Investors have been buying houses at a steady rate since the last recession, but how much does it affect availability in the housing market? New research from the Georgia Institute of Technology shows investors are most likely to push out Black, middle-class homeowners from neighborhoods.
Data from 800 neighborhoods in the Atlanta metropolitan area between 2007 and 2016 revealed that major investors bought homes in majority-minority neighborhoods far from downtowns and in lower-income areas. These homes were often undervalued because of their minority populations, but they remained desirable and offered good market value. The neighborhoods where investors bought up real estate were predominantly Black, effectively cutting Black families out of home ownership. Collectively, Black people lost more than $4 billion in home equity over a 10-year period because of investors, according to the research.
“That $4 billion refers to the home values that would have gone to individual homebuyers if these large institutional investment firms hadn’t purchased those properties,” said Brian An, an assistant professor in the School of Public Policy at Georgia Tech. “This is a very conservative, lower estimate than what the actual effect probably is.”
The data showed that, on average, neighborhoods experienced an increase of large investor purchases from nearly zero percent in 2007 to over 12 percent in the peak year, 2013. Investors acquired up to 76 percent of for-sale, single-family homes in some neighborhoods.
The full study, “The Influence of Institutional Single-Family Rental Investors on Homeownership: Who Gets Targeted and Pushed Out of the Local Market?,” was published in the Journal of Planning Education and Research. It may be accessed here.