Institutional owners of single-family houses for rent are selling more of their portfolios than they are adding to them, a new report finds, with selling activity clustered in three major markets.
Together, selling activity in Atlanta, Miami, and Houston represent half of all institutional for-sale inventory, according to the report from Parcl Labs, a provider of housing market data, analytics, and research for real estate and investment applications.
FirstKey Homes dominates the motivated selling activity. With more than twice the listings of any competitor, FirstKey is cutting prices deeper and more frequently than its peers, the report says.
Parcl compared the eight top single-family rental (SFR) portfolios in aggregate against the national market across all owner types and found that institutional portfolios are more motivated than the broader market.
Atlanta, Miami, and Houston also correspond to the markets where institutional investors also have their heaviest concentration of houses for rent. Listings by Wall Street investors totaled 771 in Atlanta, 336 in Miami, and 269 in Houston.
But Houston leads the “fire sales,” with four times the local median number of listings. Miami and Atlanta also “significantly outpace” their local markets. And Chicago chimes in as a “surprise outlier,” according to Parcl’s data.
Together, three investors account for two-thirds of the institutional inventory:
- FirstKey Homes, with 1,045 listings or 35% of the total;
- Amherst, with 418 listings; and
- AMH, with 409 listings.
With more than double the listings of any competitor, FirstKey dominates both listing volumes and seller motivation. Their properties have seen price cuts averaging over 10% off original list prices, with reductions occurring every 20 or so days, the report says.
In each of the four hot spots, investors account for an outsized share of on-market activity, according to Parcl Labs.
While the rationale behind FirstKey’s selling strategy remains unclear, the report says,
market-level pressures explain some of the broad-based institutional selling activity. “Atlanta has the highest institutional SFR concentration nationally; operators there are logically reducing exposure in this saturated market,” the report states.
In Houston, meanwhile, institutional operators face rising competition from accidental landlords. Parcl Labs recently reported Houston had the largest year-over-year jump in homes converting from for-sale to rental listings. And Miami’s single-family rental market faces broader Florida headwinds — declining prices and growing inventory — creating clear incentives for institutions to trim positions.
