The metropolitan and neighborhood geographies of REIT- and private equity–owned single-family rentals

ABSTRACT

After the U.S. foreclosure crisis, institutional investors purchased thousands of homes and converted them into rental properties. Past research links these entities to a number of negative outcomes, including rent increases and eviction filings. This paper examines a larger variety of investors, including private equity firms and contract sellers. Using a national dataset of real estate transactions from 2010 to mid-2017, we examine the inter- and intra-metropolitan geography of institutional investors. Consistent with prior research, we find that large publicly traded entities purchased homes in growing Sunbelt metros, yet some specific firms target weaker-market metros. Large, publicly traded firms have concentrated investment in higher-value neighborhoods with larger shares of white residents. In contrast, private equity firms and contract sellers tend to invest in relatively lower-value neighborhoods with larger shares of Black residents. Results suggest different potential implications for these diverse actors’ investments, from crowding out prospective homebuyers to racial targeting.

KEYWORDS:

• Institutional investors
• single-family rentals
• class monopoly rent
• housing

Acknowledgments

We thank the anonymous reviewers for their substantive comments. All errors remain ours.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Eric Seymour

Eric Seymour is an assistant professor at the Edward J. Bloustein School of Planning and Policy Development at Rutgers University. His research focuses on post-foreclosure-crisis transformations in U.S. housing markets and their implications for housing security. This work includes examinations of investors in single-family homes and their business practices across diverse housing markets. His work has also been published in journals including Housing Policy Debate and Housing Studies.

Taylor Shelton

Taylor Shelton is an assistant professor in the Department of Geosciences at Georgia State University. Broadly trained as a geographer, Dr. Shelton’s research focuses on the variety of ways that urban spaces and social inequalities are represented, reproduced and contested through maps and data. He is particularly interested in using mapping to develop alternative understandings of urban social and environmental injustices, especially as it relates to issues of housing and property ownership.

Stephen Averill Sherman

Stephen Averill Sherman is a research scientist at Rice University’s Kinder Institute for Urban Research, working within the Housing & Neighborhoods Center. He is trained as an urban planner and researches policing, housing, and governance.

Joshua Akers

Joshua Akers is the research manager at the Mid-America Regional Council in Kansas City, Missouri, where his work focuses on issues of housing, workforce, and climate. He was an associate professor of geography and urban and regional studies at the University of Michigan–Dearborn and faculty fellow at the University of Michigan’s Poverty Solutions (2013–2023). He founded the Urban Praxis Workshop, a research collective based in Detroit and developed community centered digital data tools. This work led to advances in advocacy and activist strategies and led to significant state and local policy changes since 2016.