Investors List More Homes Post-ROAD Act, National Impact Limited

Institutional investors have significantly increased their listings of single-family rental homes following the passage of the 21st Century ROAD to Housing Act. Data from Parcl Labs indicates that listings rose from 4,166 homes on February 1 to 9,447 homes in the current month, representing approximately $3.1 billion in total asking price. The ROAD to Housing Act defines institutional investors as entities owning 350 or more single-family homes, a lower threshold than the industry's typical benchmark of 1,000 homes. While the act does not mandate the sale of existing properties, it imposes restrictions on future purchases of existing homes, with exceptions for build-to-rent developments.

According to Parcl Labs, investors subject to the new legislation own an estimated 589,000 homes, which constitutes 3.9% of the nation's approximately 14 million single-family rental homes. These firms are responsible for about 40% of the net sales by large institutional investors year-to-date. Despite this surge in investor-driven listings, economists and real estate professionals suggest that the legislation is unlikely to cause substantial shifts in the broader national housing market.

Mike Simonsen, chief economist at Compass, stated that the trend has not yet had a discernible effect on most housing markets nationwide. He observed that national inventory levels have remained flat, indicating that the increase in investor listings has not created a significant national flood of properties. Simonsen noted that the total number of homes owned by institutional investors is still relatively small in the overall market.

Simonsen anticipates that any notable market changes are more likely to occur in specific locations where institutional landlords have concentrated substantial portfolios. He mentioned potential areas like Tampa or suburban Atlanta as examples where a higher density of investor-owned properties might lead to localized impacts. However, he has not personally observed an uptick in markets such as Tampa.