Capitalizing on Collapse: An Analysis of Institutional Single-Family Rental Investors

Abstract

A well-documented consequence of the recent foreclosure crisis was a pronounced dislocation in the single-family home market. Large institutional buyers emerged to capitalize on this dislocation. These firms acquired hundreds of thousands of single-family homes to create a pool of single-family rentals (SFRs) in markets across the United States. Existing analyses of institutional investors focus on their aggregate characteristics and associated community effects, showing faster housing recovery in places hard hit by foreclosure but also increases in evictions and home prices. Relatively little is known about individual firms’ strategies or how they have evolved over time—knowledge that is critical to understanding the diversity of these actors and establishing causal links to community impacts. We help fill this gap by using quantitative and qualitative data from the corporate filings of publicly traded SFR companies to understand the industry’s birth, growth and development, strategies and approaches, and points of differentiation.

Rental tenure and rent burden: progress in interdisciplinary scholarship and pathways for geographical research

“…The recent U.S. foreclosure crisis has led to an extensive conversion of single-family homes into rentals (Chilton et al, 2018 ; Colburn et al, 2020 ; Fields et al, 2016 ; Immergluck, 2018 ; Immergluck & Law, 2014a , 2014b ; Pfeiffer & Lucio, 2015 ; Pfeiffer et al, 2020 ). Since this crisis, there has been a pronounced tenure shift toward rentership in large U.S. metropolitan statistical areas (MSAs), and a substantial share of this increase concerns rental single-family homes (Immergluck, 2018 ), now accounting to more than one-third of all U.S. tenants residing in single-family rentals (Pfeiffer et al, 2020 ).…”

“…This foreclosure crisis further facilitated corporate investors’ acquisition and leasing out of thousands of foreclosed homes all across the U.S. These firms created vast pools of institutionally owned single-family rentals (Colburn et al, 2020 ; Fields et al, 2016 ). This promoted extracting profits from real estate that were otherwise difficult to sell, given a decreased demand or financial abilities to owning homes.…”

“…Concerning geographical variations, the metropolises with higher degrees of investor activity in terms of single-family rentals include those that experienced a significant decline in property values, causing a reluctance to sell homes at lower prices and an increased demand for rentals. Colburn et al ( 2020 ) claimed that acquisitions by corporate investors predominantly concentrated in fast-growing regions most affected by the Great Recession, and where housing prices had declined significantly and increases in rentership had been more pronounced. Such areas are overrepresented in the Sunbelt and Immergluck ( 2018 ) demonstrated that it was the domain of single-family rentals, since nine MSAs with the largest increases in single-family rentals (2006–2015) were in that region.…”

“…Such areas are overrepresented in the Sunbelt and Immergluck ( 2018 ) demonstrated that it was the domain of single-family rentals, since nine MSAs with the largest increases in single-family rentals (2006–2015) were in that region. Given this spatial concentration, besides several empirical analyses of single-family rentals across the nation (Colburn et al, 2020 ; Pfeiffer et al, 2020 ), there are also those specifically focused on the Sunbelt MSAs such as Atlanta (Immergluck, 2018 ), Nashville (Chilton et al, 2018 ), and Phoenix (Pfeiffer & Lucio, 2015 ).…”

“…This might have reversed the 1990s tendency when rentals were often concentrated in disadvantaged neighborhoods (Pfeiffer & Lucio, 2015 ) mostly due to housing filtering and neighborhood change. Others, however, viewed the foreclosure crisis as a missed opportunity (Colburn et al, 2020 ) for appropriate entities to provide larger numbers of affordable rentals.…”