Smart money

Residential real estate data for several pockets of the Gulf Coast point to an alluring projection: Investment firms backed by Wall Street money and private equity could seek to cash out in 2015 on bulk purchases made in the downturn.

If that happens, say several area agents, equilibrium could return to many markets that are exceedingly low on inventory, especially in the $300,000 and under category. “We are anticipating a lot of these homes coming back to the market,” says Stafford Starcher, recently named president of the board of directors of the Realtor Association of Sarasota and Manatee. “It will help our market this year.”

Entities that might sell homes, from Cape Coral to Ellenton to New Port Richey, include Invitation Homes, which is backed by private equity giant Blackstone Group; American Homes 4 Rent; and Colony American Homes. These firms, according to data from Irvine, Calif.-based research firm RealtyTrac, could see equity gains of at least 20% on sales of homes bought in 2012. A large chunk of these homes are on the rental market.

“The takeaway is the big, single-family operators were smart to buy when they did,” says Darren Blomquist, a vice president with RealtyTrac, which recently released two comprehensive national surveys on the topic. “Probably would have been smart for other people to buy then, too.”

One RealtyTrac study is titled “Where Wall Street is Most Likely to Cash Out of the Single Family Rental Market. The other is “Where Wall Street is Most Likely to be Your Landlord.”

“These guys were buying like crazy in 2012, and they were buying sight unseen on certain properties,” says Premier Sotheby's International Realty agent Craig Cerreta, who is based in Manatee County but didn't work with any of the firms directly. “They bought when prices were really low and as soon prices started to creep up they stopped buying.”

Several agents say they heard most of the institutional investors were on a five-year buy-and-hold plan. But with price appreciation growing faster than many anticipated, those five years could be cut to take profits.

That scenario is an elixir for agents who can't find enough houses to show clients, given the tight inventory. “I bet a lot of Realtors would love that,” says Bradenton-based Keller Williams On the Water broker Greg Owens. “Anything with four walls and a roof that's hospitable is hot right now.”

Yet there's a flip side to an inventory increase in that it could bring a wild supply and demand swing. “If it happens too rapidly,” says Cerreta, “it will push down prices.”

Institutional investors are likely wise to that issue, says Blomquist. So some might exit by selling a portfolio in bulk to another firm that believes the market has more upside.

And not every firm even wants to exit the Gulf Coast real state market just yet. Blackstone, for example, includes Tampa on a list of five cities where it continues to make single-family home purchases, according to a recent Bloomberg News report. The other four are Atlanta, Miami, Orlando and Seattle. “There are still a lot of markets where prices are very appealing,” says Blomquist. “(Some firms) are still looking to acquire properties when they can make the math work.”

Follow Mark Gordon on Twitter @markigordon