Housing market turbulence causes Wall Street to flee, but CEO predicts recovery.
Institutional investors, including the largest owner of U.S. single-family rental homes, Invitation Homes, have bought 90% fewer homes in the first two months of 2023 than they did in the same period last year. The reason for the pullback is that the financial return on each additional home added just isn't that great right now after factoring in interest rates, house prices, and rents. Some big investors think that national house prices are poised for another step down. Interest rates on “floating” loans offered to firms are still in the 7% to 8% range, making buying new single-family rentals unattractive for some institutional investors.