Will Wall Street cause the next real estate meltdown?
According to the Review Journal, in the summer of 2023, a corporate landlord bought hundreds of homes in a massive transaction. The Miami-based investment firm Starwood Capital Group sold 264 homes for $98 million to Dallas-based Invitation Homes. The majority of the homes sold are in the city of Las Vegas (94), followed by the city of North Las Vegas with 77. The average price was at $371,514 and were the typical 3 bed, 2 bath, 2 car homes our investors purchase.
This local sale was just just a segment of a much larger deal between Starwood Capital and Invitation Homes, a $650 million swap for a portfolio of close to 1,900 single-family rental homes in the Sunbelt that included Texas, Florida, Phoenix, Las Vegas and Los Angeles.
This type of transaction has a significant impact on our local market in 2 ways. First of course is these properties never become available for either first time home buyers or investors. The second impact is the volume of rentals goes up which keeps rental prices low.
I predict over time that toxic leases will accumulate just as toxic mortgages accumulated in the last mortgage meltdown. When these equity swaps occur, the quality of the tenants imbedded in these leases ranges wildly and there will be pressure to falsify rents and tenant quality prior to the swap. Those toxic leases get packaged up and sold to the next sucker until someone ends up with a bag full of crappy tenants who aren’t really paying rent. We could see a similar meltdown where the last investment firm holding a bag full of crappy tenants goes bankrupt and puts hundreds of homes up for sale. It will take years for this to come to light.
In the meantime, there is simply nothing to purchase. If you did manage to find something to purchase, the returns are less than a bank CD. Nearly every week we get some poor investor who just purchased a property through another brokerage with unrealistic expectations of returns. They are losing money every month and have no way out of the pickle they got themselves in.
Rental Market – By Bob Kinniburgh
According to Zillow, the median rental price in Las Vegas continued to decrease throughout the year, finishing at $1,926 in December. As you can see, Las Vegas experiences the greatest demand and achieves the highest median rents in the second quarter. We have been proactive in moving our leases to match the highest demand period as it begins a gradual descent in the third and fourth quarters. See the full set of statistics here.
According to Buildium, a property management software company, their number 1 prediction for the national rental market is that rent growth will remain slow in construction-heavy markets, like the Greater Las Vegas market. In addition, they predict an increase in “accidental landlords” as the housing market national will remain sluggish. There are 13 predictions for 2024 in all, and you can read the whole article by clicking here.
We wish you a safe, healthy, peaceful, and prosperous 2024! We thank our Limestone family of owners and are grateful for the trust they place in us. Thank you for helping us wrap up a great year!
Barb Eagan Is Superhost – 2 Consecutive Years!
Most of our investors don’t know how difficult it is to be a Superhost on Airbnb. Not only do the properties have to be immaculately clean, the quick responses to check ins, bookings and maintenance issues are also factored into maintaining that status. She puts in a tremendous amount of work behind the scenes to make guests feel appreciated.
You get discounts for staying with us and we would love for you to visit!! Click here to see what we have available.Get two nights free! When you book any of our exciting stays. Send barb an email (email@example.com) to get your two additional nights. You can transfer this special to friends or family.
Current Clients – 1099s Going Out By 1/25/2024
Corrie is feverishly working on getting everyone’s 1099s and year end reports by 1/25/2024
We sincerely appreciate your business and look forward to another prosperous year!