Dive Brief:

• Invitation Homes LP, the U.S. single-family home rental business owned by private equity firm Blackstone Group LP, has filed for an initial public offering, according to The Wall Street Journal. 

• Under the IPO, the Dallas-based company, which has the largest share of the rental homes market, is set to raise around $7.5 billion through the sale of $1.5 billion in its shares. 

• Invitation Homes has invested around $10 billion in buying up 50,000 distressed homes and turned them into rental properties, mostly following the 2008 housing crash.

Dive Insight:

Blackstone appears to be bullish on the single-family home rental business in light of its planned IPO.

Optimism around this sector of the market could be well-founded after the National Association of Home Builders reported last week that market share of single-family homes built-for-rent was 4.4% in the third quarter of 2016, down from 5.8% in early 2013 but well up on a 2.8% historical average. Over the last four quarters, single-family built-for-rent starts reached 32,000 compared to 28,000 in the prior four quarters.

The rental market is set to remain strong despite forecasts of continued, modest gains in home buying heading into 2017. The supply of homes is still expected to lag demand levels in many metro areas, keeping prices elevated and a barrier for buyers, particularly first-timers.

In a June report, the Urban Institute forecast that the number of renters will surge to almost 48 million in 2020 and 54.1 million in 2030 from 40.7 million in 2010.

Strength in the rental market has led to some consolidation, with American Homes 4 Rent joining forces with American Residential Properties in a $1.5 billion deal at the end of last year. 

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