The financialization of single-family rental housing: An examination of real estate investment trusts’ ownership of single-family houses in the Atlanta metropolitan area

ABSTRACT

Single-family rental housing (SFR) is becoming increasingly prevalent in suburban neighborhoods. Historically, small-scale investors have owned SFR, but since the 2008 housing crisis, it has become increasingly financialized—dominated by large, global investment firms. In the wake of the housing crisis, a new type of SFR investor emerged: the real estate investment trust (REIT). SFR REITs funnel large amounts of global capital into local housing markets. This paper presents an examination of the four largest publicly traded SFR REITs’ investments in the Atlanta metropolitan area. Using exploratory spatial data analysis methods, the study examines the intensity and locations of statistically significant spatial clusters of SFR owned by REITs. Then, a generalized linear mixed model is used to identify the property, neighborhood, and school district characteristics associated with houses owned by SFR REITs. Findings indicate that overall, houses owned by SFR REITs are highly spatially clustered in neighborhoods forming a U shape surrounding the city of Atlanta, and the locations of the spatial clusters vary for the four SFR REITs. Moreover, property, neighborhood, and school district characteristics differ among properties owned by each of the SFR REITs.

Acknowledgments

The author would like to thank the three anonymous reviewers for their helpful comments as well as Stephen Parry at the Cornell Statistical Consulting Unit for his help with the statistical methods used in the paper.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Tricon Capital Group is a large real estate firm that encompasses three business segments: Tricon American Homes, Tricon Housing Partners, and Tricon Lifestyle Rentals. While the company is not strictly a SFR REIT, as are the other three firms examined herein, Tricon American Homes is included in this study since it is a public company that owns a substantial number of SFR units in Atlanta.

2. Reven Housing REIT owns so few SFR units in the Atlanta MSA that its properties were not included in this analysis.

3. The numbers of SFR units reported in the firms’ SEC form 10-K filings or annual reports differ from the figures found in the CoreLogic property tax record data. The number of SFR units owned by Invitation Homes in the property tax records is 3.0% greater (373 SFR units) than the number indicated in the firm’s 2018 10-K filing. The overestimation may be due to Invitation Homes’ selling properties in 2018 for which the transfer was not yet recorded in the property tax records, or to errors in the records. The number of properties in the dataset owned by American Homes 4 Rent, Front Yard Residential, and Tricon American Homes are fewer than in the 2018 10-K filings – 2.8% (130 SFR units), 10.7% (420 SFR units), and 5.6% (223 SFR units) less, respectively. This is likely due to errors in the property tax records or ambiguous owner names, with owners not listed as subsidiaries of the SFR REIT in the SEC filings.

Additional information

Notes on contributors

Suzanne Lanyi Charles

Suzanne Lanyi Charles is an assistant professor in the Department of City and Regional Planning and the Baker Program in Real Estate at Cornell University in Ithaca, New York. Charles’s research concerns single-family housing, neighborhood change, and housing markets.