According to a new report by the Homes For All Campaign of the Right to the City Alliance, over the last two years corporations have used investor funds to buy up more than 200,000 single family rental homes across the country. Moreover, given the funds available for investment, the trend toward corporate purchase of single-family homes to rent is anticipated to continue to gain steam in certain areas of the country.
Desiree Fields, Ph.D. is the author of the report titled “The Rise of The Corporate Landlord — The Institutionalization of the Single-family Rental Market and Potential Impacts on Renters.” In the introduction to the report, Fields takes issue with the nonsensical idea that the corporatization of the single-family rental market will be a boon to the overall housing market: “…the institutionalization of the single-family rental market stands to primarily benefit the same kinds of financial interests that brought down the housing market in the first place.”
Corporate landlords growing trend in selected areas
The report highlights that the new rising class of corporate landlords are not buying homes in all areas of the country. In fact, these 21st century residential real estate robber barons are clearly avoiding buying homes in areas such as the Rust Belt or parts of Southern California where the housing market is truly depressed, and instead focused on snapping up as many single-family homes as possible in markets that are recovering rapidly so they can maximize profits.
Fields points out: “Purchasing activity has not been evenly distributed throughout the U.S.; rather, firms have undertaken fast-paced, high-volume purchases, picking selected Sunbelt markets such as Phoenix and Atlanta clean.”
Buying single-family homes on a massive scale
The scale at which private equity is moving into the single-family residential real estate market is dramatic. These firms have already purchased more than 200,000 single-family homes in the U.S. These financial corporations already own over 1.5% of the total number of single-family, and are on pace to exceed 2% early in 2015.
Fields points out that the rise of corporate landlords is also squeezing out the middle class “mom and pop” residential real estate investor. “Aided by financing from institutional investors like pension funds and credit from many of the same banks (such as JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC)) that contributed to the foreclosure crisis, private equity firms like The Blackstone Group L.P. (NYSE:BX) have poured over $20 billion into the single-family rental market, institutionalizing what has long been a “mom and pop” industry.”