Economy

http://www.bloomberg.com/news/2014-01-24/rental-home-bond-issues-may-reach-20-billion-a-year-stark-says.html

Wall Street may sell more than $20 billion a year of bonds backed by rental homes as investors become comfortable buying securities tied to loans to small landlords, according to Ryan Stark, a director who runs mortgage finance at Deutsche Bank AG.

“The numbers could be fairly staggering,” Stark said at a Structured Finance Industry Group conference in Las Vegas. “This could be a $15 billion or $20 billion-plus-a-year kind of an asset class. Certainly if those smaller shops get more volume, you’re going to see even more in growth in that area.”

Institutional investors, led by companies such as Blackstone Group LP (BX)’s Invitation Homes and American Homes 4 Rent (AMH), have bought as many as 200,000 homes in the last two years, Stark said. They are taking advantage of home prices that fell as much as a third from the 2006 peak and rising demand for rental homes among about 8 million former owners who lost property to foreclosure since 2007.

The big opportunity for debt is among smaller landlords who own most of the 14 million single-family homes occupied by renters, he said.