Investors bought a quarter of the homes sold last year, driving up rents.

Tim Henderson

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

The issue is particularly worrisome in some Sun Belt states, where investors can often be barred from other buyers, leaving the hands of potential starter home owners, especially suburban black and Hispanic families, to take hold. Some local officials in those states are pushing to regulate investor purchases, but many Republican lawmakers oppose such controls.

Investors bought 24 percent of all single-family homes sold nationwide last year, up from 15 percent to 16 percent annually in 2012. state line
Data analytics provided by CoreLogic, a California-based data analytics firm. That share fell slightly to 22 percent in the first five months of 2022.

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

Five states saw the highest share of investor purchases. Investors bought a third of all single-family homes sold in Georgia last year (33%), followed by Arizona (31%), Nevada (30%), California and Texas (both 29%).

Investor ownership began to grow after the Great Recession of 2008-2009, when overbuilt solar homes took hold and investors snapped them up. Investor ownership surged again last year as pandemic-related suburban housing demand surged, and investors saw an opportunity to win bidding wars with cash.

Jenny Schutz, a housing policy expert at the Brookings Institution, testified at a congressional hearing on investor ownership that the Sun Belt also appeals to investors because it has fewer regional restrictions than in states like California. of houses.

Local governments need help identifying problem landlords and writing new regulations, she added.

“They are not ready to deal with this. “We need to put more tools in their hands,” Schutz said.

In North Las Vegas, Nevada, which is predominantly Hispanic and black, residents have questioned a ballot initiative to limit rent increases, saying they have been turned away by investors who have raised rents sharply in recent years.

The controls were backed by Democratic Gov. Steve Sisolak, who blamed “out-of-state speculators buying up homes in our neighborhood and driving up rents” and said the North Las Vegas plan could serve as a model for statewide rent controls.

In Georgia, local officials are fighting for more regulation of rental properties, but some Republican lawmakers want a more hands-off policy. GOP leaders in the Legislature, along with Democrats, backed bills in February that would preempt local regulation of landlords and rental properties.

The bills would prohibit local government from “any restrictions” on rental housing, which would bar state funding for violations. The law immediately sparked protests from many cities and counties.

The state Senate and House bills both died in committee but could come back in another session, said Bianca Motley Broome, mayor of College Park, a black neighborhood south of Atlanta.

“It’s really been one of the defining issues of the last couple of years,” Motley Broom said.

Most of her residents are renters hoping to buy homes, and she was disappointed when more than 200 new developments announced a “build-to-rent” change, meaning the units will be long-term rentals, she said.

“Preemption rules tie our hands and essentially force 537 cities, each with unique dynamics, to eat a cookie-cutter way,” Motley Broom said.

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

“It was nice to see a house we looked at. Our budget was $1,500, but then it went up to $2,000 in two days. “It’s crazy. Yet there are people who pay those rents.

The Georgia Municipal Association, which represents Georgia municipalities, opposes the prepayment bills, in part to allow cities to make their own decisions about “build-to-rent” policies, said Charlotte Davis, the association’s deputy director of government relations, at the Atlanta-area housing forum in June.

“This was a very heavy-handed approach to go to the state legislature to put mayors and county commissions and ultimately local residents first, because it’s easy to tighten up the state,” Davis said.

Sponsors of government bills have not been reimbursed. state line Calls for comment.

David Howard, director of the National Rental Housing Council in Washington, D.C., a trade group that represents single-family landlords, said a large percentage of rental landlords are often blamed for rent increases, but they still represent a small portion of single-family homes.

“The idea that big, faceless, deep-pocketed out-of-town investors are controlling every housing market is simply not true,” said Howard, referring to half a dozen companies that make up tens of thousands of companies. Homes nationwide.

Data from CoreLogic shows that what it calls “mega” investors with a thousand or more homes bought 3% of homes last year and in 2022, compared to 1% in previous years, with large investor purchases by smaller groups. .

U.S. Rep. Tom Emmer, Republican of Minnesota, defended landlords in a June hearing before a U.S. House committee on investor-owned housing. According to a report last year by the Federal Reserve Bank of Minneapolis, racially diverse suburbs in Minnesota were among the hardest hit by investor home buying.

“We must not forget that single-family rental homes fill a void for a large population of our nation who either choose or want to rent,” Emer said. “We cannot judge institutions to facilitate the provision of this quality housing, which is otherwise out of reach for many Americans.”

Institutional buying in Georgia is concentrated in a ring of middle-class black suburbs south of Atlanta, according to research by Brian Ann, an assistant professor of public policy at Georgia Tech. In the year Since 2007, the reported buying has been concentrated in the south Atlanta suburbs, where mostly black people, low poverty, good schools and low-cost housing are good starter homes.

Another Georgia Tech assistant professor, Elora Raymond, said the institutions began investing in black and Hispanic neighborhoods near Atlanta because of unaffordable subprime mortgages that fell after the Great Recession. Raymond’s studies show that in some Atlanta neighborhoods, investors seeking higher-income tenants who can pay higher rents to increase profitability have led to foreclosures, evictions, and displacement of longtime black residents.

If landlords treat tenants well, investor ownership may not be a bad thing in itself, Schutz said. Investors’ interest in housing is a sign of a bigger problem – less housing supply, she emphasized.

“If 50 people bid on a house, they lose 49, but they still need a place to live,” Schutz said.

She said local governments could create landlord registries, similar to the one adopted by Los Angeles County last year, to help local governments identify which corporations or other investors have a pattern of abusing tenants by evicting them quickly or overcharging them or neglecting property maintenance.

Because some professional landlords are quick to evict tenants when they fall behind on rent, states and cities could increase legal protections for tenants, said Desiree Fields, an associate professor at the University of California, Berkeley, who studies single-family rental issues.

“Regions owned by investors [of rental homes] “The most popular are states that have no tenant protection measures,” Fields said.

Stateline is a nonpartisan, nonprofit news service of the Pew Charitable Trusts that provides daily reporting and analysis of trends in state policy.

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