The housing crisis intensifies as Wall Street-backed corporate landlord, Invitation Homes, acquires 264 homes in Las Vegas for $98 million. This mega-deal is part of a $650 million exchange, involving nearly 1,900 single-family rental homes between Starwood Capital and Invitation Homes.
With 3,500 homes now owned in Clark County, Invitation Homes becomes the second-largest owner of single-family rental homes in the area. The acquisition exacerbates the acute shortage of affordable housing in Las Vegas, the city facing the worst scarcity in the nation.
As housing struggles persist, particularly with rising evictions, the impact of mega-rich investors on the real estate landscape continues to pose challenges for those seeking affordable and stable living arrangements. The ongoing crisis demands attention and solutions to address the widening gap in housing accessibility.
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In 2005, entrepreneur Dallas Tanner and several others formed the housing and apartment investment company Treehouse Group in Arizona.[4] Between 2010 and 2011, it bought 1,000 distressed houses in Phoenix, Arizona, a city heavily impacted by foreclosures caused by the subprime mortgage crisis[2] and one of the first areas where private equity investor purchases of homes for rent took place after the Great Recession.[5]
In 2011, Treehouse merged with the Dallas-based property management firm Riverstone Residential.[2] The company was acquired by Blackstone Inc in the spring of 2012, forming Invitation Homes, with Blackstone giving Treehouse and Residential more capital to expand the business.[2]
2012–2017: Initial purchases
Invitation Homes’ first home purchase was in April 2012,[2] and within a year the company had spent $4 billion on 24,000 homes in the United States, becoming the largest buyer of homes for rent in the United States; section 8 properties made up 16% of the portfolio.[6] In April 2013, it made a $100-million-plus purchase of 1,400 Atlanta homes from Building and Land Technology.[6]
From August 2012 to June 2013, Invitation Homes purchased 1,650 homes in the Tampa Bay Area for over $250 million.[7] In June, 85% of Tampa Bay online listings by Invitation Homes were above the area’s average rent of $1,200.[7]
At the time, corporate home owners like Invitation Homes were purchasing houses in “strike zones,” neighborhoods located near several jobs, schools, and transportation systems that were also facing high amounts of foreclosures, and rented them to middle-aged parents raising children making around $100,000 a year or more.[8]
In 2013, Invitation Homes created an asset class of single-family rental securities (SFR) to raise money for purchasing and restoring houses.[8]
In 2016, Invitation Homes instituted its “Resident First Look” program where some renters would be given an option to purchase the homes they rent.[9]
In November 2019, Blackstone divested its share of Invitation Homes.[12][13]
In October 2020, Invitation Homes created a joint venture with Rockpoint Group to purchase $1 billion in single-family homes in Dallas, Seattle, South Florida and other U.S. markets.[14]
In July 2021, the company launched a joint venture with Atlanta, Georgia-based home construction company PulteGroup, where Pulte was projected to design and build approximately 7,500 new homes over the next five years for sale to Invitation Homes for inclusion in their single-family rental leasing portfolio.[15]
Business model
As of 2017, the company was reportedly the largest owner of single-family rental homes in the United States.[2] As of December 2022, the company owned about 83,000 rental homes in 16 markets.[3] The Wall Street Journal described Invitation Homes as competing “at the high end of the rental market”. Tenants are typically in their late-30s with children and household income of approximately $100,000.[13]
Invitation Homes has raised rents by an average of as much as 10% per year in some markets such as Oakland, California, double the norm for these markets
In May 2018, tenants filed a class action against the corporation in the United States District Court for the Northern District of California, with a rationale of excessive rent price increases and fees; they reported being charged $95 if even a minute late on a rent payment, regardless if the company’s online payment system is broken, and filing eviction notices that added more “unfair” legal costs, fees, and penalties for them to bear.[8] On July 20, Invitation Homes responded with a motion that stated the class action group and its plaintiff had too little evidence.[8]