Institutional homebuyers like Yieldstreet have paused purchases in 2023, becoming net sellers due to high interest rates and stabilized house prices. This significant shift in strategy reflects broader caution in the housing market.
Yieldstreet, a major institutional homebuyer, reduced its home purchases by over 90% in the latter half of 2022, effectively pausing its buying strategies. The high-interest rates and house prices led to this decision, with Tejas Joshi, the director of single-family residential at Yieldstreet, stating, “We’re pretty much on pause across all [homebuying] strategies.” As of August 2023, house prices have stabilized in most markets, but interest rates have risen, further halting Yieldstreet’s purchases.
Know Your Market
Through July 2023, Yieldstreet has not made a single purchase, functioning as net sellers with around 10 homes sold. Joshi doesn’t anticipate significant house price declines, expressing, “I think [national] home prices have bottomed at this point… I don’t expect major declines in most markets.” However, he hopes for falling interest rates since inflation has decelerated.
Yieldstreet aims to grow its single-family home portfolio from $200 million in 2023 to $1.5 billion by 2028. Other institutional homebuyers are also acting as net sellers; American Homes 4 Rent sold more homes than it bought through June 2023. Invitation Homes, the largest U.S. single-family homeowner, sold more homes this year than it acquired but is expected to become a net buyer again in Q3 2023 after acquiring nearly 1,900 homes for around $650 million. This trend among institutional homebuyers signals a broader caution in the market due to high prices and interest rates.
experts in finding your dream home
Want more options?
Start your search here
If institutional investors continue to lean heavily on the seller side, especially while demand is hampered by high-interest rates, we may see a growing inventory in a somewhat stagnant market pushing home values lower. The prospect of declining home values may frighten homeowners, but it’s unlikely that any declines would have any meaningful impact on prices long term as institutional investors would quickly re-enter the market as net buyers, in the event of an interest rate cut or a mild correction in home prices, creating yet another shortage of inventory and uptick in prices.
