Chicago, IL (PRWEB) October 31, 2012
The Real Estate Marketing Insider issued its observations on USA Today’s report that foreclosed homes were being sought by large corporate investors to furnish as single-family rentals, saying it would be good for home renters as the shot to rental inventory would be welcome, especially in strained urban areas.
Last week, Fannie Mae, the Federal National Mortgage Association, announced two bulk sales of foreclosed homes to large investment firms that intend to rent them for at least three years. The sales included ninety-four foreclosed properties in Chicago and almost seven hundred in Florida. Fannie Mae is forecasting sales of nearly two thousand units from its 109,000-strong inventory of foreclosed houses. Most of the units they expect to sell are single-family marketing strategy for real estate homes.
The Cogsville Group, who was the purchasing part of the Chicago sale, has recently focused on buying commercial properties and multi-family housing complexes which have been abandoned or foreclosed. The switch to single-family housing arises out of a desire to “gain economies of scale” in their inventory. The investment group offered nearly $12 million for the homes, with a down payment of $2 million and an agreement to pay the rest with shared rental income.
This new trend is divisive among realtors and economists. Many argue that the vacant and abandoned properties created by foreclosure weaken communities and encourage crime, which repurposing these properties for rental may alleviate. However, others worry that an explosion in the number of urban rental properties may lead to a precipitous drop in housing values.
These two sales are not unprecedented, neither in their scope nor the dollar value attached. Single-family home rental has been growing as sale has dwindled the past few years; in 2011, homeownership had dropped to 64.6 percent, a seven-year low, while single-family rentals have grown by ten percent in about two-thirds of American major urban areas. The $12 million sale to Cogsville Group is not unusual; Two Harbors Investment Corporation, for example, spent $150 million this year to break into the single-family market. Colony Capital reports their intentions to spend $1.5 billion on single-family rentals this year.
Worth noting is that these figures accompany census data showing the largest drop in homeownership among those under 35. This means that rather than homebuying become obsolete, it is just being postponed.
The Real Estate Marketing Insider released its statement on news that large investment firms were turning to single-family homes and planning their use as rental properties. The news is spurred by Fannie Mae’s announcement of two large sales totaling almost eight hundred foreclosed properties in Chicago and Florida.
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