Housing markets in the United States today are rapidly changing. We are bombarded in the news about corporations purchasing homes across sunbelt metros like Atlanta, Charlotte, and Phoenix. Reporting and research highlight the challenges faced by renters in private equity-backed properties, from maintenance requests gone unfulfilled to evictions as a core part of a fee-based business model. During the first two years of the Covid-19 pandemic, homebuyers fought over a limited supply of for-sale housing, often finding out that they were beat by all-cash corporate offers. Now we wonder: will these homes ever come back on the market, and what happens to the tenants who live in these new rental properties?
To shed new light on these intersecting disruptions facing housing markets in America today, the Nowak Metro Finance Lab and Accelerator for America published Averting a Lost Decade: Rethinking an Inclusive Recovery for Disadvantaged Neighborhoods. Now, the Nowak Metro Finance Lab and Reinvestment Fund have teamed up to analyze changing housing markets in three very different cities: Philadelphia, PA; Jacksonville, FL; and Richmond, VA.
For decades, Reinvestment Fund has implemented the Market Value Analyses (MVA) in cities across the US to understand the diverse tapestry that is America’s local housing markets. The MVA is a local stakeholder-informed, data-based, field-validated, examination of a city or region’s residential real estate market. Completed principally with administrative data reflective of the housing market (e.g., home sales, building permitting, new construction, vacant properties, subsidized rentals, etc.), the MVA is used by localities across the country to make data-based investment and programmatic decisions.
In this report, we overlay a new analysis of investor purchases in different MVA submarkets. By doing so, striking patterns of parasitic purchasing comes into view. In the last 30 years, the proportion of the rental market owned by sole proprietors has approximately halved, going from 77% to 41% of all rental units. At the local level, the parts of Jacksonville where investors were most active have seen greater declines in the number of homeowners and the homeownership rate. Investor purchases from owner-occupants are often concentrated in areas with below average but not the lowest homeownership rates, where both prospective buyers and current owners have struggled to access mortgage financing. Investor purchases of single-family homes are particularly prevalent in neighborhoods with low sale prices and high vacancy, elevated mortgage denial rates, and higher shares of residents who are Black or Hispanic. In the most distressed neighborhoods in Philadelphia, Richmond, and Jacksonville, more than 1 in 5 homes sold go from homeowners to investors.
As Managing Director for Policy Solutions, Emily Dowdall guides a team of analysts conducting quantitative, spatial, and qualitative research in support of more equitable communities in Philadelphia and across the country. Ms. Dowdall also oversees business operations for the department and leads cross-departmental collaboration efforts for Policy Solutions. Her research expertise includes affordable housing needs, neighborhood stabilization, fair housing, early child education access, and program evaluation.
Ira Goldstein, Ph.D., is the President of Policy Solutions at Reinvestment Fund, a results-oriented, socially responsible community investment group. Dr. Goldstein has conducted detailed spatial and statistical analyses in many cities and regions across the US.
Bruce Katz is the Co-Founder and inaugural Director of the Nowak Metro Finance Lab. Katz regularly advises global, national, state, regional and municipal leaders on public reforms and private innovations that advance the well-being of metropolitan areas and their countries. Katz is the co-author of The New Localism: How Cities Can Thrive in the Age of Populism (Brookings Institution Press, 2018) and The Metropolitan Revolution: How Cities and Metros are Fixing Our Broken Politics and Fragile Economy (Brookings Institution Press, 2013). Both books focus on the rise of cities and city networks as the world’s leading problem solvers.
Benjamin Preis is a Research Fellow at Drexel University’s Nowak Metro Finance Lab. He is currently pursuing a PhD in Urban Studies and Planning at MIT, where he received his Master in City Planning in 2019. Ben is interested in the use of novel computational tools to better understand regional wealth inequality, specifically in the areas of housing and economic development.
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