Wall Street's move into single-family housing made national headlines just a few years ago.
Firms like Blackstone and Invitation Homes were on a buying spree, snapping up tens of thousands of homes and building large-scale rental portfolios. Entire communities were developed specifically to rent, not own. It was one of the biggest shifts in the U.S. housing market in decades, and it priced out plenty of would-be homeowners in the process.
That frenzy has cooled. But the capital hasn't gone far.
Now, instead of buying the house, institutional investors are buying the upside.
They're targeting the equity inside owner-occupied homes. This new strategy doesn't involve tenants or any property management. Just a stake in future home appreciation.
The instrument making this possible is called a Home Equity Agreement (HEA).
It gives homeowners a lump sum of cash in exchange for a share of the home's future value when it sells. Unlike a home equity line of credit (HELOC), there's no debt, monthly payment or interest rate.
That model has gained traction fast, especially with firms looking for real estate exposure without operational drag. Companies like Barclays, KKR, Nomura, Carlyle Group and others have invested billions of dollars into securitizations backed by HEAs. These securitizations have given large investors a new pipeline into U.S. residential equity.
The structure of HEAs is designed to give investors returns that outperform the actual price movement of the home. This is achieved through an equity exchange rate. In simple terms, if the home's value increases by 3% annually, investors can realize annual returns of 15% or more.
And while appreciation is the obvious draw, the downside protection is quietly just as important. If home prices fall, the same exchange rate provides a buffer that allows investors to still come out ahead with positive gains.
All of this is happening against the backdrop of one of the biggest pools of wealth in the country; $35 trillion in U.S. home equity. Most of it is sitting idle and untapped. It was only a matter of time before institutional investors created a new opportunity out of this market.
HEAs weren't structured for individuals, and the funds buying them weren't open to the public. However, that's beginning to change.
Homeshares, a fintech-backed platform, is opening the door through its U.S. Home Equity Fund (HEF). The private fund that allows accredited investors to participate in a diversified portfolio of HEAs.
The fund invests in home equity in some of the most stable housing markets across the U.S. and has achieved a 17% IRR on its realized investments since inception.
The single-family rental boom may have dominated the past decade, but home equity is next. Wall Street has already moved in. Now, with the right access point, individual investors can follow.
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