After World War Two, suburbia and single-family home ownership exploded onto the scene, setting the stage for the American Dream. For the seventy-five years since then, home ownership has been an American staple, fueled by the IRS code that allows home mortgage interest to be deducted. Alas, the bubble burst when the Great Recession turned the tide, and now the homeownership rate has hit a 50-year low. One of the most visible signals of this change was the announcement that Blackstone’s Invitation Homes, and Starwood Waypoint Homes have announced plans to merge. The mega single-family rental company will own approximately 82,000 homes in 17 markets.
As noted in the Wall Street Journal when the deal was announced, with this deal, the bet is that near-term, home-building will continue to lag behind demand and that bad credit, a lack of savings and tight lending will keep many people renting. Long-term, they are wagering that homeownership will no longer be an essential component of the American dream and that more people will chose to rent. When the single-family rental gig emerged, I was skeptical that it was not a sustainable trend, but I now believe that we are witnessing, yet again, another seismic demographic change.