During the foreclosure crisis nearly a decade ago, investors plowed into the housing market, buying millions of distressed homes and turning some of them into lucrative rentals. Now they have a new strategy: Buy new.
They transformed the once mom-and-pop market of single-family rentals into a large-scale, formally managed asset class — and it is still growing, in fact faster than ever. "There is a consumer rental demand that is driving these institutions to want much greater levels of inventory of this product," said Gerald Ellenburg, CEO of ERC Homebuilders. "They are learning or have learned that new inventory is a much safer and more official rental product."
In 2017, 37,000 homes were built as rentals, according to the National Association of Home Builders. That grew to 43,000 last year, or just under 5% of total single-family housing starts. But that is just homes built and held by builders for rent and doesn't include those sold directly to investors, so the numbers are likely larger and growing more quickly.
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