According to HousingWire, the two largest public single-family rental operators, AMH and Invitation Homes, are signaling that investor confidence is returning to the build-to-rent market now that the 21st Century ROAD to Housing Act has passed. The legislation removed certain provisions that had created significant uncertainty and essentially froze capital flow into the industry during the first half of the year. Both companies' executives indicated that while capital is starting to come back into the market, it's doing so cautiously and at a measured pace rather than all at once.
The two industry leaders have taken notably different paths to growth. AMH, which started by purchasing homes through the MLS, has shifted its strategy to focus primarily on developing new rental communities in-house through its development program that launched in 2017, supplemented by builder partnerships and selective acquisitions. The company has been actively selling off its older scattered homes to free up capital and redirect it toward newer purpose-built rental communities. Invitation Homes, by contrast, has traditionally grown as an acquirer, purchasing purpose-built communities and entering into agreements with builders, though it recently moved into development after acquiring a company called ResiBuilt in January.
According to HousingWire's reporting, Invitation Homes experienced a particularly quiet first half of the year as sellers held back and capital stayed on the sidelines waiting for legislative clarity. The company's executives explained that now that the bill has passed, more sellers are beginning to come to market and capital is "starting to poke its eyes up" to explore how to participate in the sector. The ResiBuilt acquisition timing proved challenging since it occurred just before the legislative uncertainty took hold, and some development projects were delayed or canceled during that period. However, the company's lending business, which supports other BTR developers, has also started picking up steam following the bill's passage.
AMH saw similarly muted activity during the early months of the year, with only a couple of deals closing in January before the market entered a wait-and-see mode. The company's leadership noted that post-legislation, deal activity is beginning to emerge and conversations with owners are happening again. From AMH's perspective, the final version of the ROAD Act actually supports its core business model centered on development and consolidation among single-family rental operators.
What I'm seeing locally here in the Bay Area and throughout the East Bay is that investor appetite for residential development has been held back by these same uncertainties, and now that we have more clarity, I'm expecting to see a gradual pickup in transaction activity. The bigger, well-capitalized players will likely benefit most from this shift, which could mean more competitive pressure on smaller operators and potentially some consolidation opportunities for savvy buyers and sellers who understand the changing landscape.
