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Stateline

Investors Bought a Quarter of Homes Sold Last Year, Driving Up Rents

Stateline Article July 22, 2022 By: Tim Henderson Read time:
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Investors Bought a Quarter of Homes Sold Last Year, Driving Up Rents
Share
     
Navy veteran Prince Beatty
Navy veteran Prince Beatty sits on the porch of his home in the
Atlanta suburb of East Point, Ga., where he faced eviction earlier
this year after falling behind on his rent when it increased from
$1,250 to $2,000. Investors have bought up rental homes, especially
in Black and Hispanic suburbs in the Sun Belt, causing drops in home
ownership. Hakim Wright Sr. The Associated Press

Read more Stateline coverage of how communities across the country
are trying to create more affordable housing.

Investors bought nearly a quarter of U.S. single-family homes that
sold last year, often driving up rents for suburban families in the
process.

The issue is especially acute in some Sun Belt states amid evidence
that investors often can outbid other buyers, keeping starter homes
out of the hands of would-be owners, especially suburban Black and
Hispanic families. Some local officials in those states are pushing
for increased regulation of investor purchases, but many Republican
lawmakers oppose such controls.

Investors bought 24% of all single-family houses sold nationwide last
year, up from 15% to 16% annually going back to 2012, according to a
Stateline analysis of data provided by CoreLogic, a California-based
data analytics firm. That share dipped only slightly in the first
five months of 2022 to 22%.

Investor purchases doubled or more in Florida, Nevada, Vermont and
Washington state from 2020 to 2021. In Vermont, they grew from 7% of
sales in 2020 to 17% last year and in Nevada from 18% to 30%.

Five states saw the highest share of investor purchases. Investors
bought a third of single-family homes sold in Georgia (33%) last
year, with Arizona (31%), Nevada (30%), California and Texas (both
29%) not far behind.

Investor ownership began to grow after the Great Recession of
2008-2009, when large swaths of overbuilt Sun Belt homes went into
foreclosure, and investors snapped them up. Investor ownership grew
again last year as pandemic-related demand for suburban housing rose,
and investors saw a chance to win bidding wars with cash offers.

    
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Across most states, investor purchases of homes spiked in 2021 and
remained elevated in the early months of 2022. Investors made 29% or
more of the home purchases last year in Arizona, California, Georgia,
Texas and Nevada, and investor purchases doubled or more from 2020
for Florida, Nevada, Vermont and Washington.

Source: CoreLogic and Stateline analysis

Copyright (c) 1996-2022 The Pew Charitable Trusts. All rights reserved.

The Sun Belt also appealed to investors because there are fewer
statewide restrictions than in a state such as California, which
heavily regulates landlord-tenant issues, said Jenny Schuetz, a
housing policy expert at the Brookings Institution who has testified
at congressional hearings on investor ownership of homes.

Local governments need help to identify problem landlords and write
new regulations, she added, such as landlord registries and
boilerplate lease language requirements that protect tenants.

"They're not prepared to deal with this. We need to get more tools
into their hands," Schuetz said.

In North Las Vegas, Nevada, which is mostly Hispanic and Black,
residents have gathered petitions for a ballot initiative limiting
rent increases, saying they've been outbid by investors who have
raised rent sharply in recent years.

The controls were supported by Democratic Gov. Steve Sisolak, who
blamed "out-of-state speculators coming in buying up homes in our
neighborhoods and raising the rent," and says the North Las Vegas
plan could become a template for statewide rent controls. 

 
Tubers float the Comal River despite the recent spike in COVID-19
cases, Thursday, June 25, 2020, in New Braunfels, Texas. Texas Gov.
Greg Abbott said Wednesday that the state is facing a "massive
outbreak" in the coronavirus pandemic and that some new local
restrictions may be needed to protect hospital space for new
patients. Tubers float the Comal River despite the recent spike in
COVID-19 cases, Thursday, June 25, 2020, in New Braunfels, Texas.
Texas Gov. Greg Abbott said Wednesday that the state is facing a
"massive outbreak" in the coronavirus pandemic and that some new
local restrictions may be needed to protect hospital space for new
patients.
Stateline Update May 26, 2022

Suburban Areas Saw Pandemic Population Boom

Quick View
Tubers float the Comal River despite the recent spike in COVID-19
cases, Thursday, June 25, 2020, in New Braunfels, Texas. Texas Gov.
Greg Abbott said Wednesday that the state is facing a "massive
outbreak" in the coronavirus pandemic and that some new local
restrictions may be needed to protect hospital space for new
patients.
Stateline Update May 26, 2022

Suburban Areas Saw Pandemic Population Boom

Most of the largest cities lost population during the first year of
the pandemic.

In Georgia, local officials are fighting for more regulation of
rental homes, but some Republican lawmakers seek a more hands-off
policy. GOP leaders in the legislature, joined by some Democrats,
sponsored bills in February that would have preempted local
regulation of landlords and rents.

The bills would have prohibited "any restrictions" by local
government on rental housing, threatening to withhold state funding
for violations. The legislation immediately drew protests from many
cities and counties.

The state Senate and House bills both died in committee but could
come back in another session, said Mayor Bianca Motley Broom of
College Park, a mostly Black suburb south of Atlanta.   

"It really has been one of the defining issues of the last couple of
years," Motley Broom said.

Most of her constituents are renters hoping to buy homes, and they
were disappointed when a new development of more than 200 houses
announced a change to "build to rent," meaning the units would be
long-term rentals, she said.

"Preemption laws tie our hands and essentially force 537 cities, each
with unique dynamics, to be force-fed a cookie-cutter approach," said
Motley Broom.

 
Stateline Oct16 Stateline Oct16
Stateline Story October 16, 2018

Owning Real Estate Has Not Panned Out for Many African-Americans

Quick View
Stateline Oct16
Stateline Story October 16, 2018

Owning Real Estate Has Not Panned Out for Many African-Americans

Majority-black ZIP codes are nine times more likely to have house
prices fall since 2000.

Michael Malcolm, 65, said he struggled to find affordable rent in
College Park as a retired, disabled telemarketing executive. When a
landlord raised his rent from $750 to $1,500 two months ago, he found
a relative with whom to share his three-bedroom house after searching
in vain for something more reasonable.

"One house we looked at was fine when we looked at it. Our budget was
$1,500, but then in two days, it went to $2,000," he said. "It's
crazy. Yet there are people coming in and paying those rents."

The Georgia Municipal Association, representing Georgia
municipalities, opposes the preemption bills that were introduced,
partly so that cities can decide for themselves about "build to rent"
policies, said Charlotte Davis, the association's deputy director of
governmental relations, speaking at an Atlanta-area housing forum in
June.

"This has been a very heavy-handed approach, going to the state
legislature to preempt mayors and county commissions and ultimately
local residents, because it's easier to strong-arm the state," Davis
said.

Sponsors of the state bills did not return Stateline calls for
comment.

Large-scale rental house landlords often are blamed for rent hikes
but still represent a tiny portion of single-family homes, said David
Howard, director of the National Rental Home Council in Washington,
D.C., a trade group representing single-family home landlords.

"The idea that large, faceless, deep-pocketed out-of-town investors
are taking over every housing market and dictating rents is just not
true," Howard said, speaking of what he called a half-dozen companies
with tens of thousands of homes nationwide.

The CoreLogic data shows that what it calls "mega" investors, with a
thousand or more homes, bought 3% of houses last year and in 2022,
compared with about 1% in previous years, with the bulk of investor
purchases made by smaller groups.

U.S. Rep. Tom Emmer, a Minnesota Republican, defended landlords at a
U.S. House committee hearing on the issue of investor-owned homes in
June. Racially diverse suburbs in Minnesota are among those targeted
by investor home purchases, according to a report last year by the
Minneapolis Federal Reserve Bank.

"We must not forget that single-family rental homes fill a gap for a
large population of our country who either prefer or need to rent,"
Emmer said. "We cannot demonize institutions for facilitating this
supply of quality housing that otherwise would be out of reach for
many Americans."

Institutional buying in Georgia has focused on a ring of middle-class
Black suburbs south of Atlanta, according to research by Brian An, an
assistant professor of public policy at Georgia Tech. An said buying
since 2007 was concentrated in southern Atlanta suburbs with mostly
Black populations, low poverty, good schools and small affordable
houses considered good starter homes.

 
Dionna Jackson Dionna Jackson
Stateline Story February 1, 2022

Evictions Rise to Pre-Pandemic Levels

Quick View
Dionna Jackson
Stateline Story February 1, 2022

Evictions Rise to Pre-Pandemic Levels

Evictions jump as emergency relief runs dry across the U.S.

Institutions began investing in Black and Hispanic neighborhoods near
Atlanta when untenable subprime mortgages led to foreclosures after
the Great Recession, said another Georgia Tech assistant professor,
Elora Raymond. Raymond's studies found investor ownership in some
Atlanta-area neighborhoods led to evictions, gentrification and
displacement of longtime Black residents as investors sought
higher-income renters who could pay more rent to boost profits.

Schuetz said investor ownership may not be a bad thing in itself, if
landlords treat tenants well. Investor interest in houses is a
symptom of a larger problem -- low supply of houses, she stressed.

"If 50 people are bidding for a house, 49 are going to lose, but they
still need a place to live," Schuetz said. 

She said states and localities could create landlord registries, like
one adopted last year by Los Angeles County to help local governments
recognize which corporations or other investors have patterns of
abusing tenants with quick evictions or excessive fees, or who
neglect property maintenance.

States and cities could increase legal protections for tenants, since
some professional landlords have been quick to evict when tenants
fall behind on rent, said Desiree Fields, a University of California,
Berkeley associate professor who studies single-family rental issues.

"The states where investor ownership [of rental homes] is most
prominent are also states where there are hardly any tenant
protection measures," Fields said.

 
Phoenix Phoenix
Stateline Story March 15, 2022

As Rents Soar, States Take Aim at Local Zoning Rules

Quick View
Phoenix
Stateline Story March 15, 2022

As Rents Soar, States Take Aim at Local Zoning Rules

Local officials, however, say they should decide what gets built
where.

Stateline Article July 22, 2022
Topics: Demographics & Economy
Places: Georgia, Nevada & United States
 Top State Stories 7/22  Top State Stories 7/21
AUTHORs
Tim Henderson
Tim Henderson Staff Writer
Stateline
 
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