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Wall Street Investors Enter Single Family Rentals

Assessing the impact of speculators on housing markets

Professionalizing management, better bargaining over expenses, some degree of appeals over property tax, and better access to capital markets therefore enable institutional investors to improve their cost structure, which results in their ability to provide many rentals at scale. One important tradeoff in the model results is that institutional investors seem to improve outcomes for renters — who have better access to “high opportunity” neighborhoods characterized by better economic mobility and test scores, as well as lower rents overall — against higher prices for houses which make it harder for prospective homeowners. What is happening here, basically, is the standard economic story of selection: consistent with Josh’s modeling of them, institutional investors are picking areas likely to see future rental growth.

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