Large Wall Street investors are increasing their footprint in the housing market, like they did after the Great Recession, and some local and state governments are inventing new ways to prevent these institutional investors from cornering the market.
Sharon O’Malley reports for Route Fifty on the growing policy response to the large number of institutional investors buying up homes on the market.
O’Malley summarizes the current scale of the trend with data from Redfin (more specifics by geographic area are included in the source article):
In the fourth quarter of 2021, institutional investors spent approximately $50 billion to buy more than 80,000 homes—18.4% of all homes purchased in the U.S. and nearly 75% of them single-family homes, according to the real estate company Redfin. More than three-quarters of the purchases were paid in cash.
O’Malley also reports that larger shares of new housing construction financed by large institutional investors are being built to rent—increasing by 16% last year, according to data from the National Association of Home Builders. According to O’Malley, the increasing share of rental properties on the market as a result of these large-scale investments limits the future homebuying options of potential homeowners.
O’Malley cites several examples of local policy responses to the trend of single-family homes converting to rental properties:
- “Officials in the Atlanta suburb of College Park, where 75% of its approximately 14,000 residents are renters, turned away one developer who requested permits for a build-to-rent subdivision of new single-family homes that would never be offered for sale.”
- “Atlanta Mayor Andre Dickens has said he wants the city, where the median home price rose 14% over the past year to $426,000, to place limits on how much real estate institutional investors may purchase.”
- The Port of Greater Cincinnati Development Authority earlier this year spent $14.5 million for 195 houses throughout Cincinnati and surrounding Hamilton County to prevent institutional investors from buying the properties, in news shared by Planetizen at the time.
Higher levels of government have also entered the fray. California approved Senate Bill 1079 in 2021 to reduce the advantage of large institutional investors in foreclosure auctions. “[T]he Georgia General Assembly considered a bill earlier this year that would have stopped cities from placing restrictions on build-to-rent subdivisions,” report O’Malley, but the bill failed. Other legislative efforts in Ohio and California are included in the article.
FULL STORY: Governments Begin Pushing Back on Investors Snatching Up Homes
Institutional Investors Gaining a Larger Footprint in the Housing Market, Report Says
The locations with the fastest growing populations are seeing the most dramatic increase in investor-owned single-family housing rentals.
Wall Street Suddenly Buying Fewer Single-Family Homes
Rising interest rates are having a major effect in the housing market—including on the large institutional investors who spent much of the past couple of years buying up single-family homes.
'Corporate Landlords and Market Power': Study Surveys the Single-Family Rental Boom
New research documents the growing footprint of large institutional investors in the housing market during the pandemic, converting more and more of the nation's single-family detached housing units into rental properties.
Study: Maui’s Plan to Convert Vacation Rentals to Long-Term Housing Could Cause Nearly $1 Billion Economic Loss
The plan would reduce visitor accommodation by 25,% resulting in 1,900 jobs lost.
North Texas Transit Leaders Tout Benefits of TOD for Growing Region
At a summit focused on transit-oriented development, policymakers discussed how North Texas’ expanded light rail system can serve as a tool for economic growth.
Why Should We Subsidize Public Transportation?
Many public transit agencies face financial stress due to rising costs, declining fare revenue, and declining subsidies. Transit advocates must provide a strong business case for increasing public transit funding.
How to Make US Trains Faster
Changes to boarding platforms and a switch to electric trains could improve U.S. passenger rail service without the added cost of high-speed rail.
Columbia’s Revitalized ‘Loop’ Is a Hub for Local Entrepreneurs
A focus on small businesses is helping a commercial corridor in Columbia, Missouri thrive.
Invasive Insect Threatens Minnesota’s Ash Forests
The Emerald Ash Borer is a rapidly spreading invasive pest threatening Minnesota’s ash trees, and homeowners are encouraged to plant diverse replacement species, avoid moving ash firewood, and monitor for signs of infestation.
Urban Design for Planners 1: Software Tools
This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.
Planning for Universal Design
Learn the tools for implementing Universal Design in planning regulations.
City of Santa Clarita
Ascent Environmental
Institute for Housing and Urban Development Studies (IHS)
City of Grandview
Harvard GSD Executive Education
Toledo-Lucas County Plan Commissions
Salt Lake City
NYU Wagner Graduate School of Public Service