Investors Are Buying a Higher Percentage of Homes, According to Redfin Report
Some say more businesses and institutions acquiring residences have contributed to the housing crisis, while others see the pattern as a symptom of larger issues.
Some say more businesses and institutions acquiring residences have contributed to the housing crisis, while others see the pattern as a symptom of larger issues.
Amid the maze-like challenges presented by the ongoing housing crisis, the investor-owned real estate market has been thrust into the limelight. Last week, Redfin released a new report that shows a curious spike: Over the past year, $43 billion of homes purchased were bought by private investors (defined by Redfin as any institution or business) in 39 metropolitan areas, up almost 14 percent since 2023. Although townhouses and multifamily units make up a small percentage of those purchased homes, these investors are vastly more attracted to single-family and condo housing, making up approximately 69 percent and 19 percent of those sales, respectively.
The issue isn’t new: Redfin has been tracking corporate home purchases since 2000; dips and spikes in investor purchases often correlate to large-scale events like market downturns and the pandemic. The most recent increase is the largest since 2022, when high interest rates and home prices slowed individual home purchases and drove up rental demand, the study reads. In 2024’s second quarter, investors bought one in six of all homes that sold, up more than three percent despite this year’s earlier decline in individual home sales. But whether or not the upward trend in corporate home purchases requires intervention is questionable.
Bloomberg makes a distinction between large corporate Wall Street landlords snatching up single-family homes and those smaller businesses like mom-and-pop landlords. "In most US cities, the number of homes owned by Wall Street is vanishingly small," the site writes. Citing "Place the Blame Where It Belongs," a report from the Urban Institute think-tank, Bloomberg continues, "investor interest is a symptom of a lack of housing, not a cause of it. Corporate investors do not generate new demand, nor do their purchases take homes out of the local supply (barring some other problem). Investors often buy properties that require upgrades, improving the supply, and first-time homebuyers rarely have access to the same capital required for significant upfront costs."
Still, such research hasn't stopped the political will to end the practice: the End Hedge Fund Control of American Homes Act, which has been introduced to Congress, would tax hedge funds that own large numbers of single-family homes in hopes they might release a portion back into the market. Current Vice President and presidential hopeful Kamala Harris laid out some of her housing plan at a campaign event in North Carolina on August 16, where, among plans to lower costs of other essentials like food and groceries, her administration would remove tax benefits for those companies buying large numbers of single-family homes.
Still, corporations that own even a small fraction of the housing market can have immense impacts: A 2022 ProPublica investigation documented cases of rents rising as much as 33 percent under corporate landlords; even a five percent increase could "lead to thousands more homeless people in a city like New York," reads the story. Other financial squeezes like questionable fees contribute to rent burdens, even while some large landlords receive loan assistance from Freddie Mac.
In Chicago, Injustice Watch published this month a sweeping, five-part story detailing poor living conditions and building violations incurred by negligent landlords (particularly larger corporate groups) in the area. Issues more closely associated with investor owners like poor maintenance threatening residents’ safety and evictions continue to plague those residents and neighbors of corporate-owned homes; such challenges are also echoed in ProPublica’s investigation. So perhaps while the investor-owned properties are under scrutiny today, it’s not a question of whether or not the problem is significant enough to tackle, but instead of how quickly we can build our way out of the problem—and promote tenant protections along the way.
Cover Image Credit: halbergman/Getty Images
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