Wall Street Is Buying Up Entire Neighborhoods

Policymakers across the U.S. are finally pushing back against Wall Street firms buying up single-family homes to rent at high prices. However, they face formidable opposition from a powerful new single-family rental lobby.

Wall Street firms like FirstKey Homes have been buying entire neighborhood blocks, driving up corporate purchases of single-family homes. Housing advocates warn that these companies are harming tenants and pricing out potential homebuyers. Policymakers in various states and Washington, DC, are starting to push back, but the powerful single-family rental lobby presents a significant challenge.

The pandemic-era real estate boom has accelerated corporate landlords' acquisition of assets, especially in fast-growing markets like Phoenix and Atlanta. These companies prioritize short-term profits, driving up housing prices and exacerbating the housing crisis. Research shows that corporate landlords file for more evictions than smaller landlords, often trapping tenants with late fees and surprise costs.

Chris Noble, policy director at the Private Equity Stakeholder Project, explains that institutional investors are driven by the need to provide returns to their shareholders, often at the expense of tenants. This focus on profit has led to significant issues for renters, including deteriorating living conditions and frequent evictions.

In response to the growing crisis, Senator Jeff Merkley introduced a bill in December to end corporate ownership of single-family houses. Lawmakers in eight states have also proposed bills to limit or penalize corporate investors. These efforts face strong opposition from the National Rental Home Council, which has significantly increased its lobbying expenditures to fight such legislation.

The child care crisis has only worsened the situation for many families. During the 2008 financial crisis, many homes were bought up by investors after small-time homeowners were forced into foreclosure. This trend continued during the COVID-19 pandemic, with investors accounting for nearly 30% of single-family home sales by 2022. This has led to a significant increase in single-family rentals owned by corporate landlords.

Advocates worry that corporate landlords are taking away opportunities for homeownership and raising new concerns for tenants. Studies have shown that these companies often raise rents and fees, making it difficult for tenants to keep up. For instance, a 2022 study found that major rental companies increased their fees by 40% over three years, leading to higher rates of rent delinquency.

Efforts to curb corporate ownership of single-family homes are growing. Senator Merkley's End Hedge Fund Control of American Homes Act aims to force major corporate investors to sell their properties to individual homebuyers. State lawmakers have also introduced bills to limit corporate ownership of single-family homes. However, these efforts face significant resistance from the well-funded single-family rental lobby.

As policymakers continue to push for reforms, it is crucial to increase transparency and enforce regulations that prevent corporate landlords from exploiting tenants. Without such measures, families will continue to suffer from unaccountable rental companies, struggling to find safe and affordable housing.