In the News
institutional investors and private equity firms buying single-family homes
Every American has felt the bite of inflation. Everything seems to cost a little more these days - higher grocery bills, gas prices, and huge spikes in rent. But WHY is it that rents are rising so much?
The influx of institutional investors and private equity firms buying single-family homes has undoubtedly changed the residential real estate market, and this problem has been developing for years.
The global financial crisis of 2008 forced many homeowners to sell due to unaffordable mortgages. This flood of homes into the market caused the single-family housing sector to crash, contributing to 8 million foreclosures from 2007 to 2016. Consequently, the real estate market’s shift impacted annual new home construction, resulting in the fewest single-family homes built in the 2010s compared to any decade since the 1960s.
Even after the US economy rebounded, housing construction – critical for adding supply to the market – never fully recovered due to enduring investor trauma from the crisis, further exacerbating the shortage dilemma. To help stop the falling home prices, the government provided private equity firms with funding to enter the market and buy these single-family homes. The intended short-term fix led to the single-family rental market we are navigating today.
The COVID-19 pandemic further fueled changes reshaping Americans’ preferences, prompting consumers to flock to Sunbelt cities with more space, better weather, and lower taxes. However, in a high-interest rate environment, many potential buyers find homeownership unaffordable. As a result, private equity firms take advantage of the opportunity by aggressively outbidding buyers with all-cash offers and waiving inspections with the objective of adding hundreds of houses per month to their portfolios.
There are over twenty-four single-family home rental companies, including five of the most active buyers: Progress Residential, Blackstone, American Homes 4 Rent, Tricon Residential, and Invitation Homes. These corporations are either owned or funded by Wall Street firms including Blackstone, JP Morgan, and Goldman Sachs, enabling large-scale purchases.
Although institutional investors currently comprise only a small percentage of the total single-family rental market, this is projected to rise to more than 40% of all rentals on the market or 7.6 million homes by 2030, according to MetLife’s Investment Forecast. The shifting trend has impacted the affordability and availability of single-family homes for first-time buyers, replacing traditional prospective homeowners with corporate landlords.
One of the primary concerns is the impact on housing affordability. As these entities purchase large volumes of homes - particularly in areas like the Sunbelt region, with high demand and limited supply - they often outcompete individual homebuyers with access to fewer resources. This competition increases home prices and reduces the affordability of homeownership. In fact, rent growth in cities targeted by institutional investors has significantly outpaced income growth.
Moreover, institutional investors usually focus on properties with the potential to be renovated and flipped for quick profit or rented out for continuous income streams. This profit-driven approach to property acquisition further diminishes the availability of affordable housing stock, as “starter homes” that could be bought by first-time homebuyers are instead being converted into rental properties or refurbished for resale at higher prices. Also, the focus on maximized returns vs. quality housing for tenants can lead to concerns about maintenance standards, rent increases, and overall tenant rights.
Beyond immediate market effects, the dominance of institutional investors and private equity in residential real estate can have long-term consequences for communities. Homeownership has been one of the main methods of wealth accumulation for many families, providing stability and a pathway to financial security. However, as ownership moves from individuals to institutional investors, the societal benefits that accompany widespread homeownership may subside.
Furthermore, social cohesion and engagement within communities may diminish when a significant portion of their housing stock is owned by absentee landlords or distant corporate entities. Local economic impacts may also be influenced by the investment strategies of these non-local investors, such as property tax revenues and neighborhood development.
On the other hand, the entry of institutional investors and private equity firms into the residential real estate market may offer opportunities for profit and portfolio diversification. Additionally, the role of institutional investors may reduce vacancies and streamline purchase and sale processes. However, the significant concerns raised regarding housing affordability, market fairness, and community well-being significantly outweigh the potential benefits.
Addressing the challenges posed by institutional investors and private equity in the single-family rental market requires government involvement and careful consideration of policy interventions. Regulatory measures are needed to protect aspiring homeowners and ensure a fair housing market. These may include restrictions on large-scale purchases of homes, incentives for affordable housing development, and changes in property management to increase oversight of rental properties. Another potential restorative solution in rebalancing the market dynamics in favor of individuals may be by promoting homeownership through targeted subsidies or loan programs.
The growing presence of institutional investors and private equity in residential real estate has significant implications for both the housing market and consumers. Moving forward, policymakers and stakeholders must work together to ensure that the benefits of a vibrant real estate market are shared equitably among all participants while safeguarding the interests of consumers and promoting sustainable community development.
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Reidenbach & Associates ATtorneys Named “best Lawyers” by Main Line today
Scott Reidenbach, Lida Bonner and Rob Shulman were named 2019 “Best Lawyers, Real Estate” by Main Line Today.
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Scott Reidenbach was a featured guest on the Community Associations Institute's Community Matters podcast. Listen to the full episode here:
https://www.cai-padelval.org/podcast-managing-the-impact-o…/
Scott Reidenbach on CNBC
Scott Reidenbach spoke with CNBC regarding how to book smart and stay safe in today’s Airbnb-centric world. Click link below to read the full story.
Reidenbach & Associates Named a Top Law Firm in Philadelphia by Expertise.com
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Attorney Neil Hilkert Delivers National CLE Webinar
Reidenbach & Associates’ Neil M. Hilkert Esq. recently traveled to Wisconsin to the National Business Institute (NBI) to film a CLE (continuing legal education) webinar, titled “Real Estate Closings from Start to Finish.” Mr. Hilkert was invited by NBI to participate on the panel in presenting the program. Attorneys from around the country will be able to access the webinar on December 18, 2017 from 11:00 a.m. to 6:00 p.m. eastern standard time. The real estate topics discussed in the webinar is a practice area emphasized by the Reidenbach firm in Pennsylvania and New Jersey. Neil and the other panel members will be available for questions at the conclusion of the webinar on Monday.
“Don’t Set Aside good practice when dealing with reserves,” an article by Rob Shulman in the Community Association' Institute’s magazine
R&A attorney Rob Shulman recently contributed an article to the Community Association Institute’s magazine, Community Assets, titled “Don’t Set Aside Good Practice When Dealing with Reserves.” In it, Rob includes a legal overview of HOA’s responsibility regarding reserves and what is required in the state of Pennsylvania.
Scott Reidenbach Featured on Peter Greenberg Worldwide
Scott Reidenbach was interviewed by CBS Travel Expert Peter Greenberg on his national travel show, Peter Greenberg Worldwide. Peter and Scott discussed the issues that renters may encounter using sites like HomeAway and VRBO – and what kind of recourse renters have if problems arise.
Click here to listen to the full interview at the 57-minute mark.
Scott Reidenbach on CAI's Podcast, Community Matters
CAI (Community Associations Institute) recently welcomed Scott Reidenbach as a guest on their podcast, Community Matters.
In this episode, Scott talked pot – that is, the legal kind. Medical Marijuana is becoming legal in more and more states and in some, so is recreational marijuana. Community associations have long dealt with the issue of cigarette and other types of smoking, but does medical marijuana require new ways of thinking for community association managers and elected leaders?
Scott Reidenbach Interviewed by 6 ABC's Nydia Han
Scott Reidenbach was interviewed by consumer reporter Nydia Han and answered questions regarding how to protect yourself when using vacation rental sites like HomeAway and VRBO.
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Did you hear the news? Reidenbach & Associates is officially 10! At the end of July, we celebrated the milestone with clients, friends and family. Thanks to those of you who braved the high temps to come out and celebrate over barbeque, sno-cones, cocktails and games galore. We wouldn’t be here without supporters like you. We are grateful to do what we love and for our fantastic clients, and we are looking forward to the next 10 years!
Team gathers for a celebratory toast prior to the 10th Anniversary BBQ celebration
Three Reidenbach & Associates Attorneys Named Top Lawyers by Main Line Today
We are honored to announce that three of Reidenbach & Associates’ team members have been named Top Lawyers by Main Line Today magazine! Scott Reidenbach has once again been named the #1 Real Estate Lawyer on the Main Line, and team members Lida Bonner and Rob Shulman have also been named 2017 Top Lawyers. The list is determined by votes from colleagues – the ultimate compliment and sign of esteem in the legal field. Congrats to Scott, Lida and Rob – and thank you to our fellow attorneys who voted!
Scott Reidenbach in "Cautionary Tale of the Toxic Home"
Congrats to Scott Reidenbach who is quoted in "Cautionary Tale of the Toxic Home," which offers tips on how to avoid disasters when buying a new house. Read the full article here.
A Warm Welcome to Jon Rosan!
Reidenbach & Associates, LLC is pleased to announce the hire of seasoned attorney Jonathan Rosan.
Of Counsel at Reidenbach & Associates, Mr. Rosan possesses nearly 20 years of experience as General Counsel for venture capital and private equity-backed start-up and emerging growth companies. He regularly works with executive leadership teams to reduce corporate risk without negatively impacting company revenue and profitability. Mr. Rosan possesses a wide breadth of industry experience including consumer products, digital marketing, entertainment, financial services, and health care.
Specific areas of Rosan’s expertise include commercial transactions, corporate compliance, corporate governance, data and information licensing, dispute resolution, employment, mergers and acquisitions, privacy and data security, risk management, sales, revenue and business development agreements, software licensing, trademarks, and vendor management.
Prior to joining Reidenbach & Associates, Rosan served as General Counsel of Swift Capital, a leading provider of financing to small and mid-sized businesses. Before Swift Capital, Mr. Rosan was the Senior Vice President, General Counsel and Secretary for Symphony Health Solutions, a leading provider of health care data, analytics and consulting services to the pharmaceutical and biotechnology industries.
Over the years, Rosan has also held senior legal positions at Moody’s and the Publicis Groupe. Mr. Rosan began his legal career at Drinker Biddle & Reath, and received both his undergraduate and law degrees from the University of Pennsylvania.
Scott Reidenbach, founding principal of Reidenbach & Associates, shares, “We’re thrilled to have Jon on board. His demeanor, track record and deep understanding of the law make him a great fit. The continued growth of our team means more diverse legal expertise available to our clients.”
"Having a Baby?" An article by Scott Reidenbach in the Bb Magazine
Scott Reidenbach is featured as a guest contributor in the April edition of Beauty Batallion magazine. In "Having a Baby?" Scott advises new parents on some of the most important things that need to be done soon after bringing home a bundle of joy. You can see the article online at www.thebbmag.com (page 14) or in the image above.
Scott Reidenbach’s guest entry in elevated nation
Reidenbach & Associates' Founding Principal composed a guest entry for Elevated Nation, a blog focused on news related to the cannabis industry, titled "Medical Marijuana’s Impact on Condo and Homeowner Associations." Read the full article here.
Reidenbach & Associates named one of the “Best Real Estate Law Firms in Philadelphia - 2017” by Expertise.com
Expertise.com featured Reidenbach & Associates in "Best Real Estate Law Firms in Philadelphia - 2017." Site editors looked at 351 real estate law firms in Philadelphia and picked the top 19. The selection process was based on 25 variables across five categories - reputation, credibility, experience, availability and professionalism. We are honored to be included and are in good company!
Scott Reidenbach invited as panelist at “Issues in Aging: Planning for the Future.”
L to R: Scott Reidenbach, Christine Karas, Jody Guokas Kuntz, Peri Higgins, Richard Craft
On March 9th, two Main Line-based businesses collaborated to host over forty guests for a luncheon and panel discussion at Overbrook Golf Club titled, “Issues in Aging: Planning for the Future.” Wayne-based Reidenbach & Associates LLC, a law firm that specializes in estate planning and real estate, joined forces with LumaCare, a women-owned business which specializes in in-home care for seniors. Together, they delved into the myriad of options seniors now have in regards to aging and home health care.
The panel discussion featured Scott Reidenbach, founding principal of Reidenbach & Associates, LumaCare founding partners Peri Higgins, Jody Guokas Kuntz and Christine Karas, and Richard Craft, CEO of Berwyn-based Wealth Advisory Group, Inc.
The panelists addressed questions pertaining to “Aging in Place”, the impact of in-law apartments on home values, and how to broach difficult conversations with family members. They also demystified long-term care insurance and whether parents should consider adding children’s names to the deeds of their homes.
LumaCare was borne out of necessity when Ms. Higgins – like many baby boomers – needed help caring for her father and realized how difficult it was to find a trusted, qualified caregiver. Today, LumaCare assists families in finding carefully vetted, well-matched, compassionate caregivers who help with everything from meal prep, doctor’s visits and even family vacations.
Reidenbach & Associates LLC provides high-level estate planning services and works with clients to draft wills and estate planning documents. The firm specializes in real estate as well and is well-versed in buying, selling and modifying homes.
Reidenbach & Associates and LumaCare invite you to attend a luncheon and panel discussion on Thursday, March 9th at the Overbrook Golf Club, “Issues in Aging: Planning for the Future.” Topics we’ll address include details of long-term care insurance, “aging in place,” the importance of clear wills, and estate planning and the protection of assets.
Please be our guest for this interactive discussion. To RSVP or with questions, please email Sarah Domin at Sarah@reidenbachlaw.com.
Scott Reidenbach presenting his annual “Life Skills” session at Villanova University
November 29, 2016
Scott Reidenbach delivered his 15th annual “Life Skills” presentation to the freshman student-athletes from each of the 24 sports programs at his alma mater, Villanova University. Scott knows first-hand about the honor of being a Villanova student-athlete – he played on the baseball team during his four years as an undergraduate.
Each fall, Villanova coordinates a series of “Life Skills” presentations for freshman student-athletes, intended to encourage positive decision making and a healthy balance of academics and athletics. During his hour-long presentation, Scott acknowledged that newfound freedom comes with increased responsibility and each student must be accountable for their actions. With humor sprinkled throughout each topic, Scott touched upon issues the athletes may encounter as undergrads, including alcohol and drinking underage, DUI, disorderly conduct, fake ID, date rape and sexual assault – and explained the associated legal, financial and academic consequences.