WASHINGTON, D.C. — It’s a trend affecting many homeowners and renters: large companies are buying homes to rent out to tenants.
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Now a new watchdog report from the U.S. Government Accountability Office (GAO) is shedding light on where it’s happening and the impact on the housing market.
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Nationwide, institutional investor-owned homes account for about two to three percent of rental homes, according to GAO. But in some cities, it’s as high as 25 percent.
The findings show there is an especially high concentration of investor-owned rental homes in the southeast.
As of 2022, 25 percent of single-family rental homes in Atlanta were owned by companies. In Jacksonville, it was 21 percent and in Charlotte it was 18 percent.
“A new phenomenon of some of these organizations: building to rent. Building neighborhoods for the purpose of rent,” said Jill Naamane, a Director in GAO’s Financial Markets and Community Investment team.
GAO said research shows there are connections to rising home prices when large investors buy or build in communities.
“There was a connection where there are a large number of investors and the home prices,” said Naamane. “There were increases in home values or home prices in those surrounding areas compared to other neighborhoods.”
“The thing that allows these institutional investors to continue to buy properties is the lack of renter protections,” said Sarah Saadian, Vice President of Public Policy and Field Organizing for the National Low Income Housing Coalition (NLIHC).
NLIHC argues these findings highlight the need for Congress to pass federal protections to ensure people have a fair chance in the housing market when they’re up against large investors.
“Those who have the lowest incomes are often paying 50, 60, 70 percent of their income on rent… and that becomes harder when they’re looking for a new rental home and the options are really limited or their landlords are dramatically raising rents,” said Saadian. “We’d love to see Congress pass a Tenant Bill of Rights that would put in place protections that would make it more challenging for landlords to engage in abusive or predatory behavior.”
The GAO report points out big investors aren’t the only factor impacting renters and homebuyers. Market conditions like high mortgage rates also play a role.
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