(PresidentialWire.com)- It was reported last week that two Goldman Sachs-backed ventures last month bought up an entire rental community in Florida for $45 million.
Fundrise Interval Fund and Growth eREIT VII purchased 87 Brevard County single-family properties in what is being described as an ongoing southern real estate buying spree.
Fundrise had previously purchased a 120-unit Pensacola development and has been buying up rental developments in other southern states, including South Carolina and Mississippi.
With the demographic shift to the south prompting rental rates to soar, real estate experts believe Wall Street’s appetite for investing in southern properties will only continue to intensify.
Florida Atlantic University real estate professor Ken Johnson said Wall Street firms are following population trends and investing accordingly, picking up properties in regions of the country they previously ignored.
In addition to Florida, Johnson said Wall Street is also making big investments in North Carolina, Tennessee, and Texas. He explained that people are relocating to these states and population increases should be expected in the near future.
However, critics believe the unprecedented increase in rental prices is connected to Wall Street’s embrace of investing in single-family rental homes.
But Johnson said Florida is undergoing a “fundamental shift” from a hospitality-centered economy with second-home, seasonal properties to a year-round economy with permanent residents. He suggested this reorganization has contributed to the increase in housing costs.
Rents in Florida have increased by over 30 percent overall while other sunbelt states have also seen similar rental hikes.
There is also anecdotal evidence of home buyers getting priced out of a property by investors with deep pockets.
However, Professor Johnson said corporate investments like these are a “drop in the bucket” compared to overall home purchases nationwide. Johnson asserted that even large-scale, concentrated corporate purchases like those from Fundrise don’t have enough “market power” to determine rental prices.