Accessing the Impact of National SFR Operators on Local Market Dynamics

Introduction

Real estate is local. Although institutions own just 3.4% of single-family homes across the nation, their influence looms large in specific markets, significantly affecting local housing dynamics.

Before Parcl Labs, transparency into these institutional activities was limited. Parcl Labs offers real-time data that maps institutional ownership across the complete single-family rental (SFR) lifecycle—from acquisition and rental to eventual sale. Our technology enables daily tracking of market activity, capturing insights from major operators' performance to overarching market trends.

If you're an SFR operator or investor, understanding your local market is crucial. To illustrate this point, we've zeroed in on Jackson, MS, a locale where concentrated competition between large operators is shaping both supply and price dynamics.

Executive Summary

• Jackson, MS, is home to the zip code with the highest percentage of single-family homes listed for resale in the U.S. This ranking is based on an analysis of 6,900 U.S. zip codes, each with a minimum of 3,000 single-family homes.
• Large SFR operators currently account for one in every ten new listings in Jackson even though they only own 1% of the entire housing stock.
• Approximately One-fifth of resale listings in Jackson's 39206 zip code are owned by some of the country's largest operators.
• Large operators focus below the zip code level, dominating ownership and listings in specific neighborhoods within 39206.
• Among the three large operators in Jackson with substantial local portfolios, one with ~20,000 units nationally has decisively chosen to exit the Jackson market. This operator's disposition strategy is influencing supply in Jackson's submarkets.
• Increased dispositions by large operators correspond with declining home prices in Jackson.
• Understanding local market dynamics is crucial for any SFR investor or operator. Ignorance can cost you, whether your resale properties are stuck in a saturated listings market or caught in a downward pricing war. Mitigate these risks and optimize your strategy with Parcl Labs' data-driven insights—schedule a demo today.
• Data in this report is current as of November 1, 2023. Parcl Labs will continue monitoring the Jackson market.

Jackson Mississippi Case Study: Impact and Influence of Large National SFR Operators in Local Markets

Jackson's 39206 zip code has the highest U.S. rate of homes listed for resale

In Jackson, MS, just over 1% of all single-family homes are listed for resale. This figure rises 3 fold to 3% in zip codes with a strong institutional presence. The 39206 zip code in Jackson leads the nation in the proportion of homes listed for sale, at 3%.

Large operators are disproportionately offloading properties in Jackson

In Jackson, Mississippi, large operators who own more than 1,000 units make up just ~1% of all single-family homes. That might not seem like much, especially compared to Atlanta, where these big players own 13% of the market.

However, these same large operators now account for one in every ten new resale listings in Jackson. This uptick in listings suggests a rapid liquidation strategy. The bar chart below categorizes operators by size: red bars represent the percentage of single-family home stock owned by each group, and blue bars indicate their percentage of total active listings.

1 in 5 homes listed for resale in Jackson's 39206 zip code are owned by large operators

Large operators don't spread their units evenly across metropolitan areas; instead, they concentrate their efforts in specific submarkets where they believe their rental product aligns well with local demand. We've demonstrated this trend in Atlanta, and the same pattern holds true in Jackson.

Zip code 39206 is the epicenter of large SFR operator activity in Jackson. In 39206, as of today's data:

• Large operators with over 1,000 units own 4% of the homes.
• These operators make up over 15% of the current resale listing market.
• One large national operator has a staggering 20% of their entire portfolio in this area is currently listed for resale.

Large operators have taken over specific neighborhoods within 39206

The concentration is more granular than the ZIP code level, a detail that becomes evident when we look at the map at the asset-level. The map below, featuring red dots that represents all SFR homes from operators of all sizes, reveals a generally even distribution across ZIP code 39206.

However, this distribution shifts when we zero in on operators with over 1000 properties. These larger operators mainly concentrate in the southeastern region between North State Street and Route 55. The map below is filtered to only show SFR units (again represented by red dots) owned by these 1000+ operators.

Using Parcl Labs data, we can discern not only which homes institutional operators own, but also which ones they've listed for resale—shedding light on their disposition strategy. Our data shows that there are certain neighborhoods where these operators account for nearly every other resale listing. This is noteworthy, given that these homes make up an idiosyncratic portfolio of units, rather than a uniform Build-to-Rent (BTR) community.

In the map below, blue dots represent properties currently listed by these large operators in these neighborhoods.

Three large operators hold notable presence in this market, but one is primarily driving this activity

One national operator, with a portfolio of over 20,000 units across the U.S. (including 800 in Jackson), commands this ZIP code with over 100 units. They're currently selling a fifth of these units. As a result, one entity now accounts for 1 in 5 resale listings 39206 and is aggressively cutting prices.

The map below displays units currently for sale that are owned by this large national operator.

Two other large operators maintain a significant footprint in Jackson. Although it's uncertain if they realize they're in direct competition, one has started actively selling units both in the Jackson metro area and this specific ZIP code, while the other is holding steady with their current inventory.

The timing of large operator dispositions correspond to declining home prices in Jackson

Parcl Labs data indicates a YoY decline in Jackson home prices, a trend corroborated by other reputable sources.

The graph below illustrates how asking price declines align with substantial increases in listing activity by large operators.

Most recently, median asking prices have fallen below the $200k mark, representing a 28% decrease from the highs between September 2022 and September 2023. This decline corresponds with large operators now accounting for 12% of total listing activity—a 3-4x increase compared to their usual share of resales. This trend is documented in the chart below.

Mom-and-pop owners are reacting and are starting to offload their properties too

Large operators may lack on-the-ground teams, even in locales where they have a significant presence. Meanwhile, in Jackson, the mom-and-pop owners, intimately familiar with the pulse of their neighborhoods, can't help but notice the proliferation of for-sale signs.

This awareness has become particularly acute as the 39206 area experiences what can be likened to a fire sale, a situation that has not only caught the attention of these smaller operators but also prompted them to enter the resale fray. Operators owning between 2-9 units constitute 11% of the 39206 zip code's resale market, and 10% in the entire Jackson area.

This influx is exacerbating the race to the bottom, as an oversupply meets lagging demand, subsequently exerting downward pressure on prices.

Contact Parcl Labs today to get your SFR alpha

If you're an SFR investor or operator, regardless of your portfolio size, understanding local market dynamics is non-negotiable.

In dispositions, ignorance comes with a high price tag. Identifying local competitors and grasping their tactics is essential. Not knowing your competitors can have serious financial implications, from properties languishing in a saturated listing market to being ensnared in a race-to-the-bottom pricing war.

Don't gamble with your assets. Parcl Labs provides unmatched SFR intelligence that empowers you to make data-driven decisions. Contact our team today for a demo, and bring laser focus to your SFR strategy.

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