A new report from the Lincoln Institute of Land Policy and the Center for Geospatial Solutions (CGS) has determined that corporate entities and investors now own 8.9% of residential parcels in 500 counties, or roughly one in 11 parcels.
The report observed that corporate ownership exceeds 20% in communities including St. Louis, Missouri; Harrisonburg, Virginia; and Franklin County, Ohio. Corporate ownership is defined by the report as spanning the spectrum from smaller limited liability corporations to large institutional investors such as private equity firms, pension funds, and real estate investment trusts.
“Policymakers can’t protect affordability if they can’t see who controls the land beneath our feet,” said Jeff Allenby, director of innovation at CGS. “Geospatial, parcel-level visibility reveals how corporate investment is shaping housing––from national patterns to city blocks. Leaders need this clarity to respond to emerging pressures in real time and deploy interventions where they’re needed most.”
“It’s clear that corporate ownership of residential property is here to stay—and might even continue increasing,” added George McCarthy, president and CEO of the Lincoln Institute. “However, this report offers a look into key trends, establishing a national baseline that policymakers, reporters, and communities can use to best understand how to move forward.”
The full report is free to access and is available on the Lincoln Institute’s website.
As a real estate broker, I have been warning this for years. Anyone who wonders why there is a housing shortage it is because of this 9% ownership that will never sell. If the intent of this country is to force future generations to become lifetime renters than that is fine. Corporate ownership should be limited to major developmenta nd multi family housing complex projects not single family homes. Our political leaders on both sides of the aisle who say they are for homeownership need to put there vote where the so called mouth is and create policy that will gradually reduce corporate ownership of single family homes, as to not create a collapse of the marketplace and return these proerties to the many first time buyers at market price. I am not lobbying for a free giveaway but a competitive redcution in the volume of corporate ownership. There are many areas where corporate money can be utilized to turn the profit that they need rather than driving hownership by consumers into the ground and force a rental lifestyle on them.
I’m also a 23 year REALTOR and have processed and resold about 300 foreclosed single family homes for bank owners among the roughly 1000 homes I have listed or helped buyers acquire. That experience has shown me that homeownership is not the ideal type of living for some people. Being a home owner requires you to maintain that home in order for it to appreciate in value, over time. Not everyone homeowner will keep their home in top shape. Maintenance averages around 5% annually plus property taxes and HO insurance and maybe flood add another 5% easily. As well, if you plan to move in less than five years, with a mortgage and the typical cost to sell, you are not likely to gain any valve, in that short time period. Renting is a great option for many people. The freedom to move as needed and the lack of responsibility to pay for a new roof or replacing an HVAC system can be better financially for 10 to 20 percent of the population. As a REALTOR, I welcome the option of none, single or multiple ownerships to all parties, both individually or as corporate entities.
I’m a real estate broker of 28 years and I vehemently oppose the government implementing policies that restrict the freedoms of real estate ownership. Rather than blame corporations for investing in real estate we should instead be asking why it’s happening. The simple answer is, it’s because it’s a sound investment that analysts working for such entities can easily identify as such because of the main root cause…which is historical low inventory. Housing is a commodity like anything else, and when supply is historically low for any commodity it doesn’t take a genius to know that the value of said commodity will increase in value. This whole problem of unaffordability stems from the housing crash of 2008. The health of the housing market has always relied on new construction to bring new inventory to the market. This helps maintain a healthier balance between supply and demand. So if you imagine every builder across the entire nation laying their hammers down for one full year that will cause a reduction in available inventory. Now imagine if that happened for a full decade. Well you don’t have to imagine it because that’s exactly what happened. That’s the root of this problem. If we want housing costs to come down we need to add supply to the market. As inventory increases values will come down. We’re seeing this very fact happening currently in certain parts of the country like Florida. Not that new construction is adding that inventory but the fact that owners are selling at a higher clip because of insurance issues relating to hurricane propensity. Demand there is also down for the same reasons. So, higher inventory with lower demand and bingo…prices come down. Our nation’s issue is a lack of boxes. This is not a demand side issue. It’s a supply side issue. If the government should do anything it should find ways to incentivize building. Not take away freedoms of real estate ownership. That is a slippery slope.
Adding inventory at rates Mr Kvale recommends is not economically feasible, otherwise it would be happening. Using statistically irrelevant foreclosure rates, and blaming the victims’ irresponsible behavior, as an excuse to encourage corporate ownership is ludicrous (and self-serving). Nine percent moves the needle in terms of available inventory. That 9% is concentrated in low cost, 3-bed, 2-bath homes in established neighborhoods. In other words, first-time buyer homes in otherwise economically robust communities. What is the percentage of corporate ownership in that price and size range? Probably closer to 20%. There must be a limit to the number of single-family homes any entity can own. Corporations who own more than the limit should be obligated to sell off inventory at a rate that does not adversely affect the supply & demand equation. This sell-off can happen after a prescribed minimum appreciation has been reached for each unit. The corporate owners will make a healthy profit. Having practiced real estate for 25-years, I have worked with these corporations on both sides of transactions and have experienced what they do to market health. This does not even take into account the lack of accountability regarding their deceptive business practices (negligent with apparent criminal intent) that wreck the quality of life for the people with whom that are doing business. Wealth disparity has crushed the American Dream. This is an easy way to repair many gaps in our economy that will improve countless people’s quality of life. Rare foreclosures notwithstanding.
I have been in the real estate business 26 years and I think this needs clarification. Do you see an LLC and consider that a corporate entities or an investor. As a Realtor you typically don’t have a pension so my husband who has been in real estate 54 years bought properties to retire on. Real estate is a great investment vs the stock market, other than the mortgage melt down it has not really lost value. We have sold properties to ma and pop for retirement which is a safer bet. I don’t think we need to say who can buy what unless seller wants to which happens with bank owned properties. They will say only owner occupy for a certain amount of days. When it comes to sales in our area we don’t find a lot of investors buying the nice homes they look for ones that have not been taken care of so they can put sweat equity into them and hold for investment.