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, which illustrates the rise of large investors as a powerful new force in the U.S. real estate market.
DR Horton Inc. he built 124 houses in Conroe, Texas, rented them out and then put the whole community, Amber Pines in Fosters Ridge, on the block. A Who’s Who of investors and rental companies went to the December sale. 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 booked about twice what it usually does by selling homes to the middle class, an encouraging debut in the business of selling entire neighborhoods to investors.
“We certainly wouldn’t expect all the single-family communities we sell to be sold at a gross margin of 50%,” Bill Wheat, the builder’s chief financial officer, said at a recent investor conference.
From individuals with smartphones and a few thousand dollars to pensions and privately owned companies with billions, investors chasing yields are reclaiming single-family homes to rent or invest. They are competing for homes with ordinary Americans, who are armed with the cheapest mortgage financing in history and are raising house prices.