A committee looked at the impact on first-time buyers and minorities – and the real estate industry – if a high percentage of traditional family homes become rentals.
WASHINGTON – Congress targets investors and asks a question: “Where have all the houses gone?”
The pace of single-family rental home purchases by hedge fund-backed investors has risen in recent years, according to data submitted by the companies to the U.S. House Financial Services Committee.
During a June 28 committee hearing on the own-to-rent industry, witnesses called for expanded protections for renters, more public housing, limits to local zoning rules that prevent new housing from being built, and other federal laws to help bridge generational wealth gaps.
In 2011, no single investor owned over 1,000 U.S. homes. However, the five biggest investors owned a combined 280,637 as of October 2021, adding 76,325 homes to their portfolios between March 2018 and October 2021.
Q3 2021 institutional investor homes
- Invitation Homes – 83,512
- Progress Residential – 71,930
- American Homes for Rent – 56,077
- FirstKey Homes – 35,899
- Amherst Residential – 33,219
“These homes would likely have been bought by first-time home buyers, low- to middle-income buyers, or both,” said U.S. Rep. Al Green (D-Texas), chair of the Financial Services Subcommittee on Oversight and Investigations.
Meanwhile, a memo submitted to the committee indicated that home builders may turn to institutional investors to buy more of their product as more buyers get priced out of the market.
According to witness testimony before the committee, institutional investors target minority communities and prevent them from building generational wealth through homeownership.
According to Green noted, lower-income buyers are losing out to institutional investors that buy homes with cash. “This all has the troubling effect of displacing residents of color and leading to gentrification of these communities,” he said. He also called the companies “very poor landlords,” citing steep rent hikes and evictions, including during the COVID-19 pandemic.
Jenny Schuetz, a senior fellow at the nonpartisan Brookings Institute, said it’s a “long-term problem caused fundamentally by the fact that we’re not building enough homes.”
Source: Inman (06/30/22) Anderson, Taylor
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