Econintersect: News to share with GEI readers arrived on the Managing Editor's doorstep in North Carolina this weekend. The Raleigh News & Observer story describes how one company alone is looking to buy more than 1,000 single family homes in 2013. In some cases the homes are being bought directly from builders and going market prices are being paid. The goal of only one company buying 1,000 homes this year is ambitious: There are only 7,317 homes listed in the region at the end of January, according to the N&O.
American Homes 4 Rent is a company operating nationally with 25 cities listed on their website. Raleigh is not on the list currently displayed, but presumably will be soon. Cities already on the list located in the southeastern U.S. are Charlotte (also in North Carolina), Atlanta and four Florida cities.
Homeowners are getting close to asking prices. An example given by the N&O involved a sale of a 10-year old home for $1,000 more than the property sold for when new. And the buyer (American Homes 4 Rent) paid all cash - plus added on the seller's closing costs and the cost of the home inspection.
About a third of the homes being bought are brand new, direct from the builder. Builders closing these deals are happy. An excerpt from the N&O:
“Very reasonable offers, they’re not trying to low-ball us,” said Dan Cunningham, of Brandywine Homes, which sold a house in the Braemar subdivision in Zebulon to American Homes 4 Rent for $152,000. “I mean, I don’t understand why they’re buying new homes to rent, but that’s their business model, I guess.”
Why is Raleigh getting this investor attention? Three reasons:
1. Houses are cheap. Raleigh did not experience a major house price bubble compared to some other metro markets in the last decade. Newly built and nearly new homes are generally available in the price range from under $100 up to $150 per square foot, with the higher prices corresponding to custom homes with high end appliances and finishes.
2. Raleigh is one of the fastest growing metros in the country. In January Forbes ranked it the fourth fastest growing city in the U.S. and the fastest outside of Texas. The area is one of the country's high tech centers, with a number of biotech companies and other technology ventures attracted by the well-known Research Triangle Park and the concentration of major research universities.
3. The number of new homes being built is currently lagging the area's rate of population growth, according to the N&O.
- California billionaire bets on rentals with Wake home-buying spree (David Bracken, Raleigh News & Observer, 23 February 2013)
- American Homes 4 Rent (Company Website)
- America's Fastest Growing Cities (Morgan Brennan, Forbes, 23 January 2013)