- The housing market is so tight even Wall Street giants are having trouble buying a home.
- Large landlords made up just 0.4% of all home purchases last quarter, down from 2.4% in late 2021.
The US housing market is so low on supply that even huge Wall Street landlords can't find any homes to purchase.
Landlords with 1,000 properties or more accounted for just 0.4% of all home purchases over the last quarter, according to data from John Burns Research & Consulting cited by the Wall Street Journal.
That's one of the smallest shares since 2008, the Journal reported — and it's a steep drop from late 2021, when large landlords accounted for 2.4% of all housing purchases.
It's a sign landlords are also under pressure from the dearth of available housing, with inventory plunging 15% year over year in June to notch a new all-time low, according to Redfin data. The trend is largely due to high mortgage rates, experts say, as a high cost of borrowing has discouraged homeowners from moving out and listing their properties for sale.
The average rate on the 30-year fixed mortgage inched higher to 7.18% in the last week, according to Freddie Mac data. Meanwhile, over 90% of current homeowners have a mortgage rate below 6%, meaning many are looking to cling to the ultra-low rates at which they financed their home years ago.
The shortage in inventory has also had the effect of pushing up home prices, which has posed another barrier to landlords looking to buy up properties. The US median home price rose a record 8.5% the second quarter to $402,600, according to the National Association of Realtors, attesting to one of the most unaffordable housing markets the US has seen in decades.
Meanwhile, large landlords have been selling their properties and squirreling away the money until the housing market loosens up again and more inventory becomes available.
Invitation, one large home leasing company, sold 675 homes for the first half of 2023, with plans to ramp up selling through the second half of the year, while acquiring just 470 homes, the Journal reported.
AMH, formerly American Homes for Rent, was also a net seller, having shed 1,100 homes from its portfolio during the first half of the year while adding just 780.
Experts have said that mortgage rates will need to dial back significantly in order to unlock more inventory and improve affordability. Rates would likely need to fall back to the 5% range to bring on a "flood" of inventory, according to Compass CEO Robert Reffkin, though most housing market forecasters see rates easing to just around 6% by the end of the year.