“Race and ethnicity never factor into decisions about where or when to buy or sell a home,” Howard said in an email. “The overriding motivation is having a presence in those neighborhoods and communities where the demand for quality and affordably priced rental housing is strongest.”
KKR declined to comment. A representative for FirstKey Homes, a Cerberus portfolio company, said that it's purchased just 1% of its properties through iBuyers. Kathleen McCarthy, global co-head of Blackstone Real Estate, said that “not one of our portfolio companies have purchased a single off-market home from an iBuyer.” Blackstone has a small stake in Tricon.
The confluence of iBuyers and Wall Street-backed landlords is on display in the Creekwood Station neighborhood of McDonough, where Prince sold her home to Offerpad. Aimee Turner moved to the subdivision two decades ago, when the homes were new and most residents owned their properties. These days, she said, roughly three-quarters of the houses are rentals.
“I probably couldn’t even tell you five homeowners on this street,” she said on a recent afternoon while out walking her dog.
An entity affiliated with Tricon bought the home next door to Turner in February, paying Offerpad $140,000, according to Attom data. Tricon also paid $140,000 to buy a house two streets over from Opendoor. And Zillow flipped another home in the neighborhood in July to Progress Residential, a company run by New York-based investment firm Pretium Partners.
A representative for Tricon said most of the properties the company acquires from iBuyers are listed on the open market. Kevin Baldridge, the company's chief operating officer, said in a statement that single-family rentals let families live “in neighborhoods they may not otherwise be able to afford to buy in.” The company receives “up to 10,000 leasing inquiries each week across the country for an average of just 200 to 300 available homes,” he said. Pretium declined to comment.
Homes in the Creekwood Station subdivision are seen in McDonough, Georgia, U.S., on Sunday, December 12, 2021. According to Aimee Turner, president of the homeowner's association, at least 75% of the homes in the subdivision are owned by absentee landlords. Photographer: Elijah Nouvelage/Bloomberg
The increasing number of rentals in the neighborhood was a good thing for Tyrone and Sherece Sapp, who were scrambling to find a place to live with their two kids after Tyrone accepted a job transfer to Atlanta from New York.
After several other rental options didn’t pan out, Tricon accepted their application to lease the house next door to Turner’s. The $1,500-a-month rent was higher than what some smaller landlords, like Prince, were charging. But for a couple that had been living with two kids in a two-bedroom apartment in New York, the cost for a whole house didn’t seem that bad.
“In New York, sometimes that’s a basement apartment,” Sherece said.
The challenge comes when renters look to purchase a house, so that they can start building wealth.
Institutional landlords already have all kinds of advantages over average buyers, said Desiree Fields, an assistant professor of geography and global metropolitan studies at the University of California, Berkeley, who studies single-family rental companies. By giving them access to off-market listings, the iBuyers are only strengthening their hand, she said.
“It's troubling,” Fields said. “It's just going to make it that much harder for people who might otherwise be in a position to acquire a starter home.”
This article was provided by Bloomberg News.