By Patrick Clark | Bloomberg
The largest owner of U.S. rental houses isn’t seeing any let-up in demand, or in its ability to increase rents.
Invitation Homes, which owns more than 80,000 single-family rentals, raised prices by nearly 11% in the third quarter, according to a statement. The company boosted rents by 8% on renewals and 18% when leasing homes to new tenants. Rates are rising fastest in the Southwest, where rents increased 30% on new leases in Las Vegas, and 29% in Phoenix.
“It’s a little bit crazy,” Chief Executive Officer Dallas Tanner said on a conference call with investors Thursday. “There just isn’t enough quality housing available right now.”
Rising rents have been a staple of the economy since early Covid lockdowns lifted in the middle of last year. Surging purchase prices have pushed homeownership out of reach for first-time buyers.
Invitation’s properties, which tend be more centrally located than those owned by other institutional landlords, have been especially popular. And tenants tended to stay put: The company had a record-low turnover rate in the quarter, which reduced the expenses associated with preparing a house for leasing.
Household formation and migratory shifts to the South and the West are fueling demand, Tanner said in an interview with Bloomberg Television. On the supply side, builders grew cautious following the U.S. foreclosure crisis, and more recently, battled bottlenecks in the pandemic economy.
“We’re dealing with the same supply constraints in housing as a lot of other sectors,” Tanner said.
Invitation’s shares rose slightly to $40.68 at 1:36 p.m. New York time after the company raised its expectations for full- year revenue and net operating income. The stock is up 37% for the year.