As rising mortgage interest rates, record-high home prices, and inflation squeeze more and more individuals and families out of the house-buying market, home builders are turning to professional investors to replace them.
Investors buy homes in popular markets and nice neighborhoods, then rent them to people who want to live in a single-family home with a yard but are unable to amass cash for a down payment or qualify for high mortgage payments. 
Investment cash has flooded into the housing market to buy houses as rental properties as rental rates have soared, a trend we have documented in articles such as “Invitation Homes to Buy $1 Billion Worth of Houses This Year” (1 Jun 2021), “Private Equity Partners Target $5 Billion in Rental Houses” (27 Jul 2021), Residential Rental Rates Skyrocketing (10 August, 2021), and Middle-Income Buyers Too Poor to Buy Homes (15 February, 2022).
Keystone Homes in Scottsdale, Az., is building 800 houses this year, half of which are being sold to investors, owner Rich Eneim, told The Wall Street Journal.
He will keep the other half and rent them to tenants, he said.
More than 25 percent of houses bought by investors in 2021’s last quarter were newly built, compared to 3 percent in 2019, according to a study by John Burns Real Estate Consulting LLC and the National Rental Home Council, a landlord trade group.
New houses owned by investors now make up about 9 percent of U.S. single-family housing stock, Burns noted.
So far, investors have spent only about 25 percent of the $89 billion they have gathered this year to buy, or help finance construction of, new houses, according to the WSJ.
In February, 799,000 new houses were under construction across the U.S., 28 percent more than a year previous, government figures show.
However, fewer households can afford to buy them: mortgage interest rates averaged 4.72 percent earlier this month, compared to 2.97 percent a year earlier, according to the Federal Home Loan Mortgage Corp.
As a result, 41 percent fewer mortgage applications were filed during the week ending 7 April than a year earlier, the Mortgage Bankers Association said.
Rates are due to rise higher next month when the U.S. Federal Reserve will raise its base rate yet again.
TREND FORECAST: As we have been warning for more than a year, the flood of private equity money into residential housing not only sweeps tens of thousands of houses off the market; it also inflates rental rates to the point that tenants are unable to save enough cash to make a down payment on the relatively few homes still available on the market.
The result will be at least one generation, and probably more, of Americans unable to live in a home they own and control and denied the opportunity to build wealth through homeownership.
Because private equity money is only about the bottom line, it will only stop buying homes when there are no more homes it deems adequately profitable to buy.

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