Private equity shops vacuumed up cheap homes during the financial crisis to convert them to rentals. Now, they're reconsidering.
If there’s been one clear beneficiary of the housing crisis, it's landlords. With people losing or unable to purchase homes, the rental market has been flooded with demand. And though the housing market has improved a lot since 2008, the amount of money the typical American household pays in rent is at an all-time high.
But the high rents aren’t enough to satisfy some private equity and asset management firms who have invested in the trend. Private equity shops and massive developers made headlines for vacuuming up cheap homes during the financial crisis to convert them into rentals. But the slowly recovering housing market has led some of those investors to reconsider the moves, even amid signs that the home-buying market may be cooling off somewhat.
David Yearley, the CEO of Toll Brothers, says his firm has spent $250 million investing in multi-family buildings between Boston and Washington, D.C., that could be rented out. But he referred to these investments solely as "a hedge" against a U.S. housing market he thinks is on the up.
Still, other players, like private equity giant Blackstone, have continued to gobble up rental properties. Last month, it bought $2.7 billion multifamily homes around Atlanta, Georgia, from GE Capital, the financial services arm of General Electric.
This post originally appeared on Quartz, an Atlantic partner site. More from Quartz:
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