PLANNING + PROPERTY LAB at GEORGIA TECH
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10 units or fewer, but now major ISFRs own properties numbering in the tens of
thousands (Colburn, Walter, and Pfeiffer 2021). SFRS now consistently receive AAA ratings
from credit rating agencies, and are established as a profitable and growing asset class. In
addition to the creation of financial infrastructure, the emergence of ISFRs was enabled by the
development of digital property management technology (Fields, 2019). Digital technologies for
tenant screening, home assessments, maintenance, and rental collection substantially reduce the
cost and complexity of managing scattered properties (Mills, Molloy, and Zarutskie 2019).
Large corporate landlords are associated with high rates of housing instability due to frequent
rental price increases and aggressive eviction practices (Mari, 2020). These firms have higher
eviction rates than small landlords (Gomory, 2021; Raymond et al., 2018). Investor purchases of
multifamily have been found to cause spikes in evictions-led displacement, and to accelerate
displacement of Black residents at the neighborhood level (Raymond et al., 2021).
Traditionally, residential housing has been an extremely deconcentrated industry; however, since
the foreclosure crisis, the market crisis and shifts in institutional support for private equity firms
have generated an increased stance for private equity in the single family rental market.
Individuals went from owning 92% of SFR to 74% from 1991 to 2015; (Pfeiffer et al., 2020).
From 2000 – 2014, in the 20 largest metropolitan areas, institutional investors went from 5% to
14% of all purchases and from 1% to 24% of all distressed purchases (Lambie-Hanson et al.,
2019). Not only are large corporate investors growing in market share in the single family rental
space, they have been found to compete with, and crowd out homeownership at the local level
(Lambie-Hanson et al., 2019).
As this asset class was built in the footprint of subprime lending and the foreclosure crisis,
ISFR’s tend to locate in the Sunbelt region of the U.S., including cities such as Atlanta, Miami,
Tampa, Charlotte, Phoenix, and Los Angeles (Mills, Molloy, and Zarutskie 2019). These are
cities with newer housing stock which experienced high rates of foreclosures during the
foreclosure crisis, a prolonged price collapse, but had projected population and income growth
over the long term. While the overall market share of institutional investors is low nationwide,
they have high market share in particular submarkets of some metropolitan areas (Colburn et al.,
2021; Lambie-Hanson et al., 2018). Within cities, SFR purchases are concentrated in areas with
higher racial and ethnic diversity, low housing choice voucher rates, and rising economic
disadvantage (Pfeiffer et al., 2020).
Not all large corporate buyers of single family rentals are the same. Instead, there are a wide
array of investor types, and the profit strategies for these firms vary widely. Some, like
OpenDoor and Zillow, can be thought of as trading platforms, which seek to realize a profit by
flipping or quickly reselling properties, as well as transforming the way in which homeowners
purchase homes from the typical realtor model. Trading platforms created an online system that
allows for remote investments, embedding local real estate markets in wider geographic markets
(Fields, 2019; Fields & Rogers, 2021). These firms generate profits through a significantly
shorter buying process, eliminating realtor fees, appraisal, and the mortgage qualification
process. These platforms use automated valuation to make cash offers, then sell, market, and