By: Joe Mcdermott, journalist, reporter and writer for SEARCHEN NETWORKS®
A new report this week revealed that a Dallas-based corporate landlord backed by Wall Street snapped up hundreds of homes in Clark County, Las Vegas, in a monumental transaction that took place on a single day in the summer of 2023. Sin City, known predominantly for her shimmering glamor and glittering Strip, is now caught up in an ongoing phenomenon of Wall Street corporations acquiring single-family homes en masse, primarily for rental purposes.
Invitation Homes (NYSE: INVH), the significant corporate landlord in question, struck this deal on July 18. According to Clark County property records, the Dallas-based entity purchased an impressive 264 homes from Starwood Capital Group, a Miami-based investment firm. This astounding buy-out occurred via three separate residential transactions amounting to a whopping $98 million. Interestingly, this wasn’t an isolated deal; it was part of a broader $650 million real estate portfolio swap involving approximately 1,900 single-family rental homes across Texas, Florida, Arizona, Nevada, and California.
Invitation Homes’ Clark County venture saw significant acquisitions in both Las Vegas, with 94 homes, and an additional 77 in North Las Vegas. The purchase prices varied, ranging from $292,000 to $694,000, with an average price of $371,514.
This event is a vivid manifestation of a surge in purchases of single-family homes across the country by hedge funds, corporate landlords, and affluent investors. However, experts have posed concerns regarding this trend. They argue that such mass acquisitions have notably contributed to housing shortages, pushed up prices rendering homes less affordable, and induced a rise in rental rates.
Notably, a study by MetLife Investment Management suggests that Wall Street corporations might own approximately 40 percent of all houses in the United States by 2030 if this phenomenon continues at the current pace.
Several reasons underpin Wall Street’s keen interest in residential properties. First, real estate traditionally offers steady returns via rent or value appreciation over time, making it a preferable alternative to the ever-fluctuating stock market.
Additionally, investing in real estate provides a substantial opportunity for portfolio diversification. This strategy significantly mitigates risks across different asset classes, especially when adequate hedges are in place. Lastly, real estate generally holds up well during inflationary periods, making it a valuable hedge against rising prices.
Las Vegas, famed for its casinos, entertainment, and nightlife, is rapidly evolving into a major hotspot for corporate landlord acquisitions. This acceleration might alter Sin city’s real estate landscape significantly. It also brings into focus the broader national concern around accessibility of affordable housing and the escalating rental rates.
While these Wall Street-backed transactions offer lucrative opportunities for investors, they flourish at an expense. The social consequence is that families aspiring to own homes might find it increasingly challenging in this highly competitive market dominated by corporate landlords.
As we move forward, the confluence of investment opportunities and market dynamics makes it pivotal for a balanced approach in the real estate sector. For the City of Lights and beyond, there is a pressing need to create a more inclusive housing market that can satisfy both individual and corporate clients without compromising affordability and choice.