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That Suburban Homebuyer Could Be a Foreign Government

Some large, international commercial buyers have started to invest in single-family suburban homes, viewing them as less expensive than apartment building investments.

NEW YORK – Foreign investment firms that often buy office buildings, hotels and shopping centers across the globe are partnering with U.S. housing companies to buy or build rental homes, or invest in single-family homes in the American suburbs.

In suburban neighborhoods near cities such as Atlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds. These investors are following in the footsteps of many large U.S. investment firms and pension funds that started buying single-family homes on a large scale in the aftermath of the financial crisis.

Foreign investors now account for nearly a third of institutional investment in single-family rental homes, said Alex Foshay, head of international capital markets at real-estate services firm Newmark.

The recent growth in foreign investment means that individual homebuyers must increasingly contend with this deep-pocketed group of purchasers in a number of prime U.S. neighborhoods, boosting prices there and adding more fuel to a housing boom already at its hottest level in 14 years.

Unlike a decade ago, when investors bought foreclosed homes and those already occupied, the focus is now on newly built properties. Part of the appeal of single-family rental homes is that, despite rising home prices, they’re still considered less expensive to acquire than apartment buildings, even when the rental income is the same.

Investors also hope that, by buying now, they can benefit from a rising market.

Source: Wall Street Journal (04/13/21) Putzier, Konrad

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