A bidding war broke out this winter in a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban home, illustrating the growth of large investors as a new strong force in the US real estate market.
DR Horton Inc. built 124 homes 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 rental companies came on sale in December. The $ 32 million winning bid came from an online real estate investment platform, Fundrise LLC, which manages more than $ 1 billion on behalf of about 150,000 people.
The country’s most prolific homebuilder has booked about twice as much as usual to sell homes to the middle class – an encouraging start in the business of selling entire neighborhoods to investors.
“We certainly wouldn’t expect every single-family community we sell to be sold at a 50% gross margin,” builder finance chief Bill Wheat told a recent investor conference.
From individuals with smartphones and thousands of dollars to pensions and billions of private equity firms with billions, investors looking for returns are building single-family homes to rent or overthrow. They are competing for homes with ordinary Americans, who are armed with the cheapest mortgage financing ever and are raising house prices.