15% each year. According to data reported by the PEW Trust and originally gathered by CoreLogic, as of…
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