The institutional homebuyer slowdown isn't translating into a massive institutional selloff

This weekend, the Lance Lambert House Price Tracker will be updated for ResiClub PRO members. It will include fresh pricing data down to the metro and county levels.

The pandemic-era economy presented an irresistible opportunity for institutional homebuyers, lured by a combination of skyrocketing rents, historically low interest rates, readily available capital, and surging home prices. Data from John Burns Research & Consulting revealed that during Q2 2022, institutional landlords—defined as firms owning at least 1,000 homes—snapped up 2.4% of all home purchases that quarter. However, this fervor subsided sharply as interest rates surged. In Q2 2023, institutional landlords represented a mere 0.4% of home purchases.

But this institutional slowdown hasn’t translated into a massive institutional selloff.

To better understand which institutional homebuyers are selling off the most—and least homes—ResiClub reached out to the residential real estate data pros at Parcl Labs.

Parcl Labs provided ResiClub the following data 👇

The Parcl Labs data makes it clear that institutional homebuyers aren’t offloading a ton of inventory. Invitation Homes, which owns over 84,000 homes, only has 156 homes up for sale. Amherst, which owns around 44,000 homes, has 128 homes for sale.

That’s just normal portfolio culling.

Among these 21 major institutional homebuyers, only 7 are selling off at least 2% of their portfolio right now. The last time Parcl Labs ran this analysis for us in December, only 3 institutional homebuyers had at least 2% of their portfolio up for sale.

“The findings are consistent with your takeaways from last time: no large sell-off, continued culling/reallocation of portfolios,” Lucy Ferguson, VP of Strategy at Parcl Labs, tells ResiClub.

Divvy (5.2% of its portfolio is for sale) being high on the list makes sense, given its business model: They rent homes to financially constrained individuals until they're prepared to make a purchase. That rent-to-own business model, in theory, has higher levels of turnover.

One institutional firm to closely watch might be VineBrook.

As ResiClub reported in November, VineBrook Homes Trust doesn’t have enough liquid capital ready to meet its debt requirements. In its third quarter filing, it wrote: “The Company has significant debt obligations coming due on the Warehouse Facility of approximately $1.2 billion within 12 months of the financial statement issuance date. As of the date of issuance, the company does not have sufficient liquidity to satisfy these obligations. In order to satisfy obligations as they mature, management intends to evaluate its options and may seek to… sell homes from its portfolio and pay down debt balances with the net sale proceeds.”

Parcl Labs’ analysis includes institutional homes observed on the resale market in the past 90 days. It doesn’t reflect bulk portfolio deals shopped off-market.

When it comes to the housing market, we should always keep a close eye on the labor market. Despite the Fed raising interest rates at the fastest pace in four decades, the unemployment rate in February 2024 (3.9%) remains close to what economists historically considered 'full employment.' We have risen a bit from the multi-decade low (3.4%) reached in April 2023.

Monthly unemployment rate 1970-2024 👇

Red = warm labor market

Blue = cold labor market