Lawler: More on Investor Purchases of Residential Homes: Pretium

From housing economist Tom Lawler:

“In a report last month, I wrote about how data from Redfin and CoreLogic indicated that there had been a surge in investor buying of SF homes in the second and third quarters of this year, with some of the biggest increases coming from “large” investors.

One private company that has massively increased its holdings of SF residential properties is Pretium Partners, a “specialized investment manager” with a huge portfolio of SF residential properties for rent. (Pretium owns Progress Residential, which has recently gotten some negative press.) 

According to Pretium’s website, Pretium has increased the number of SF properties it owns from 41,000 at the end of 2020 to 70,700 at the end of September 2021.

While there is limited information about the holdings and activity of these private firm, Progress’ Residential’s website says that it “serves” 32 different markets, though there are no data on how many properties are owned in each market.  In each market, however, there are listings of properties either currently available or “coming soon” for rent, and this probably gives one a decent idea of the company’s mix of acquisitions by region.

These “listings” are shown [in the table below].

The Washington Post ran a “page one, below the fold” (I have a hard copy subscription) article this past Sunday that cast Progress Residential in an unfavorable light. 

Over the past six years, 19 of the 32 homes on Tammy Sue Lane have been purchased by a billion-dollar investment venture, part of an unprecedented flow of global finance into the American suburbs. Less than 10 years old, the company has amassed one of the nation’s largest portfolios of single-family houses, becoming the landlord for tens of thousands of families.

The venture, Progress Residential, acquires as many as 2,000 houses a month through the use of a computerized property-search algorithm and swift all-cash offers. Progress executives boast that the company’s efficient management practices have been a boon to their tenants who cannot afford to buy one of the “entry level” homes.

Pretium is by no means the only large “private” investment firm that has invested heavily in the SF rental market.  However, it is not easy to find publicly available data on these firms’ activities.

What is striking, and to some extent disturbing and alarming, is that the surge in large investor buying of SF homes has occurred when there already was an unusually low inventory of homes for sale, and when home prices had already risen exceptionally sharply prior to the surge in investor buying.”