Home Builders Bypassing Individual Home Buyers for Deep-Pocketed Investors

[sureshkonda]

Investors who buy and then rent new homes are fast becoming a favorite customer of the home builder industry.

The vast majority of the hundreds of thousands of new homes built last year were sold to individuals and families to live in. But rising mortgage rates are making those purchases much more expensive and could lead to a pullback in demand by those traditional buyers.

Investors say new rentals enable people to live in single-family homes in desirable neighborhoods, where they either can’t afford to buy or prefer to rent. Investors offer a reliable sale even if interest rates rise because many already have cash on hand.

“We can offer them something that feels a lot more certain,” said Sudha Reddy, founder of investor Haven Realty Capital, which has acquired more than $1.1 billion worth of new construction rental homes from builders since late 2020.