The CEO of Invitation Homes, Dallas Tanner, believes the recently passed housing bill that bans investors like him from buying existing homes will eventually lower home prices, but not in the short-term.
According to the report, Tanner said, “I believe in the medium- to long-term, it definitely will.”
The bill focuses on deregulation, simplifying capital coming into housing, and addressing supply side challenges.
Tanner pointed to mortgage rate volatility, high construction costs, and zoning and regulatory imbalances as factors that will affect the immediate term.
Housing Bill and Its Impact
In early January, President Donald Trump called for a ban on large-scale investors buying single-family homes to rent, stating that “People live in homes, not corporations.”
This move was part of a larger push to tackle the affordability crisis in housing. Some argued that institutional investors were pushing owner-occupants out of the market and inflating home prices.
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The ban became law in July, preventing investors who own more than 350 homes from purchasing any more existing units.
Invitation Homes’ Strategy
Invitation Homes is leaning towards buying new single-family homes specifically built for rent.
According to Tanner, “Our focus as an industry and as a company has been, how do we create new supply and bring that into the housing system today?”
Invitation Homes has built or acquired over 6,000 new homes in the last five years through partnerships with builders.
In January, Invitation Homes purchased a homebuilder, ResiBuilt, and has also purchased homes from large public builders like Pulte Homes and Lennar to use as rentals.
Tanner noted that the company has been selling off hundreds of its older rental properties, and they’re focused on creating new supply.
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Market Impact
The largest investors, those owning more than 1,000 homes, represent less than 3% of the single-family rental market, according to various sources.
However, they have an outsized footprint in certain metropolitan markets, like Atlanta, Jacksonville, and Charlotte.
Invitation Homes reported better-than-expected earnings at the end of July, despite rents and demand not being as healthy as they were in the first few years of the pandemic.
Tanner said, “We’ve seen sort of fundamentals reset… We’re starting to see actual pretty positive green shoots in several of our markets.”
The company’s strategy to focus on new single-family homes built for rent may help address the supply side challenges and provide more affordable housing options.
As the housing market continues to evolve, it will be interesting to see how Invitation Homes and other investors handle the changing setting and respond to the ban on institutional homebuying.
