This winter a bidding war broke out in a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a suburban home, illustrating the rise of big investors as a potent new force in the US housing market.
DR Horton Inc. built 124 houses in Conroe, Texas, rented them out, and then put the entire community, Amber Pines at Fosters Ridge, on the block. A Who’s Who of investors and home rental companies flocked to the December sale. The winning bid of $ 32 million came from an online real estate investment platform, Fundrise LLC, which manages more than $ 1 billion on behalf of some 150,000 people.
The nation’s most prolific homebuilder put aside roughly double what it normally makes selling homes to the middle class, an encouraging debut in the business of selling entire neighborhoods to investors.
“We certainly wouldn’t expect all the single-family communities we sell to sell at a 50% gross margin,” the builder’s chief financial officer, Bill Wheat, said at a recent investor conference.
From individuals with smartphones and a few thousand dollars to pensions and private equity companies with billions of dollars, investors chasing performance are buying single-family homes to rent or sell. They are competing for homes with ordinary Americans, who are armed with the cheapest mortgage financing ever, and they are driving up home prices.