Skip to Content

Investors Are Now Building Houses Rather Than Buying Them

New Single-Family Home Sales Surge In First Quarter Of 2018New Single-Family Home Sales Surge In First Quarter Of 2018
Lots of investors are currently building single-family homes.Scott Olson—Getty Images

A lack of entry-level homes on the market is prompting some investors to build their own.

These homes are usually purchased by both first-time buyers and rental-home companies. But many occupants now don’t seem to be upgrading to larger homes or moving out of their rental property. It’s a trend that is leaving young families who might not be able to afford to buy or rent a home because of such factors like student debt out of luck.

Now institutional landlords are building those homes, The Wall Street Journal reports, a new move from companies that have traditionally thrived on buying foreclosed homes and other “bargain” properties.

Some companies are even buying up entire new developments with plans of turning them into rental properties. Many of those companies are able to pay builders cash, scoring them deep discounts on new homes that they can then rent for many years without having to do significant maintenance.

The homes are often bought in existing neighborhoods as well, sometimes with the promise of not using yard signs to advertise the rentals in order to not upset neighbors.

This year is expected to be a buyer’s market when it comes to real estate. While home prices are higher than they were a year ago, they are dropping in most major markets, CNBC reports. There’s also more supply in the market, as people are choosing to sell their homes at a slower pace.