Even big corps can’t make money on rentals. Not enough to bother with the risk. Higher property taxes, higher insurance, higher maintenance costs on one side, deadbeat friendly regulation and wages not keeping up with inflation resulting in not being able to pass the extra costs along to renters.
Starwood is the first REIT looking to sell 2000 of their 3200 homes, I expect more to follow especially if Fed hikes another 50-100 basis points. Why would anyone go for a < 3% return cash on cash from operating rentals if they can make 5-6% from loaning money to the government?
Normally you’d expect this to be good news, with falling demand making homes affordable. Not going to happen. The costs of building a home, between more expensive materials, tight labor and high cost of debt (builders take out unsecured loans to buy land/build the home) mean new homes are stupid priced, and that feeds into higher costs of older homes. Just like the insane car market post COVID shortages. Expect paralysis and continued housing shortages, not cheaper housing.
Even big corps can’t make money on rentals. Not enough to bother with the risk. Higher property taxes, higher insurance, higher maintenance costs on one side, deadbeat friendly regulation and wages not keeping up with inflation resulting in not being able to pass the extra costs along to renters.
Starwood is the first REIT looking to sell 2000 of their 3200 homes, I expect more to follow especially if Fed hikes another 50-100 basis points. Why would anyone go for a < 3% return cash on cash from operating rentals if they can make 5-6% from loaning money to the government?
Normally you’d expect this to be good news, with falling demand making homes affordable. Not going to happen. The costs of building a home, between more expensive materials, tight labor and high cost of debt (builders take out unsecured loans to buy land/build the home) mean new homes are stupid priced, and that feeds into higher costs of older homes. Just like the insane car market post COVID shortages. Expect paralysis and continued housing shortages, not cheaper housing.