REI INK

Perspective

Invest Properly Today to Sleep Well Tomorrow

Dramatic Changes in the Economy Have Had a Major Impact on Our Industry by Adam Whitmire What is happening to the real estate market? Homeowners are finding it easy to sell their homes. They are also sharply realizing that they are not able to find another one due to low inventory. Is this a bubble, or something more? Since the last recession in 2008, new home starts have been below 50% of pre-recession levels, up until recently, 2019 to be exact. New home starts dropped again significantly during the pandemic. It is what happened next that was so unexpected. After sheltering in place for several months and working from home, homeowners and renters decided to stretch their legs and expand the home front. This meant bigger yards, a home office, and room for social distancing. The shelter in place ended during the summer with lower interest rates and pent-up demand for housing. Not to mention that social distancing does not mix well with high density housing in high density cities. This began the race to the suburbs. Coinciding with the anti-density movement, millennials were already getting older and looking to buy or rent a home. In fact, the moment an apartment renter bought a pet, they began looking for a yard. Add this excitement to the extremely low home production over the last decade, and the many new home sellers that were created from skyrocketing home prices, and you have a mass buying frenzy. Where are we going to get all these new homes? There are many builders anxious to build and sell homes. But they cannot build without materials or lots. During the full force of the COVID-19 pandemic, there was a lot of new home inventory available. We were helping investors purchase new homes as rentals at that time. We tried to get investors excited about the additional selection of homes that would not be available during normal circumstances. However, to no avail, most investors were too afraid of the economic shut down to purchase rental homes. A few months later, all the homes were gone and there was nothing to replace them with, but much higher priced pre-sales. Today, construction materials have skyrocketed. Lumber has increased over 300% and no one can find windows. We have plenty of land. Let’s just develop more lots. Sounds simple, right? Well, if you think waiting 5-6 months for a home to be built is a challenge to your patience, try waiting 18 months to develop a lot. You see, in the olden days, prior to 2008, a local developer could go down to the bank and take out an A&D (Acquisition and Development) loan, buy some land, develop it into lots, and sell the lots to a builder group or a national or regional builder. The problem with that model today is that since the financial crisis, banks stopped loaning money to develop lots. Not to mention, most of the developers went bankrupt or were forced into retirement. And since builders do not like to develop their own lots, here we are with no lots to build on and more housing demand than ever before. Home buyers have noticed that for the last few years as the homebuilding industry has been trying to shake off the dust and ramp production back up, the majority of the homes were priced from $300K – $500K, the price of a typical move up home. Building for less than that just did not make sense financially. The cost of development was too expensive. This left workforce housing and starter homes in short supply. To solve this problem, the industry began building rental subdivisions, commonly termed build-to-rent or build-for-rent. These are communities of single-family homes and townhomes that are only for rent and not for sale. The income valuation of these homes was enough to justify building them. And with the growing demand for rentals, a new asset has emerged. Today, these types of developments have become increasingly popular due to its mitigated risk profile and ability to fill a large gap in the market. These dramatic changes in our economy have had a major impact. One year ago, you could still buy land at a reasonable price. In fact, you could buy homes at a reasonable price. The capital markets were flush with cash and underwriting was still disciplined. Today, equity and debt are being flooded into the market as sensible underwriting has become somewhat hazy. Don’t get me wrong, there is legitimate demand in the real estate market, just below the smoke screen of “everything is a good deal” and “you can charge whatever you want in rent”. I like a growth market as good as the next developer, but this is off the chart. So, are we buying for deals, supplying the gap in the market, or just trying to place debt because we are expecting hyper-inflation? No matter what the future holds, if we invest properly today, we will sleep well tomorrow. Keeping our feet on the ground when the market is flying will only lead to better decisions.    

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SFR: Disruption, Impact, Innovation

Three Key Disruptions in the SFR Asset Class  by Stephanie Casper In his highly acclaimed book, “Innovator’s Dilemma,” Clayton Christensen details how established companies focusing on incremental improvements or innovations to address their biggest customers’ evolving needs often miss the true innovation occurring around them. The disruption caused by the upstart innovators ultimately spells the demise of countless companies in Christensen’s book. Since its publishing, disruptors continue to impact incumbent companies and industries. Think Uber, iPhone and NetFlix. However, in real estate, particularly the single-family residential space, I would argue that disruptions are the drivers of innovation in the asset class. There have been three key disruptions in the last 20 years that have dramatically impacted real estate, and in particular the single-family residential asset class: internet usage, the Great Recession, and the global COVID-19 pandemic. Out of each of these disruptions, innovation has emerged dramatically changing the complexion of single-family real estate. Internet and Data Availability In early 2006, shopping for a new home or residential investment property often meant perusing the real estate section of the local newspaper or spending weekends driving through neighborhoods in search of “for sale signs” and open houses. And to get additional information on comparables, property details, and property history, buyers had to rely on realtors and brokers. This was the process my parents followed when shopping for a home 30 years prior. My mother, not one to leave things up to the realtor, would drive by the address prior to the showing so that she could modulate her reaction instead of being surprised. On one realtor led showing, a 2-year-old, me, already clearly interested in single family real estate, asked, “Mom, isn’t this a sh*t house?” To my mother’s horror I had repeated her often uttered property assessment to the agent. Zillow’s website launch in February 2006, complete with listings, aerial pictures and Zestimates, instantly democratized the property buying experience. Shoppers were now armed with information previously only accessible to realtors. Now, buyers could check out listings and neighborhoods from the comfort of their home computer, and finally in 2009 from their smart phones (thank you, Apple). Trulia, Redfin and Realtor.com soon followed. These sites have evolved such that virtually all information a buyer needs to make an assessment of a property, from pictures and price history, to tax information, to estimates of value and comparables, is available. The rise of widespread data availability via just a few keystrokes not only enabled buyers and investors to make more informed decisions, but lenders also benefited as well. Tech-enabled lenders have been able to leverage web-based databases of transaction, mortgage, and property details to build decisioning and underwriting models that quickly assess potential borrowers, the viability of proposed fix and flip projects, and the anticipated cash flows of rental properties. The Great Recession As we all know, largely due to some “innovation” in lending, the incentives for originators and the capital markets’ execution for mortgage-backed securities, a single-family real estate bubble grew and ultimately burst causing The Great Recession. In 2007 and 2008 more than 5.3 million homes were foreclosed in the US. Virtually overnight the inventory of residential homes outpaced the demand resulting in a plummeting of home prices. This massive disruption in the residential market spurred innovation from institutional investors, in both equity and debt. Historically, residential real estate investors were smaller individual owners, typically with ten or fewer properties. My grandfather, a retired firefighter in a small town in Massachusetts, was one. Anytime a house or lot in his immediate neighborhood came up for sale, he bought it all cash and rented it out. He even developed a duplex for rent on a lot adjacent to his home. This small town, small time execution in single family investment evolved due to the innovation brought about by The Great Recession. As more and more REO properties became available across the country, institutional equity investors took notice and seized the opportunity. They began acquiring foreclosed properties at courthouse auctions and via partnerships with local boots on the ground. The scattered site single family properties were renovated, leased up and added to growing portfolios of rentals being operated like contiguous multifamily complexes. Early on, this innovative approach to holding large numbers of detached properties as rentals was met with skepticism. Naysayers preached that the economies of scale afforded landlords in a traditional multifamily property would not be achieved with single family detached homes resulting in much lower returns. What started out as a small group that included Invitation Homes, American Homes for Rent and Colony Capital, the number of large players in the space has exploded with single family rental now a solid 6th real estate investment asset class. As it turns out, the management of SFR rentals has outperformed expectations with less tenant turnover and lower CapEx and maintenance needs. Seeing an opportunity to gain yield in a prolonged period of low interest rates and capitalize on the counter-cyclical nature residential rental properties offer in an investment portfolio, the interest and demand for single family residential rental properties continues to explode. Alongside the institutional equity players entering the space, institutional debt emerged to provide financing for those investing in the space. These lenders provided and continue to provide short and long-term financing for investors who are acquiring, renovating, and flipping, as well as “aggregators” who are buying and stabilizing rental properties, along with single and portfolio rental loans. Few investors in the space had access to debt financing prior to the Great Recession, and if they did, it regularly came in the form of hard money lenders or high net worth individual private lenders. Today’s lending scene is crowded. A recent white paper, “Housing Mania 2.0” published by John Burns Real Estate Consulting, lists more than 50 national lenders, with many more local and regional players not counted among them.  And, while institutional capital continues to pile into investing in single family rentals, mom and pops still own the vast majority of

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The “Not So New” World

To Thrive Post-Pandemic, Build a Community of Willing Partners by John Gordon It seems impossible to engage in any current dialogue that does not turn to some aspect of COVID and the “new world” in which we all live. While there is no denying COVID and the profound impacts it has had on so many lives and businesses, I would like to share some thoughts about the “not so new” world in which we all now live and work. I began my career in the home improvement industry in 1980, starting in the lumber business. At that time, a new product called “wafer board” had hit the market. Any self-respecting and seasoned carpenter and salesperson knew that no product made from chips of wood could ever be a legitimate and structurally-sound building component. Well, how wrong we were. If you don’t know how the story ends, “wafer board” evolved—and today OSB (Oriented Strand Board, if lumber jargon is not your strong suit), is a building staple accepted and respected by all. Much has changed in the last 40 years. I have moved on from selling lumber to managing businesses and launching new markets, new concepts, and new technology. Even our world of real estate investing has undergone significant changes in just 15 years of its 61-year history. While COVID has been an agent of change for us all, there is one constant that underpins survival and success in both the best and worst of market conditions: strong partnerships. Oh, the irony. In a time when COVID has us isolated and socially distant when in public, the need for strong relationships with supplier partners continues to be key to success. Strong Partnerships Building on a foundation of strong partnerships is not just a great sound bite—here is what it looks like in practice. Price and value are table stakes. Value that differentiates is the stuff of strong partnerships. How will my business work to make some element of my customers’ business better? How can we integrate processes and solutions to save time and money? How can we leverage existing capabilities to solve new challenges? I trust that most of you have built strong connections with your partners. I am fortunate to have genuine partners in our industry and in others. As director of national accounts at The Home Depot, one of my responsibilities is supporting very large single-family property investors with product and service solutions. At any given time, my team works with customers who, in aggregate, touch almost half a million single-family homes and their occupants. Think of this. Taking care of the residents who occupy our properties and communities took a serious blow when maintenance techs were not able to get into homes for 30 or 60 days. Thanks to strong partnerships with our suppliers, investors/property managers were able to share “how to” content that walked residents through simple but urgent fixes during those months when technicians could not enter homes. This small act of reciprocity lessened our backlog and made it more manageable until homes could be entered again. Given today’s supply chain and transportation constraints, having a partner with the ability to assemble product in a single place and deliver it as a package when needed is a huge win. We turned many times to our internal business partners to leverage order aggregation and distribution solutions traditionally used in multi-family settings to solve problems for our single-family residence customers and their contractor networks. Similarly, industry partners whose traditional focus was assembly of products for our retail customers came to our rescue when additional capacity was needed. Now, in addition to assembling product for our stores they made property visits to complete pre-defined and routine activities. This was an existing partnership with a whole new spin. Bottom line: While there have been many new challenges and pressures, strong partnerships—both current and new—have proven to be a reliable element of success. The type of partnerships you will need to weather hard times will vary. Identifying and embracing technology partners helps to make most all other partnerships exponentially more effective. Personally, I could do without digital meeting platforms. But given the last year, I was forced to embrace the concept during stay-at-home orders. Using Technology as a Force Multiplier How can home renovation business entities utilize technology to partner together in a way that is mutually beneficial? It is difficult to build from scratch solutions within the tech world’s breakneck pace of innovation. Thankfully, The Home Depot has found ways to share information with existing systems and platforms that marry the best of both partners. Today, the RenoWalk app, launched in the investor marketplace over ten years ago is better than ever. It now accommodates the tracking of change orders, provides before and after pictures and tracks project status updates. RenoWalk has forms that allow for loading information directly to digital project management and procurement platforms. It supports investors and property managers with the ever-debated tenant responsibility and deposit tracking details. To make adoption easier, there are open API’s (data feeds) for integration with existing platforms.  Technology is a great enabler and force multiplier. When it is placed in the hands of the innovative and resilient people who run and support daily businesses operations, the outcome is success. The resiliency of the human spirit is not to be ignored or underestimated, especially in difficult times like the past year. Resilient people tend to be innovators when new solutions are needed—resilient employees are to be treasured. An engaged employee committed to taking care of your customer, despite hardships at home, can make or break your business. Your people need to know you will care for them in these difficult times. Taking Care of Your Team What have you done—what are you doing—to take care of your team and to reinforce their trust? How are you improving their lives as your business improves? This will be your most important partnership. Take care of them and they will take care of you

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2021 Real Estate Investing Outlook

A Perspective on Single-Family, Multi-Family, and Commercial Assets by Erica LaCentra Despite still being in the midst of a global pandemic, real estate investing is booming. The Single-Family Rental space in particular is primed for continued growth in 2021. Record-low mortgage rates and lack of inventory continue to drive demand for housing. Couple that with the mass exodus from major cities to the suburbs because of the pandemic, and the industry is seeing spikes in housing prices across the country which has made it unaffordable for many potential buyers. This means more and more people must continue to rent as homeownership is now beyond their reach. The Single-Family Rental space is undoubtably having its moment, but that is just a portion of the big picture. As we head into another year where there is still a lot of uncertainty, how is the rest of the real estate investment industry fairing and what trends lay on the horizon? How Will Home Prices Fair? Home prices skyrocketed in 2020 and it no doubt continued to be a sellers’ market. As we saw the year close out, home prices ended “7.6% above where they were in 2019” according to the realtor.com national housing forecast. However, the question that remains on everyone’s mind is, will the growth continue in 2021, and if so, for how long? From all current indications, the answer is yes, strong growth is expected to continue for home prices in 2021. The median national home listing price grew by 15.4% over last year, to $346,000 in January 2021, based on data provided by realtor.com. Pent-up demand for homes is not slowing down any time soon and there is still no easy answer for how to increase supply in the market. Even as the supply of new home listings has increased since the beginning of the pandemic, it has not been nearly enough to curb the sharp home price increases that we have seen throughout the country. Many are banking on an increase in new construction starts, renewed interest in home flipping, and finally, an end to the government moratorium on single-family foreclosures to finally remedy the issue of inventory as we go into the spring. The current prediction is that 2021 will display a bit more normalcy than we saw in 2020 with the typical seasonal listing, buying, and selling patterns emerging and inventory increasing in the Spring as we have seen in previous years. From there, inventory levels are expected to continue to improve throughout the fall and into the end of the year as the vaccine is more wide-spread and people can get back to the way things once were. Maybe then we may finally see home prices start to level out. New Construction and the Reemergence of Home Flips Builder sentiment in the single-family space remains high in 2021 due to a growing desire to address the insatiable demand for homes with new construction. While Dodge Data and Analytics estimates that “total residential starts are expected to rise 5% in 2021”, starts for single-family housing are estimated to “rise 7% in 2021, to $254 billion, the highest since 2007”, according to Engineering News-Record.  And this statistic is not a fluke. The National Association of Home Builders also projects continued growth in the new construction space, with an estimated “6% increase in single-family housing in 2020, followed by a nearly 3% jump in 2021 and a 2% uptick in 2022”, which is all very good news. However, even with this projected growth, the industry will still be below the production levels needed to keep up with the rising demand for housing. There has been such an immense backlog of projects that had to be put on hold due to the pandemic that it will be challenging to make up for lost time. This is where new construction coupled with renewed opportunities in the fix and flip space will benefit the industry. For a combination of reasons, it is no surprise that over the past year home-flipping activity dropped. With limited buying opportunities in a highly competitive market, inexpensive homes were in short supply. However, investors that were able to find those opportunities, were able to make hefty profits. According to ATTOM Data Solutions, “the gross profit on the typical home flip nationwide (the difference between the median sales price and the median paid by investors) rose in the third quarter of 2020 to $73,766—the highest amount since at least 2000”. These high returns on investment will continue to make the flipping space very attractive to savvy investors as long as they can keep finding properties.  How Will Commercial Real Estate Fare? Commercial real estate was probably the segment of the market that was hit the hardest by the pandemic, and at one point the industry was questioning if it would ever recover. However, it seems like commercial real estate is starting to recover and there are positive indications that hard hit areas will be able to bounce back in 2021. For example, with employment starting to rebound there is hope that the multifamily space will come out of the pandemic unscathed as an increase in housing demand for workers returns. There is also optimism for the office sector as vaccine distribution has started and it looks like employees will be able to return to work versus solely working remotely in the near future. While many companies will have to adapt now that they know workers can be efficient while working remotely and offer more flexibility, there will still be a need for physical office spaces which is good news for this area of the market. Finally, one of the more interesting trends that is starting to emerge which should prove extremely beneficial for commercial real estate, is adaptive reuse of currently unoccupied or unwanted commercial real estate. This practice of taking spaces like unused retail or defunct hotels and renovating them into something useful rather than demolishing and redeveloping the space is starting to get traction. Companies

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Hindsight is 2020

Looking Back on Last Year’s Top REI Insurance Claims by Shawn Woedl With 2020 in the rearview mirror, we can look back on the year and see what we learned. Last year proved that you cannot prepare for everything, but some of the most common insurance losses that happen across the real estate investment industry, year after year, can be mitigated or avoided completely with some planning and commitment. Let’s look at the most common claims submitted last year and some practices an investment property owner can follow to protect their valuable assets. Cause of Loss #1: Wind/Hail With a record-setting 30 named storms (more than two and a half times the annual average), it is no surprise that Wind claims increased 21% compared to 2019. Last year broke 2005’s record of 28 named storms, blowing through the assigned alphabetical names and moving into the Greek alphabet. While these storms certainly caused significant damage (especially those late in the season), they luckily didn’t reach the damage estimates of 2017’s Maria, Irma, and Harvey (more than $90 billion combined). Prepare Your Properties for the Storm If you own properties in the Southeast or along the Eastern Seaboard, you can take steps to prepare for impending storms and limit the damage your property may endure. Well before a storm hits, ensure you have fans, water pumps, cleaning supplies, and a portable generator on hand. You may consider installing permanent storm shutters, but a second option is to use 5/8″ marine plywood cut ahead of time to fit over windows. Tape does not prevent windows from breaking. A well-maintained property can help mitigate damage. Be sure gutters and downspouts are secure and clear of debris. Keep trees and shrubs well-trimmed so they are more wind resistant. Be sure the battery backup for your sump pump is working to prevent drain backups. When it’s safe to visit the property, you may find broken windows, holes in the roof, or standing water. Use tarps to cover openings in case of additional rain, or secure with plywood to discourage thieves from accessing the property. Water can cause mold to form quickly. Act swiftly to dry out wet items. Put furniture on blocks, remove area rugs, and bring in a water pump and fans. Now is a great time to be sure your insurance policy covers Named Storms (a storm or weather condition identified by name by the National Weather Service). Some standard property policies exclude this cause of loss and require that it be purchased separately. Don’t be caught flat footed after the fact—review your policies now, before hurricane season. Cause of Loss #2: Fire Fire is one of the most avoidable causes of loss for investors but remains one of the most common. Preventable Fire Losses The COVID-19 pandemic meant more people were staying at home, which increased opportunities for negligent fire losses. Cooking is the leading cause of home fires, starting from either a grease fire that gets out of control or from unattended cooking. It is critical (and often required by your insurer) that your properties, whether tenant-occupied or vacant, have working and well-maintained smoke detectors. They should be inside every bedroom, outside each sleeping area, and on every level of the home, including the basement. Have a plan to inspect them monthly and change the batteries twice per year. Place fire extinguishers at readily accessible locations in the kitchen and other main areas. Fire extinguishers can help put out small fires before they become uncontrollable. Research the various types available and educate your tenants on their use, as well. During colder months, heat sources can also lead to fire losses. Have all fireplaces and chimneys professionally inspected, and fixed if needed, before the cold season hits. Space heaters should not be used as the primary heating source. If allowed, they should be equipped with safety features such as auto-shut-off, be plugged directly into an outlet, and never be left unattended or allowed to run overnight. Cold weather and increased homelessness can also mean that vacant and renovation properties are more susceptible to squatters who need shelter. It is not uncommon to see a property burn because someone taking refuge there lit a fire to stay warm. Be sure the home is properly secured to keep them out. Wildfire Losses 2020 was also a record-setting year for wildfires with more than 52,000 recorded fires from California to Colorado. Last year nearly 9 million acres went up in flames, almost double from 2019 and 2.3 million more than the 10-year average. If you invest on the West Coast or within a mountain zone, there are regular maintenance practices that can create a “defensible space” around your properties. Keep the area around the home clear of dead vegetation, dried leaves, pine needles, ground debris, and anything that will burn. Remove tree limbs that overhang the roof, and keep the roof and gutters clear of branches and debris. Do not store combustible materials in or near the house and make sure vents are covered with 1/8″ mesh screen. Be sure the property has garden hoses long enough to reach any area of the home. Cause of Loss #3: Theft and Vandalism Vacant and renovation homes are always more at risk for theft, but the pandemic has heightened this risk. Many theft losses can be avoided by taking simple security measures. Make thieves and vandals believe the house is being lived in. Set exterior lights on a timer or install motion-activated lights. A well-lit exterior may discourage thieves from approaching your property at night. Keep the yard cut and clean, and trim back trees and shrubs that may block views of the house and provide places for thieves to hide. Make sure the property is properly secured—lock doors and windows and reinforce them with sturdy hardware. Use an alarm system with monitoring. If someone does break in, they may leave just as quickly if the alarm goes off. Lastly, monitor the property frequently, check the mailbox,

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2020 Has Been a Year of Adaptation and Expansion

Using Your Core Values for Record Performance by Peter DiLello Investing in real estate demands constant adjustments to factors outside our control. That has been particularly true this year, as the world confronts a global pandemic. At Invitation Homes, we spent the early days of the COVID-19 pandemic adjusting our practices and protocols to protect our residents and associates and developing programs to assist residents in financial distress. However, by summer, we realized the pandemic was not impacting the bulk of our residents financially. Instead, it was fueling demand for the single-family homes we own. Now, we are at the cusp of a major expansion that few outside our company would have predicted in the depths of March or April. Adaption was a major theme for Invitation Homes this year. Late in the first quarter, Invitation Homes made the intentional decision to pause acquisitions and prioritize the safety of our residents and associates. We strive to be the best operators in the industry and have offered a variety of options for residents confronting financial hardships, working with many to find the best solution for each situation that will keep them healthy and in their homes. The steps we took are central to our company’s core values, and part of the reason we experienced a record-high occupancy of 97.8% in the third quarter. Invitation Homes’ strong financial footing has left the company in the best position to respond to resident needs and deploy a growth-minded approach moving forward to meet the desire for single-family rental homes. During our acquisition process, we consider many of the same factors as first-time home buyers: optimal layouts, quality appliances and close proximity to good schools, parks, and employment centers. That last factor—“location, location, location”—is the single most important for any real-estate investor whether you are an individual owner managing several properties or a large company managing many. Location, Location, Location At Invitation Homes, “location” has two meanings: the neighborhoods where we like to buy homes and the regions of the country in which we choose to deploy our capital. We spend a lot of time considering both meanings when we buy new homes. Regionally, we consider migration patterns to determine where in the country to invest. We tend to buy homes in competitive areas where people are moving. This often means the Sunbelt, or “The Smile,” those states stretching from the Carolinas down to Florida and across the Southeast and Southwest to California. These markets are desirable because they continue to grow faster than the country as a whole, thanks to a population shift to affordable, less-dense markets with diverse economies. This consistent population shift continues to drive demand for single-family rental homes across the Sunbelt and helps explain the resilience of these housing markets throughout the pandemic. In Atlanta and Phoenix, REITs reported 8% and 12% growth on new leases in the third quarter of 2020, respectively. And geographic winners according to multiple sources—REIT commentary, John Burns Real Estate Consulting’s quarterly Single-Family Rental Market Index survey, and population growth trends as of September 2020—include Arizona, Nevada, Texas, Georgia, Colorado, and Florida. Housing Trends A recent survey of 175,000 institutionally managed single-family homes across 55 markets found that 59% of new single-family rental residents are relocating from urban locations. The same survey also observed that 32% of new single-family rental residents are moving from apartments, and 46% are coming from similar rental properties, leading to the conclusion that the industry is not gaining massively from apartments but is instead benefitting from better locations that provide value for people who prefer to live in a lower density, detached home. From our own survey sent to new residents who moved into our homes during the third quarter of 2020, we learned that the need for more space is the number one reason for moving into a single-family home, with 34% of respondents saying it was their primary motivator. Throughout the acquisition of new properties, Invitation Homes prioritizes high-quality homes that meet the evolving needs of residents. Even before the pandemic, our ideal home had three bedrooms with two baths, an attached parking structure, and was somewhere between 1,700 and 2,400 square feet. Establishing this standard early on has ensured that the floor plans of our homes are convenient and meet the lifestyle needs of our residents, positioning us well as housing trends change. Despite the pandemic and resulting recession, demand for single-family homes remains historically strong, by some measures. Resale homes are sitting on the market for just 21 days, an all-time low, according to John Burns data. Bidding wars are now common, with each sold home averaging 3.4 offers, up from 2.1 a year ago. We expect low interest rates, tight housing supply, rising home equity and continued price appreciation to fuel a continued boom in the resale market through next year. Home prices in some top single-family rental markets are climbing more than 10%, year-over-year, including Phoenix (15%) and Tampa (13%). These fundamentals are driving demand among single-family rentals, as well. Occupancy rates are touching all-time highs in a number of REIT markets and rent growth on new leases on single-family homes is up 3.8% year-over-year, according to the Burns Single-Family Rent Index. New Influx of Capital That insatiable demand for single-family homes in multiple markets continues to stoke investment that is keeping the industry hot. Outside investors are realizing the value in the industry as residents continue to show desire for the flexibility single-family rentals offer. Invitation Homes recently announced a $375 million joint venture with Rockpoint Group, L.L.C. to expand our portfolio, American Homes 4 Rent raised $625 million through a joint-venture with JPMorgan’s asset-management arm, and a former Colony Capital Inc. executive is raising $1.2 billion in equity and debt to build 5,000 rental homes. This influx of capital is not a surprise to those of us who have been in the industry from the beginning. Housing is a universal need, and Americans are increasingly drawn to the flexibility of renting,

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