ST. LOUIS — In the wake of the Great Recession, a new breed of landlords has emerged: corporate investors. These Wall Street-backed entities have been quietly amassing vast portfolios of single-family homes, particularly in economically distressed neighborhoods. Now, a team of researchers led by Carol Camp Yeakey, the Marshall S. Snow Professor of Arts & Sciences at Washington University is launching a two-year national study to examine the implications of this trend, especially for marginalized communities of color.
The study builds upon Camp Yeakey’s recent paper, “Corporate investors and the housing affordability crisis: Having Wall Street as your landlord,” published in January in the American Journal of Economics and Sociology. The paper details how the foreclosure crisis of the late 2000s created a perfect storm for corporate investors to snap up thousands of homes at bargain prices. “Our research details how corporate investors ‘buy low and rent high’ to populations who can least afford it,” Camp Yeakey says in a university release. “As wages have stagnated and the cost of housing has risen, an increasing number of Americans are now being priced out of the housing market entirely.”
To grasp the scale of this phenomenon, consider this: As recently as 2011, no single corporate entity owned more than 1,000 single-family rental (SFR) units nationwide. Fast forward to 2021, and the five largest SFR operators collectively owned approximately 300,000 homes, out of 350,000 overall acquired by corporate landlords across the country. This rapid consolidation has been particularly pronounced in the Midwest and Sunbelt regions, where Camp Yeakey’s preliminary research shows corporate investor-owned SFRs predominate.
But it’s not just the speed and scale of acquisition that’s concerning – it’s also the tactics employed by these corporate landlords. Camp Yeakey’s research found that they often maximize profits at the expense of tenant safety and well-being, including massive rent increases, eviction filings, dangerous lack of maintenance, steep fines, and more. Some have even likened this targeting of low-income, Latino, and Black homeowners to a form of modern-day redlining.
For the new study, Camp Yeakey and her co-principal investigators, Vetta Sanders Thompson and Dr. Will Ross, will focus on neighborhoods in St. Louis, Cincinnati, and Atlanta, where more than half of the housing is owned by corporate investors and there is a predominant number of low-income renters of color. They aim to provide an in-depth view of the SFR market, identifying which investors predominate in particular neighborhoods, examining the characteristics and lived experiences of renters and their families, and detailing the social, political, and economic changes these neighborhoods have undergone over time.
Importantly, the study will also delve into the public health consequences of this trend. Given that one’s ZIP code can be as determinative as one’s genetic code, [we will] study the public health dimensions and consequences for these neighborhoods,” the researchers say. This holistic approach underscores the far-reaching implications of the corporatization of housing, from wealth-building opportunities and intergenerational wealth transfer to the very health and well-being of entire communities.
While the growth of institutional investors is a symptom rather than the cause of the tight housing market – the U.S. has not built enough housing to keep pace with demand since the Great Recession – their practices can exacerbate existing inequalities. “The implications for low-income persons of color to build wealth through homeownership, as well as reduced opportunities for intergenerational wealth transfer, are further complicated by private-equity firms and other corporate investors who see SFRs as investments with a stable rate of return,” Camp Yeakey notes.
By shining a light on this issue, the researchers hope to spur important conversations about how the federal government can address the housing affordability crisis. Proposed solutions include increasing housing subsidies, creating incentives for local governments to allow moderately priced homes, and providing targeted federal investments and tax incentives for first-time homebuyers in distressed communities.
As America grapples with the aftermath of the pandemic and the ongoing challenges of inequality, the question of who owns our homes – and who profits from them – has never been more pressing. With studies like this one leading the charge, we may be one step closer to ensuring that the American dream of homeownership remains within reach for all.