Where are Large Operators Cutting Home Prices?

What 6 Markets are Large Portfolios Cutting House Prices?

Over the past 12 months, 40% of Single Family Homes offered by large SRR operators (100+ units) experienced price reductions on the resale listing market. Six markets stood out due to their high level of price-cut activity:

• Cape Coral, FL (80%)
• Pittsburgh, PA (75%)
• Deltona-Daytona Beach, FL (71%)
• Milwaukee, WI (64%)
• Tampa, FL (51%)
• Louisville, KY (51%)

While the price reduction phenomenon has been observed across multiple regions, these markets witnessed widespread cuts. Additionally, half of the markets with the most significant cuts are situated in Florida, including Tampa, a major SFR market.

Summary of Price Cut Activity

In previous discussions, we highlighted SFR operators who are actively disposing out of the market, leading them to implement price reductions on their assets. To delve deeper into this trend, we undertook a comprehensive analysis of price changes in properties listed for sale by major operators of SFH portfolios (100 units or more). Here are our key findings:

• In the median metropolitan market, 40 percent of listings experienced reductions; however, in 10 markets, constituting 1 in 6 of all units available in the past 12 months, more than half of all units saw a price discount.
• Six markets stood out on price contractions activity with half of those located in Florida, an important market for SFR activity.

• Surprisingly, markets that demonstrated heightened activity during the COVID-19 pandemic and maintained a positive investor-to-sale ratio, such as Pittsburgh, PA, and Milwaukee, WI, also witnessed a significant amount of inventory held by large SFRs being discounted.
• Our analysis shows that  in Milwaukee and Pittsburgh the majority of price cuts are driven by large SFR operators like VineBrook Homes, despite sustained interest in investing in those markets.
• Florida emerges as another noteworthy market where SFRs have implemented inventory price cuts. In Cape Coral three out of four homes offered by large operators experienced price reductions. Simultaneously, traditional SFR markets like Tampa also witnessed discounts in two out of four homes offered by these operators.

As large SFRs grapple with the diminishing availability of affordable capital for investment, additional, market specific, volatility could ensue. Contact us to know more.