Real estate developers are building more new single-family rental homes after years of investors buying up houses to rent

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Christopher Todd Communities At Stadium, a 313-home community located in Phoenix, Arizona.

  • Investors are plowing into the single-family home market, buying up houses to rent out.
  • The demand for rental homes is now spurring developers to build entire communities from scratch.
  • The Wall Street Journal reports that suburban rental developments are underway in nearly 30 states.
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It’s no secret that investors large and small are buying up single-family homes and renting them out to tenants who want all the lifestyle perks of a house without the obligations of owning one.

After a record buying spree in 2020, the trend is heating up with institutional buyers picking up nearly 55,000 homes during the first quarter of 2021, according to data from Redfin.

And in March, the largest operator, Invitation Homes, told investors it planned to spend $1 billion acquiring homes this year.

But a growing wave of developers are tapping into that demand by building up entirely new communities of rental homes that are leased and managed like vast, horizontal apartment complexes.

One developer, Transcendent Investment Management, started in 2014 and now manages over 1 million square feet of single-family homes.

“We decided to no longer buy older product, but to partner with homebuilders and be a wholesale buyer of new homes,” CEO Jordan Kavana told Insider.

Today, nearly 30 states are home to such developments cropping up outside cities like Phoenix, Nashville, and Atlanta, according to the Wall Street Journal,

“We didn’t want to get into homeownership,” Joe Paul, a resident of a community in Arizona, told the Journal. “We still want to travel and don’t want to have to maintain a house.”

Offering professional property management, routine maintenance and repairs that are the responsibility of the landlord, not the tenant, the new developments provide a sort of souped-up version of the homeowners’ association model that some communities already have.

In addition, some tenants have gone from owner to renter – and welcome the flexibility of life without a mortgage.

Matt Marooney, who rents a five-bedroom house a house in a community in Georgia, told the Journal that he previously owned a house and that renting has helped him get back on his feet financially. He would like to go back to owning, but not just yet.

Institutional ownership of single-family rental properties has been the subject of much criticism, but analyst Brad Hunter told the Journal that built-to-rent homes make up about 6% of all new homes, but could soon approach 50% as demand grows for more flexible housing.

Homeownership has traditionally been the largest factor in building household wealth in the US, but that equity doesn’t grow when paying rent.

“We need to be thinking more about different ways that people can still own the communities that they live in, outside of the primary residence model,” said Christopher Ptomey, executive director of the Terwilliger Center for Housing at the Urban Land Institute, according to the Journal.

Ptomey suggested several alternatives that could provide the economic benefits of ownership without a traditional mortgage, such as neighborhood-scale real estate investment trusts, or other fractional ownership models.

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Don’t short meme stocks as retail and institutional investors rotate back into Reddit trades, market strategist says

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Traders shouldn’t be shorting so-called meme stocks amid a rotation back into Reddit trades from both institutional and retail investors, according to Joe Terranova, senior managing director and chief market strategist at Virtus Investment Partners.

Terranova sat down with CNBC on Thursday to discuss the recent resurgence of meme stocks and said when it comes to the social media favorites, “the first thing you don’t do is you don’t short these stocks.”

To his point, on Tuesday alone, AMC and Gamestop’s rise caused short sellers to lose $618 million in a single day, according to data from ORTEX.

The market strategist went on to describe the rotation back into Reddit favorites like GameStop and AMC from both retail traders and institutions after cryptocurrencies’ recent leverage unwinding.

Despite a common belief that these trades are run by the retail community, Terranova says institutions are just as involved.

“Let’s not think that this is just all retail traders. This is institutional money, this is hedge funds, they’re participating on the long-side, and I don’t think you fight it,” he said.

When asked whether this was a short-term trade or a “fundamental investment” Terranova laughed and said it was clearly just a trade as far as institutions are concerned.

The strategist noted that there are algorithms used by institutions that are recognizing price momentum in meme stocks and “positioning accordingly on the long-side.”

Shares of Gamestop are up more than 35% this past week as increased chatter on Reddit, and other social media platforms has brought a second wind to the video game retailer.

Fellow Reddit darling AMC‘s stock is also on fire, surging more than 45% since last Thursday.

Blackberry has seen a resurgence of late as well, with Reddit traders using rocket emojis to celebrate its return to around $10 per share.

Terranova says as these Reddit stocks rise, the key question isn’t how to trade them, but rather: what’s next?

“The question now becomes where else do they target? Do they go to Beyond Meat which has a 24% short interest? Do they look at Roblox, which is trading incredibly strong? I think ultimately that they do, but absolutely you don’t short these stocks,” Terranova said.

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78% of institutional investors are not planning on investing in cryptocurrencies, though a majority say crypto is ‘here to stay,’ JPMorgan survey finds

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  • A JPMorgan survey of 3,400 institutional investors shows a majority do not plan to invest in or trade cryptocurrencies. 
  • However, 58% of investors surveyed said cryptocurrencies are “here to stay.”
  • The survey is the latest look into institutional sentiment on cryptos as more firms enter into the space.
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An overwhelming majority of institutional investors surveyed by JPMorgan said they do not plan to start investing or trading cryptocurrencies, though 58% said crypto is “here to stay.”

In a survey of roughly 3,400 investors representing 1,500 institutions around the work, 11% of investors said their firm either trades or invests in crypto, while 89% said their firm doesn’t.

Out of the investors who answered “no,” 78% of investors said it’s “not likely” their firm will trade or invest in crypto, while 22% answered “likely.”

The survey sheds a light on the state of institutional investor interest in cryptocurrencies. While bitcoin’s parabolic rise has garnered the attention of institutional and retail investors alike, the institutional community remains somewhat divided on the future of crypto. 

When asked: “What is your opinion on Crypto?” 14% answered “probably rat position squared (something to avoid,)” while 7% said it “will become one of the most important assets.” 58% of investors said it’s “here to stay,” and 21% answered that crypto is just a “temporary fad.” 

Almost all investors (98%) said they believe fraud in the crypto world is “somewhat” or “very much prevalent.” 

Multiple well-known Wall Street behemoths are taking in interest in cryptocurrencies and bitcoin. Most recently, a unit of Morgan Stanley said it’s exploring whether to invest in cryptocurrencies, according to Bloomberg. Morgan Stanley also has a 10.9% stake in MicroStrategy, which gives the bank indirect exposure to 7,681 bitcoin. 

BlackRock has authorized two of its funds to invest in bitcoin futures, while JPMorgan strategists have a theoretical price target of $146,000 for bitcoin.

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