A report published by researchers at the Georgia Institute of Technology, “Large Corporate Buyers of Residential Rental Housing During the COVID19 Pandemic in Three Southeastern Metropolitan Areas,” finds evidence of speculative investment in single-family rentals (SFRs) during the COVID-19 pandemic in the Atlanta, Miami, and Tampa areas. Large corporate buyers targeted SFR purchases in BIPOC, low-poverty neighborhoods heavily impacted by the pandemic, increasing their market share in these communities. The authors conclude that the continuing expansion of large corporate buyers into the SFR market could threaten market competitiveness, a concerning possibility given the poor track record of such buyers when it comes to evictions, maintenance, and rent increases.
The researchers utilized Zillow’s ZTRAX parcel-level data on residential sales from 2019 through 2021 to conduct their primary analysis. Large corporate buyers were identified as those making purchases worth at least $5 million or that were found in 15 or more transactions. The authors drew on American Community Survey data, as well as the Urban Institute’s Housing Instability Risk, COVID-19 Impact, and Equity Indices to determine whether large corporate buyers targeted investments in neighborhoods with certain socioeconomic profiles or pandemic impacts indicating distress.
They found that large corporate buyers had a strong and growing presence in the SFR market and focused investments in pandemic-impacted, low-poverty, BIPOC neighborhoods. Large corporate buyers accounted for 17% of all SFR purchases in the counties studied and nearly doubled their quarterly purchases between 2019 and the second quarter of 2021. Large corporate buyers increased SFR purchases in areas where the COVID-19 Impact Index predicted distress would occur, while other corporate buyers reduced investment in these areas. Large corporate buyers also targeted purchases in areas that were, on average, 84% non-white and had low poverty rates and low percentages of first-generation immigrants while avoiding areas with large shares of rental housing.
Corporate landlords of SFRs have an established track record of hiking rents substantially, charging hidden fees, failing to maintain properties appropriately, and evicting renters at high rates. The authors conclude that these firms’ growing market shares in southeastern cities could lead to declines in the competitiveness of rental markets and poor outcomes for renters in these cities. Policymakers will likely need to respond to the problem with policies and regulations addressing rents, maintenance, and evictions.
Read the report at: https://bit.ly/3GLoK8s