The average American home price in June 2021 has increased over 23.4% over the last year alone, and Wall Street has taken notice of the yields. American investment banks are making massive investments into buying single-family homes in an attempt to profit from the increasing rents and property values that have occurred in recent years.
CoreLogic’s Single-Family Rent Index from April showed a “national rent increase of 5.3% year over year, up from a 2.4% year-over-year increase in April 2020,” as The Daily Wire previously reported. The group noticed that “as demand for more space and outdoor amenities remains, detached rentals, in particular, are experiencing accelerated growth with a 7.9% year-over-year increase in April, compared to growth of 2.2% annually for attached rentals.”
A more recent report from the National Association of Realtors explained that average American home prices in June 2021 reached $363,300 — a 23.4% increase over the average of $294,400 in June 2020.
According to Hanna Ziady, a CNN Business journalist, rapidly rising rents and property values are attracting the attention of Wall Street investment banks to the housing market:
According to John Burns Real Estate Consulting, in the first three months of this year, nearly a quarter of all homes sold in the United States were going to investors. That’s a broad umbrella that covers everything from mega institutions to individuals buying vacation homes, but BlackRock, JPMorgan Chase, and Goldman Sachs were among the big-name buyers.
Institutional investors still own only about 2% of all single-family rentals in the United States, or roughly 300,000 homes, according to John Burns research director Rick Palacios.
A similar pattern is being observed in England, where American corporations are also purchasing residential real estate:
Institutions poured a record £3.7 billion ($5 billion) into the UK build-to-rent sector in 2020, almost a third of which came from first-time investors, according to real estate consultants Knight Frank. This year’s number is likely to come in even higher, with inflows in the first three months of the year alone reaching almost £1.3 billion ($1.8 billion) — a 16% increase on the same period last year.
One of the institutional investors actively seeking single-family housing opportunities is Goldman Sachs, which earlier this year bought 900 single-family houses in the northwest of England, and is now partnering with developers to build more homes.
The Federal Reserve’s monetary policies, as pointed out by senators during a recent hearing with Fed Chair Jerome Powell, lower the cost for investors and purchasers to purchase real estate, resulting in homes increasing in value.