W I N T E R 2 0 2 3

EVIDENCE

MATT E R S Transforming Knowledge Into Housing

and Community Development Policy

INSTITUTIONAL INVESTORS IN HOUSING

IN THIS ISSUE

Institutional Investors

03

Institutional Investors:

12

Investments in

24

Outbid Individual

A Local Perspective

Affordable Housing

Homebuyers

Message From PD&R Leadership

Evidence Matters signals HUD’s commitment to synthesizing research on important policy issues. By offering a timely recap of research and a deep dive into communities, Evidence Matters helps shape public debate on housing, communities, and neighborhoods. These articles summarize the problem for readers and highlight interventions to explain how local actors are responding to housing challenges. In short, Evidence Matters helps readers understand policy issues and solutions.

In this issue, we look at the role of institutional investors in the housing market. The pool of housing investors includes many types of players in the market. Some investors own just a

handful of properties. Their housing investments may be essential to their livelihood or part of a personal financial strategy. Other investors own many more units, and those units often are concentrated in a single housing market. Institutional investors are the largest players in this group. These are investors who own more than a thousand housing units in the single-family market. Their holdings often are scattered across several rental markets rather than concentrated in a single market. And, although they make up only a fraction of the single-family housing market, they are playing an increasingly large role in it.

By focusing on the role of these institutional investors, this edition of Evidence Matters invites readers to better understand a subtle but important shift in the housing market. On one hand, these investors help preserve the single-family housing stock for renters. As they purchase properties, especially in the suburbs, institutional investors create rental opportunities for households to access suburban neighborhoods. Investors often have access to capital that enables them to renovate and repair these homes, ultimately improving the quality of the housing stock.

At the same time, however, the growth in institutional investors creates additional barriers to homeownership for low-income and first-time homebuyers. Unrestricted access to capital enables these investors to compete on the housing market by outbidding individual buyers or offering more attractive terms to sellers. Keeping their investments as rental units prohibits other buyers from purchasing those units for owner occupancy. Moreover, the concentration of property in the hands of a smaller number of owners may reduce competition in the rental market.

The growing presence of institutional investors in the single-family housing market is an important topic to consider as we advance the policy goals of the Biden-Harris administration. We need to understand the types of investors entering the housing market and how the continued financialization of housing drives these investments. We need to understand the ways in which communities respond to these shifts in the housing market. We need to understand how these investments reshape opportunities available to first-time homebuyers, especially in communities of color. I hope that this edition of Evidence Matters contributes to these critical policy discussions.

Sample text.

1 Sample footnote

— Brian J. McCabe, Deputy Assistant Secretary for Policy Development

2

Editor’s Note

This issue of Evidence Matters explores the role and influence of institutional investors in the housing market. Institutional investors are increasing their footprint throughout the country, particularly in the Sun Belt states, so analyzing the impacts of these investors, including their impacts on low- and moderate-income communities and communities of color, is important. With the finding that large corporate investors tend to concentrate their single-family rentals in low-income neighborhoods that are historically nonwhite, it is vital that we undertake a critical analysis of this trend as we work to reduce the racial wealth gap, increase homeownership opportunities, and support the growth of intergenerational wealth.

The lead article, “Institutional Investors Outbid Individual Homebuyers,” examines the relatively recent entry of institutional investors into the single-family housing market, their effect on renters and prospective homebuyers, and ways to combat their negative impacts. The Research Spotlight article, “Institutional Investors: A Local Perspective,” looks at institutional investor activity in two metropolitan statistical areas: Dallas-Fort Worth-Arlington and Houston-The Woodlands-Sugar Land. The In Practice article, “Investments in Affordable Housing,” highlights three local organizations that are working to preserve affordable housing in Atlanta, Louisville, and Milwaukee. Through strategies such as a loan fund, acquisition and rehabilitation, lease-to-purchase programs, downpayment assistance, and homebuyer education, these organizations play an important role in their communities and serve as useful models for others.

The research and data highlighted in this issue of Evidence Matters are particularly timely as institutional investors shift the dynamics of the nation’s housing market. We hope readers gain knowledge and a better understanding of this emerging topic. We welcome feedback at www.huduser.gov/forums.

— Heidi Joseph, Director of the Research Utilization Division

Institutional Investors Outbid

HIGHLIGHTS

ture

Individual Homebuyers

n Institutional and other large corporate

fea

investors own an increasing share of

Institutional and large corporate others, referred to as trading platforms, single-family homes, taking properties investors represent a growing

may seek to scale purchases in markets

off the market for individual homebuyers

and putting upward pressure on home

percentage of owners of single-family

where they can profit from quickly

prices and rents.

homes. Institutional investors are

reselling properties without investing

single, nonindividual entities such

in improving them. When institutional

n Institutional investors have concen-

as limited liability companies (LLCs),

and other large corporate investors

trated their purchases regionally

(in the Sun Belt) and in particular

limited liability partnerships (LLPs),

concentrate their activity in a local

neighborhoods (typically low-income,

and real estate investment trusts

market — particularly within a specific

historically nonwhite and disinvested

(REITs) that have portfolios of 1,000

neighborhood — the effects can be

areas).

or more housing units. Unlike tradi-

significant. In addition to preventing

tional, smaller-scale “mom and pop”

individual buyers from purchasing homes,

n Federal, state, and local governments

can combat the negative impacts

landlords, these investors often

investor activity lowers the overall avail-

of institutional investors, often in

can outbid prospective individual

ability of homes for purchase and raises

partnership with nonprofit and other

homeowners with all-cash offers and

prices for the remaining homes in the

social-purpose organizations that can

fast-track their purchases by waiving

market. And these practices can have

purchase single-family homes for

common steps in the buying process

material impacts for renters in investor-

individual buyers or help those buyers

that would be too risky for individual

owned properties, including additional

purchase them directly.

buyers to skip. Institutional investors

costs and fees and issues related to unit

have various motivations; some may

conditions and maintenance.

seek to hold onto the home as a rental

single-family dwellings. 1 Because larger

unit and maximize its profitability;

Institutional Investors in

households tend to prefer the size of

others may be interested primarily in

the Single-Family Market

single-family homes, roughly 41 percent

capital gains from home value appre-

An estimated 39 percent of rental

of the renter population lives in single-

ciation in the medium term; and still

housing units in the United States are

family homes. 2 In recent years, institutional

3

that foreclosed properties should be

converted to rentals. 14 Noting the

large number of foreclosed properties

and the nation’s growing demand for

rentals, a Federal Reserve white paper

Authority

stated, “Reducing some of the barriers

to converting foreclosed properties to

rental units will help redeploy the exist-

ing stock of houses in a more efficient

way.” 15 Notably, says Immergluck, this

approach represented a missed oppor-

tunity to help homebuyers purchase

homes while prices were low. 16 Fannie

Mae and Freddie Mac both held pilot

sales in 2012 to facilitate the sale of real

estate owned properties and mortgage

notes to investors who would operate

them as rentals. 17 The Federal Housing

Administration (FHA) also expanded

Photo courtesy of Port of Greater Cincinnati Development

its sales of distressed mortgage notes

Investor activity in the single-family rental market increased rapidly during the COVID-19 pandemic.

to investors through its Single-Family

Loan Sales Program, also known as the

and other large investors have been

financial crisis, investors bought fore-

Distressed Asset Sales Program.18

actively expanding their share of the

closed properties, often at a discount,

single-family rental market. Between

with institutional buyers joining the

Institutional investors had long avoided

2011 and 2017, these investors purchased

usual cash investors. 10 As hundreds of

the single-family market because of

more than 200,000 single-family homes

thousands of homes went into fore-

the challenge of managing dispersed

at a total cost of $36 billion. 3 Investor

closure, the federal government sought

properties. 19 Digital technologies,

purchases surged again during the

to stabilize housing prices by increas-

however, including improved data and

COVID-19 pandemic: in the first quarter

ing demand for the homes, which it

analytics, have transformed the single-

of 2022, investor purchases of single-

accomplished largely by creating incen-

family rental market. 20 Technology has

family homes averaged 28 percent per

tives for private investors to make bulk

made both purchasing and manag-

month, compared with 19 percent the

purchases.11 In his study of Atlanta,

ing dispersed rental properties more

previous year and the average of 16 per-

Immergluck notes that in 2012, “a com-

efficient and profitable. Corporate

cent between 2017 and 2019. 4 This rate

bination of public policy and Wall Street

owners can use digital tools to acquire

is much higher in certain areas of the

financialization” accelerated the rise

property quickly and other tools to

country, reaching up to 67 percent in

of activity by institutional private-equity

screen applicants, accept payments,

Lincoln County, Mississippi; 63 percent

investors in the single-family rental

manage maintenance requests, and

in Van Buren County, Iowa; and 52 per-

market. 12 Banks and other lenders, as

gather data on rental markets. 21 Fields

cent in Tarrant County, Texas, in 2021.5

well as the government-sponsored en-

and Vergerio point out that these tools

Large portfolio investors (those holding

terprises (GSEs), the Federal National

allow institutional investors to monitor

more than 100 properties) drove this

Mortgage Association (Fannie Mae)

real estate markets and move quickly

growth. 6 According to CoreLogic, insti-

and the Federal Home Loan Mort-

to identify, evaluate, and make offers

tutional investors purchased 3 percent

gage Corporation (Freddie Mac), had

on properties that fit their criteria,

of homes sold in 2021, three times their

amassed large numbers of foreclosures

and they allow landlords to analyze

typical share in prior years.7 Research by

on their portfolios that they wanted

costs at scale to identify inefficiencies

MetLife Investment Management sug-

to offload. In addition, because the

and maximize profits. 22 Goodman and

gests that, as of August 2022, institutions

foreclosure crisis left many potential

Golding point out that institutional

owned approximately 700,000 single-

homebuyers wrestling with lower credit

investors, with their access to capital,

family rental homes.8

scores and tighter lending standards,

may be better able to efficiently reno-

private households were less likely to

vate properties after purchase than

The increase in institutional investors

qualify to buy homes even at lower

individual homebuyers and therefore

began during the Great Recession, when

price points, thereby increasing the

perform a useful function in improv-

housing prices dropped precipitously

demand for rentals.13 Immergluck docu-

ing the condition and quality of the

and credit tightened.9 During the

ments how federal policymakers argued

housing stock. 23

4

As noted previously, investor activity

Although different types of investors

Investors vary in the markets and prop-

grew rapidly during the COVID-19

have different motivations, market

erties they target, but, historically, most

pandemic, and its ongoing effects

conditions have aligned at certain

of the growth in investor purchases has

may further shape market dynamics. 24

points to make single-family homes an

been in the Sun Belt (the southern and

However, the recent rise in interest

attractive option for many investors

western regions of the United States),

rates and financing costs appear to

(see “Institutional Investors: A Local

which, not coincidentally, experienced

have slowed the growth of investors’

Perspective, ” p.12). 28 Some investors

high foreclosure rates during the finan-

purchases (although not their market

may primarily be interested in purchas-

cial crisis. 33 For example, in 2013, 12

share, because investors may be better

ing and holding properties to collect

percent of single-family homes in Atlan-

able to weather interest rate increases

rental streams and fees. 29 This invest-

ta were purchased as rentals compared

than individual buyers). Investor pur-

ment strategy becomes particularly

with 1 to 2 percent of single-family pur-

chases fell for two straight quarters

attractive when price-to-rent ratios

chases nationwide from 2012 to 2014. 34

following their peak in the third quarter

fall.30 Other investors may be attracted

As the housing market recovered from

of 2021.25 At the same time, as higher

by the opportunity for capital gains,

the financial crisis, investors were no

mortgage rates have driven away indi-

focusing on purchasing properties that

longer able to purchase foreclosed

vidual homebuyers from the purchase

they anticipate will appreciate in value

properties in bulk. However, according

market, homebuilders have increas-

over the medium term before being

to Immergluck, Sun Belt properties

ingly turned to institutional investors to

resold. 31 Still others may want to profit

remained attractive to investors because

finance “build-to-rent” developments.26

from a quick resale of their purchase.

of the region’s relatively lax tenant pro-

Elora Raymond of Georgia Tech says

This type of investor, sometimes called

tections and the unlikelihood that local

that the relevant data point will be

a trading platform, profits by using

governments would pass rent control

the rate of return on the investment

automated processes and cash offers to

laws.35 The largest investors often use

in single-family homes compared with

move quickly and bypass common fees

revenue strategies that require operat-

alternative investments. Any time the

such as those for appraisals, real estate

ing at a large scale for profitability;

return rate favors single-family homes,

agents, and financing before reselling

as a result, they seek out areas where

investors will buy them.27

their purchases. 32

they can acquire many properties. 36 In

Large corporations own nearly 1 in 5 detached single-family rental homes in Phoenix.

5

some cases, regional concentrations

and a study of Los Angeles County

communities, where, in many cases,

have intensified; for example, in the

found that investor activity was higher

residents own their homes but rent the

third quarter of 2021, large investors

in neighborhoods with relatively low

land underneath their homes. Because

purchased 43 percent of homes for sale

home prices and a high proportion

moving their homes is difficult and

in the Atlanta metropolitan area and 39

of Black residents.40 In their study,

costly, most of these homeowners are

percent of those in the Phoenix-Glen-

which included some cities outside

essentially trapped in their current loca-

dale-Scottsdale area.37 Overall, large

of the Sun Belt, Dowdall et al. note

tion, even as the landowners raise their

corporations own nearly 1 in 5 of the

that investor purchases in Philadelphia,

rents.43 Esther Sullivan of the University

approximately 41,000 detached single-

Jacksonville, and Richmond are also

of Colorado, Denver, notes that, as

family rental homes in Phoenix.38

concentrated in areas with below-

with the housing bubble and bust in

average homeownership rates where

the 2000s, manufactured housing is

Within regions, researchers find that

prospective homebuyers face barriers

a bellwether for investors’ strategies;

large corporate investors that are buy-

to mortgage financing.41

the return-maximizing strategies that

ing single-family rentals and rent-to-own

private equity firms have employed in

units tend to concentrate their purchases

Some variations of this general trend

manufactured home communities —

at the neighborhood level, primarily in

exist. For example, the large corpo-

including raising rents (in some cases as

“low income, historically non-white

rate trading platforms that specialize

high as 50 to 60%), charging new fees,

neighborhoods that have suffered from

in buying and quickly reselling homes

and cutting costs for expenses such as

disinvestment, but where gentrification

at a profit purchased homes in areas

maintenance — are the same ones that

or real estate cycle dynamics predict

with smaller populations of people of

investors in the rental market for single-

medium term price increases. ” 39 A study

color overall, and, after the pandemic

family homes have used. 44

of the single-family home rental market

began, these platforms reduced their

in Atlanta from 2010 to 2015 found that

purchases in places with a high risk

Impact on Prospective

investors concentrated their purchases

of housing instability. 42 Private equity

Homebuyers and Renters

in older neighborhoods with high num-

investors have increased their owner-

Because investors tend to concentrate

bers of Asian, Latinx, and Black residents,

ship share in manufactured home

their purchases in particular markets,

Investors can outcompete individual buyers with cash offers or by waiving processes such as inspections.

6

Authority

Photo courtesy of Port of Greater Cincinnati Development

Port of Greater Cincinnati Development Authority purchased 194 single-family homes from an institutional investor to sell to individuals.

even particular ZIP Codes or neigh-

also might be more willing to waive

also can use leases to shift obligations

borhoods, they can significantly affect

inspections — an attractive advantage

onto tenants. Semuels reports that a

home prices, rents, and options for pro-

for sellers of homes needing repairs,

standard lease from one corporate owner

spective homebuyers.45 It even matters,

which are not uncommon in the mar-

required tenants to replace air filters

says Raymond, “not just what percent-

kets investors target.50 These purchases

monthly and assume responsibility for

age of units, but what percentage of

not only take units off the market but

sewer and sink backups and broken

three-bedroom units [for example], or

also apply upward pressure on the prices

glass. Another owner charged tenants

in a particular school zone,” are investor

of the homes that remain for sale. One

for any maintenance staff trips to the

owned, “because that’s how tenants are

study found that from 2007 to 2014, the

unit.54 Some companies reportedly

searching” — by a particular housing

increase in institutional investors “con-

charged tenants aggressively to increase

type and location. 46 Investor activity

tributed to 9 percent of the increase in

earnings, deducting the expenses from

reduces the inventory of homes available

the real house price growth…. ”51

tenants’ security deposits. According to

for potential owner-occupants to pur-

Semuels, between 2014 and 2018, one

chase, especially homes at lower price

These dynamics contribute to the

company increased such charges by

points. 47 These lower-priced homes are

demand for the very type of rental

more than 1,000 percent.55

the types of homes that first-time home-

properties that institutional investors

buyers and groups that historically have

seek. The management strategies inves-

A study of Milwaukee rental data found

been excluded from homeownership

tors employ to maximize profit, in turn,

that rentals owned by LLCs were more

are likely to target. Researchers indeed

affect the costs and conditions for rent-

likely to be in disrepair, both because

observe declines in the number of

ers. Institutional investors use property

LLC investors tend to buy in areas

homeowners and homeownership rates

managers, whom tenants sometimes

where dilapidated properties are con-

in areas with high investor activity.48

perceive as removed and impersonal.52

centrated and because the properties

To maximize cash flow, investors system-

deteriorated more rapidly under LLC

Because institutional investors buy with

ize the transfer of responsibilities for

ownership.56 Travis writes that, because

cash and sometimes bypass appraisals

maintenance and other expenses, such

identifying the precise owners of LLCs

and other typical processes, institution-

as landscaping, to tenants, or, in some

is so difficult and because of the liability

al investors can use these advantages

cases, charge fees for these services as

protections that LLC status offers,

to outcompete prospective homebuyers

well as for pools, automatic door locks,

both tenants and local governments

to purchase available homes.49 Investors

and utilities, among others. 53 Investors

may be less able to hold these owners

7

accountable for tenant mistreatment

keeping them in the rental market.

purchasing, such as first look programs

and poor housing conditions. 57 Insti-

This way, investors may significantly

that give nonprofits or tenants the first

tutional investors are also more likely

alter the tenure mix of a neighbor-

opportunity to purchase a property

than other landlords to evict tenants.

hood over the long term.60

that is for sale before it is listed on the

In their study of Fulton County, Geor-

open market.

gia, Raymond et al. find that owners of

Immergluck notes that because inves-

15 or more single-family home rentals

tors bought properties at the nadir of

Nonprofit organizations in several

were 8 percent more likely than smaller

the market, they, rather than low- and

markets acquire and rehabilitate prop-

portfolio landlords to file eviction notices,

middle-income homebuyers, have

erties that they then offer at affordable

a trend that holds even when control-

benefited from the recovery in housing

prices to individual homebuyers. (See

ling for neighborhood and property

values since the foreclosure crisis. 61 As

“Investments in Affordable Housing,”

characteristics. 58 Seymour and Akers

a result, these low- and middle-income

p. 24, for a discussion of the Atlanta

similarly find that large investors were

households missed out on what could

Neighborhood Development Partner-

more likely than small- or medium-sized

have been transformational gains in

ship, Inc.; Housing Partnership Inc. in

landlords to file eviction notices and

household wealth.

Louisville, Kentucky; and Acts Housing

execute evictions. 59

in Milwaukee, Wisconsin, all of which

Combating the

attempt to help preserve affordable

In addition to the immediate impacts —

Negative Impacts of

single-family homes for individual

outcompeting potential homebuyers as

Institutional Investors

buyers.)

well as increasing costs and worsening

Various nonprofit and social-purpose

conditions for renters — investment

institutions can compete with inves-

Another entity that can compete with

activity has long-term impacts. Dowdall et

tors to buy single-family homes and

institutional investors to protect single-

al. note that when the five largest insti-

preserve them as affordable rentals

family homes for individual purchasers

tutional investors sell their units, they

or resell them at affordable prices.

are social-purpose REITs. Social-purpose

often sell them in bulk to other inves-

Some policy interventions offer these

REITs are institutional investment funds

tors (61% of homes they sell), thereby

institutions a competitive advantage in

that seek returns for investors while also

/Mike Bullard

Photo courtesy of ROC USA

ROC USA is a nonprofit organization that has helped 303 manufactured home communities convert to resident ownership, giving residents control over their communities.

8

upholding a stated social mission, such

as preserving affordable housing. One

In addition to the immediate impacts —

such example, the Housing Partnership

Equity Trust (HPET), founded in 2013

outcompeting potential homebuyers as

as institutional investors were snap-

ping up huge numbers of foreclosed

well as increasing costs and worsening

properties, focuses on purchases that

conditions for renters — investment activity

preserve naturally occurring afford-

able housing in multifamily properties.

has long-term impacts.

HPET provides investment capital and

partners with nonprofit housing provid-

ers to manage the purchased housing.

HPET’s investments adhere to its core

Investor activity poses unique chal-

reverse mortgages that were available

mission to meet social impact goals

lenges for residents of manufactured

exclusively to mission-driven nonprofits

such as setting affordable rents and

home communities, who typically

and state and local government buyers,

serving specific high-need populations.

own their units but rent the land on

thereby excluding commercial inves-

The average rent at HPET properties

which they are sited. 64 Investors buy-

tors. HUD expects that these buyers

is affordable to households earning

ing the land might seek to either profit

will preserve or expand affordable

less than 60 percent of the area median

from rental streams and fees or resell

homeownership opportunities or, in

income. HPET also encourages envi-

the land at a markup. ROC USA is

some cases, affordable rental options.

ronmental sustainability at its properties

a nonprofit organization that helps

The effort follows a December 2021

by tracking and reducing energy usage,

manufactured home communities

sale in which HUD reserved half of the

seeking to improve cash flow (and

become resident-owned land trusts in

auctioned properties for nonprofits

investors’ returns) by reducing operat-

which the residents collectively own the

and local governments; these entities

ing costs rather than transferring costs

land. ROC USA has helped convert 303

purchased 814 mortgage notes.68

to renters. HPET has also kept vacancy

manufactured home communities rep-

rates low to increase profitability. The

resenting 21,386 households to resident

The Biden Administration also has

REIT has nearly 3,000 units in 14 prop-

ownership.65 Only a small percentage of

announced steps to increase sales to

erties across 7 states. 62

manufactured home communities are

individuals and nonprofits through

resident owned, but those that are can

Second Chance Claims Without Con-

Like HPET, community land trusts

protect themselves from excessive rent

veyance of Title (CWCOT), a process

(CLTs) can acquire properties, often

hikes and other measures that a profit-

by which loan servicers sell foreclosed

those that need some rehabilitation, to

seeking institutional landlord might

FHA-insured properties without first

preserve affordability. In some cases,

impose. 66 Sullivan notes that residents

conveying them to HUD. In May 2022,

CLTs have first look options to buy

of these communities also have more

FHA created a special listing period

distressed properties. The Oakland

control to invest in needed infrastruc-

during which governments, nonprofits,

Community Land Trust, for example,

ture that institutional investors might

and owner occupants have an exclusive

was founded in 2009 to purchase fore-

neglect. 67

opportunity to purchase CWCOT prop-

closed properties and preserve them

erties.69 Similarly, the Federal Housing

to provide affordable homeownership

Government Efforts To

Finance Agency has directed GSEs and

opportunities for residents of Oak-

Mitigate Negative Effects

HUD to extend the “first look” period

land, California. The trust used federal

Although HUD has few tools to limit

during which nonprofits and owner

Neighborhood Stabilization Program

investor purchases, it has attempted to

occupants can purchase their real-

funding, but it was often outbid by

prioritize individuals and nonprofits

estate owned properties. HUD will also

investors’ cash offers. However, the land

in the sale of FHA-insured and HUD-

expand its outreach efforts to educate

trust has recently increased its capacity

owned properties. HUD has an Office

eligible buyers about the process for

and garnered additional resources. In

of Asset Sales to manage properties that

purchasing HUD- and enterprise-owned

2019, the Oakland City Council awarded

fall under its ownership — for example,

properties.70 Dowdall et al. recommend

the trust $12 million to buy properties.

homes secured with FHA-insured

forming an intergovernmental task

The land trust continues to acquire

reverse mortgages after a borrower dies

force to investigate and address the

properties, including single-family

with no surviving nonborrowing spouse.

rise of institutional investors as well as

homes, to preserve as affordable hous-

HUD has prioritized owner occupancy

other changes to the housing market to

ing options in Oakland and prevent

for the sales of these properties. In June

ensure a coordinated approach across

further displacement of low-income

2022, HUD auctioned approximately

federal agencies and with federal, state,

households.63

1,450 properties that had secured

and local governments.71

9

Julia Gordon, who now serves as HUD’s

ownership; in Portland, Oregon, the

properties. 79 Sullivan also notes that

assistant secretary for housing and FHA

Portland Housing Bureau used com-

no central database currently exists to

commissioner, says that Fannie Mae,

munity development block grants in

track the extent or location of insti-

Freddie Mac, FHA, and state housing

partnership with private developers,

tutional investment in manufactured

finance agencies should improve and

nonprofits, and state and local govern-

home communities. Such a database

expand financial products that help

ments to purchase and rehabilitate Oak

could help researchers and policymak-

individual homebuyers purchase and

Leaf Mobile Home Park and prevent it

ers understand and analyze trends and

renovate the types of properties that

from being sold and repurposed, which

take action to protect tenants.80

investors might target. Further, she says,

would have displaced its residents.76

because most homeowners might not

Community or tenant opportunity to

be able to manage a renovation effort,

State and local responses, including

purchase policies or laws, such as the

state and federal entities should help

robust rental registries and enhanced

District of Columbia’s District Oppor-

nonprofit organizations acquire and

tenant protections, can also mitigate

tunity to Purchase Act and Tenant

renovate properties. 72 The National

the increase and impacts of corporate

Opportunity to Purchase Act, can give

Community Stabilization Trust (NCST)

investment. Landlord-tenant laws,

local governments and tenants a first

is a nonprofit that administers “first

option to purchase rental properties

look” and other distressed properties

before they are listed on the market.81

sales programs for local nonprofit;

Dowdall et al. suggest that another

To bolster manu-

government; and mission-aligned, for-

trigger could be significant differences

profit property purchasers that renovate

in assessed value and purchase value,

factured homes as

these properties and return them

which could then require an indepen-

to productive use, including through

a source of afford-

dent appraisal to ensure that investors

resale to owner occupants. NCST has

cannot take advantage of homeowners

able housing, HUD

found that, although investors of all

by paying significantly less than what

types commonly renovate distressed

their properties are worth.82

recently announced

homes for homeownership, its mission-

aligned purchasers were particularly

a proposed rule to

Dowdall et al. recommend that state

effective at facilitating homeownership

and local governments or quasi-govern-

increase and index

in minority neighborhoods.73 Indepen-

mental and nonprofit entities purchase

dent researchers have also found that

single-family portfolios and resell the

loan limits for FHA

rehabilitating distressed properties

properties to individual homeown-

strengthens neighborhoods by boosting

ers. They offer the example of the

insurance for per-

the values of neighboring properties. 74

Port of Greater Cincinnati Develop-

sonal property loans ment Authority, which purchased 194

More generally, the Biden Administra-

single-family homes owned by a single

to purchase manu-

tion, including HUD, is mitigating the

institutional investor to resell them,

potential negative impacts of investor

ideally to current renters receiving sup-

factured homes.

purchases of single-family homes through

port from community-based partners.83

policies designed to increase the supply

Landlord licensing, rental registries,

of affordable housing and support for

zoning, and tax incentives are among

and code enforcement can help miti-

homebuyers. The administration also

the local factors that can make institu-

gate abuses or negligence by landlords

is pursuing measures to increase the

tional investment more or less likely in

or property managers, who may be

supply of manufactured housing and

a particular area. 77 Generating acces-

remote.84 Local governments can also

two- to four-unit properties by expanding

sible data on the extent of investor

adopt tenant protections against evic-

FHA and GSE financing and encour-

activity can help localities understand

tions, such as just cause eviction and

aging localities to reform zoning to

how to respond. The Federal Reserve

right to counsel laws.

eliminate barriers to housing construc-

Bank of Minneapolis created a tool to

tion. To bolster manufactured homes

track investor ownership in the Twin

Conclusion

as a source of affordable housing, HUD

Cities region. The tool also estimates

Institutional and other large-portfolio

recently announced a proposed rule to

and categorizes investor size to analyze

investors have substantially increased

increase and index loan limits for FHA

investors’ differing strategies.78 State

their activity in single-family rental

insurance for personal property loans

governments can require LLCs to

markets over the past decade, and

to purchase manufactured homes. 75

disclose their ownership so that ten-

they have the potential to continue

Federal funds can also support local ef-

ants and local officials can hold them

to extend their holdings. These inves-

forts to activate alternatives to investor

accountable for problems with their

tors often outcompete prospective

10

homebuyers for relatively low-cost

Bidder: How Tech is Cashing In on the American Dream.”

Michael Lucas, and Shiraj Pokharel. 2016. “Corporate

homes and depress the homeownership

22 Fields and Vergerio, 12.

Landlords, Institutional Investors, and Displacement:

Eviction Rates in Single-Family Rentals,” Federal 23

rate in areas where they concentrate

Laurie Goldman and Edward Golding. 2021. “Insti-

Reserve Bank of Atlanta.

tutional Investors Have a Comparative Advantage in

their purchases. For renters, the inves-

Purchasing Homes That Need Repair,” Urban Wire.

59 Eric Seymour and Joshua Akers. 2021. “‘Our customer

is America’: Housing insecurity and eviction in Las

tors’ profit model results in high rents,

24 Elora Raymond, Yilun Zha, Ethan Knight-Scott, and

Vegas, Nevada’s postcrisis rental markets,” Housing

fees, and the transfer of responsibilities

Leah Cabrera. 2022. “Large corporate buyers of resi-

Policy Debate 31:3-5, 534.

dential rental housing during the COVID19 pandemic

traditionally shouldered by landlords

in three southeastern metropolitan areas,” Federal 60 Dowdall et al.

61

to renters. Nonprofits, CLTs, and

Reserve Bank of Atlanta.

Quoted in Mari.

25 Lily Katz and Sheharyar Bokhari. 2022. “Investor

62 Housing Partnership Network. “About HPN” (hous-

social-purpose REITs can compete to

Home Purchases Slump 17% From Pandemic Peak as

ingpartnership.net/hpet). Accessed 7 October 2022.

keep homes available to individual

Interest Rates Rise.”

63 James A. Crowder Jr., Chris Schildt, and Rick Jacobus.

homebuyers. Federal, state, and local

26 Committee on Financial Services, U.S. House of

2021. “Our Homes, Our Communities: How Housing

Representatives. 2022. “Memorandum: Where Have

Acquisition Strategies Can Create Affordable Housing,

governments can create opportunities

All the Houses Gone? Private Equity, Single Family

Stabilize Neighborhoods, and Prevent Displacement.”

for nonprofits to buy properties, and

Rentals, and America’s Neighborhoods,” 23 June; Joe 64 U.S. Department of Housing and Urban Develop-Burns. 2022. “Housing stress creates opportunity for

they can take measures to mitigate the

ment, Office of Policy Development and Research.

Build-to-Rent,” finLedger, 13 October.

2020. Evidence Matters Winter/Spring 2020.

conditions of renters through tenant

27 Interview with Elora Raymond, 30 September 2022.

65 ROC USA. “Media Center” (rocusa.org/media-cen-

protections and information sharing to

28 Emily Dowdall, Ira Goldstein, Bruce Katz, and Benja-

ter-2/). Accessed 7 October 2022.

hold large landlords accountable.

min Preis. 2022. “Investor Home Purchases and the

66 Evidence Matters Winter/Spring 2020.

Rising Threat to Owners and Renters: Tales from 3

67 Interview with Esther Sullivan.

Cities.”

68 U.S. Department of Housing and Urban Develop-

29 Mari.

ment. 2022. “HUD Announces First-Ever HUD-Held

30 Pedro Gete and Michael Reher. 2018. “Mortgage Sup-

Single Family Note Sale (HVLS 2022-2) Exclusively

1 William Maher. 2022. “Single-family Rental Housing –

ply and Housing Rates.”

for Mission-Driven Non-Profits and Units of State and

Institutional Opportunities, ” RCL CO.

31 Raymond et al.

Local Government,” 12 April press release.

2 Claire Gray. 2021. “An Overview of Single-Family Rent-

32 Mari; Raymond et al.

69 White House. 2021. “FACT SHEET: Biden-Harris Ad-

als, ” National Multifamily Housing Council.

33 Joint Center for Housing Studies of Harvard Univer-

ministration Announces Immediate Steps to Increase

3 Alana Semuels. 2019. “When Wall Street Is Your Land-

sity, 12; Henderson.

Affordable Housing Supply,” 1 September statements

lord,” The Atlantic, 13 February.

and releases; U.S. Department of Housing and Urban

34 James Mills, Raven S. Molloy, and Rebecca E. Za-

Development. 2022. “Mortgagee Letter 2022-08:

4 Joint Center for Housing Studies of Harvard Univer-

rutskie. 2015. “Large-Scale Buy-to-Rent Investors in

Expanding Affordable Housing Supply Through

sity. 2022. “State of the Nation’s Housing,” 12.

the Single-Family Housing Market: The Emergence of

FHA’s Claims Without Conveyance of Title (CWCOT)

5 National Association of Realtors. 2022. “Impact of

a New Asset Class?” Federal Reserve Board.

Process.”

Institutional Buyers on Home Sales and Single-Family

35 Immergluck, 170.

70 Ibid.

Rentals,” 11.

36 Fields and Vergerio, 2.

71 Dowdall et al.

6 Ibid.

37 Committee on Financial Services.

72 Julia Gordon. 2018. “The Dark Side of Single-Family

7 Tim Henderson. 2022. “Investors Bought a Quarter

38 Andrew McIntyre. 2022. “Wall Street’s Single-family

Rental,” Shelterforce.

of Homes Sold Last Year, Driving Up Rents,” Stateline.

Home Grab, Phoenix, Part 1,” Law 360.

22 July.

73 Andrew Jakabovics and David Sanchez. 2021. “Does a

39 Raymond et al.

Nonprofit “First Look” Program Promote Neighbor-

8 Jeff Adler. 2022. “Institutional Investment in Single-

40 Committee on Financial Services.

hood Stabilization? Examining Outcomes for REO

Family Rentals Is on the Rise, Reports Yardi Matrix, ”

Sales in Florida,” In Tackling Vacancy and Abandonment:

Yardi Matrix .

41 Dowdall et al.

Strategies and Impacts after the Great Recession Center for

42

9 Lauren Lambie-Hanson, Wenli Li, and Michael

Raymond et al.

Community Progress and the Federal Reserve Banks

Slonkosky. 2019. “Leaving Households Behind: Institu-

43 Jim Baker, Liz Voight, and Linda Jun. 2019. “Private

of Atlanta and Cleveland.

tional Investors and the U.S. Housing Recovery.”

Equity Giants Converge on Manufactured Homes:

74 Rohan Ganduri and Gonzalo Maturana. 2022. “Do

10 Francesca Mari. 2020. “A $60 Billion Housing Grab By

How private equity is manufacturing homelessness &

Property Rehabs Affect Neighboring Property Prices?”

Wall Street,” New York Times, 4 March.

communities are fighting back.”

SSRN Working Paper.

44

11 Semuels.

Interview with Esther Sullivan, 29 September 2022.

75 U.S. Department of Housing and Urban Develop-

45

12 Dan Immergluck. 2022. Red Hot City: Housing, Race,

Fields and Vergerio, 2–3.

ment. 2022. “Federal Housing Administration

and Exclusion in Twenty-First Century Atlanta, Oakland:

46 Interview with Elora Raymond.

Proposes to Adjust Title I Manufactured Home Loan

University of California Press, 161.

47 Mari.

Program Loan Limits Annually, ” 18 October press 13 Immergluck, 161–2, 164.

release.

48 Dowdall et al.

76

14 Immergluck, 163–5.

U.S. Department of Housing and Urban Develop-

49 Fields and Vergerio, 22–3.

ment. 2019. “In The Mix.”

15 Federal Reserve. 2012. “The U.S. Housing Market:

50 Dowdall et al.

Current Conditions and Policy Considerations,” 1.

77 Committee on Financial Services.

51 Lambie-Hanson et al.

78

16 Immergluck, 171.

Kim-Eng Ky, Libby Starling, and Tu-Uyen Tran. 2021.

52 Mari.

“New property-data tool reveals patterns of investor

17 Semuels.

53 Ibid; Semuels.

ownership in the Twin Cities area, ” Minneapolis 18 U.S. Department of Housing and Urban Develop-54 Semuels.

Federal Reserve.

ment. n.d. “Distressed Asset Stabilization Program

79 Dowdall et al.

Enhancements.”

55 Ibid.

56

80 Interview with Esther Sullivan.

19 Mari.

Adam Travis. 2019. “The Organization of Neglect:

Limited Liability Companies and Housing Disinvest-

81 Dowdall et al., 15.

20 Desiree Fields and Manon Vergerio. 2022. “Corporate

ment,” American Sociological Review 84:1, 162.

Landlords and Market Power: What does the single-

82 Ibid.

family rental boom mean for our housing future?” 1.

57 Ibid., 165.

83 Ibid.

58

21 Tech Equity Collaborative. 2022. “Sold to the Highest

Elora Raymond, Richard Duckworth, Ben Miller,

84 Crowder Jr. et al.

11

Institutional Investors:

HIGHLIGHTS

A Local Perspective

n Cash sales have become more

prevalent in low-income ZIP Codes.

spotlight

n Between 2017 and 2021, home prices

ch

the highest number of cash home sales.

have appreciated rapidly in ZIP

Home purchases by investors have

garnered national attention as

Florida accounted for 37 percent of the

Codes with a large investor presence.

the inventory of homes for sale nation-

1.97 million home sales transactions

Conversely, income growth in these

wide decreased precipitously from

in Region IV during the 12 months

resear

ZIP Codes has been modest.

2020 through the first quarter of 2022,

ending June 2022, of which 320,400

n Some localities are starting to imple-

the result of strong demand fueled

were in cash. Texas accounted for 72

ment restrictions on institutional

by historically low mortgage interest

percent of the 1.10 million home sales

investment.

rates. Commanding further attention

transactions in Region VI during the

was the emergence of bidding wars for

12 months ending June 2022, of which

homes between traditional homebuyers

292,300 were in cash.

(including first-time and move-up buy-

Medium investors, defined as inves-

ers) and investors of all sizes, including

Types of Investors

tors with portfolios containing 10 to

iBuyers. 1 As the percentage of investor

To understand the effect of investors

99 units, held the second-highest share

purchases increased, average home

on home sales markets, researchers

of investor-owned homes at the na-

sales prices skyrocketed, making home-

need to know the size, location, and

tional level during August 2022, at

ownership more expensive.

composition of the purchases within

14 percent. The percentage of homes

their portfolios. Investors are cat-

owned by medium investors exceeded

Investors typically have a competitive

egorized as small, medium, large, or

the national level in Kentucky’s larg-

advantage over households because of

institutional based on the number

est metropolitan areas. In Lexington,

their access and ability to pay in cash.

of units they own. In addition, the

medium investors accounted for 25

Investors are also attracted to properties

location of investors’ purchases offers

percent of investor-owned homes.

in various stages of disrepair. According

valuable insight into potential imbal-

Similarly, in Louisville, medium inves-

to research from Laurie Goodwin and

ances between the supply and demand

tors accounted for 23 percent of

Edwin Golding, “most of the homes

for housing. Investor purchases can

investor-owned homes. Investors in

institutional investors buy need repair.

include several types of real estate,

Kentucky were attracted to the state’s

And because of operational and financ-

but for the purposes of this article, we

lower-priced homes. The average home

ing advantages, these institutional

focused on data from John Burns Real

sales prices in the Lexington-Fayette and

investors can repair these properties

Estate Consulting that include only

Louisville-Jefferson County metropolitan

more quickly and efficiently than

single-family detached homes.

statistical areas (MSAs) were $280,400

an owner-occupant generally can.”2

and $260,900, respectively, during the

Investors often have access to a line of

Investors with portfolios containing

12 months ending July 2022, which was

credit, which allows them to expedite

one to nine units generally are con-

substantially lower than the national

their transactions. Although investors

sidered small investors and typically

average home price of $401,900 during

may use a line of credit or some other

consist of mom-and-pop investors:

the same period. 3

financing mechanism, these transac-

individuals who own and operate

tions ultimately are recorded as cash

properties either through tradi-

Investors with portfolios containing

sales. Because data on investor home

tional leases or through popular

100 to 999 units are defined as large

sales are limited, cash home sales serve

platforms such as Airbnb and Vrbo.

investors. As of August 2022, single-

as a measure of investor activity. Ac-

As of August 2022, single-family rental

family rental properties within large

cording to CoreLogic and the National

properties within small investor port-

portfolios accounted for 3 percent of

Association of REALTORS®, during the

folios accounted for 80 percent of

investor-owned homes nationwide. The

first quarter of 2022, investors were re-

investor-owned homes nationwide.

share of large portfolios in the Sun Belt

sponsible for approximately 60 percent

The percentage of small investor-

generally mirrors the national share,

of cash home sales nationwide.

owned homes exceeded the national

although the major metropolitan areas

level in several metropolitan areas

of Oklahoma City and Tulsa in Oklaho-

Since 2017, investor purchases have

throughout the Sun Belt, including

ma recorded market shares of 8 percent

been most prevalent in the Sun Belt.

Albuquerque and Myrtle Beach, at 88

and 7 percent, respectively. Large inves-

Of HUD’s 10 Regions, Regions IV and

and 90 percent, respectively, where

tor purchases in these markets were

VI recorded the most home sales trans-

home sales prices were well below the

attributable in part to the much larger

actions during the past year and had

national average.

share of single-family homes in their

12

rental inventory. Single-family renter

several notable exceptions exist. Shares

leases that are more adaptable to

households account for an estimated

of single-family rental homes owned

rising costs.

32 percent of the rental market at the

by institutional investors in Atlanta,

national level.4 By comparison, single-

Georgia; Charlotte, North Carolina;

Why Institutional Investors

family renter households in Oklahoma

and Jacksonville, Florida, in HUD

Are Buying Existing

City and Tulsa account for an estimated

Region IV were 21 percent, 16 percent,

Single-Family Homes

48 percent and 43 percent of the rental

and 16 percent, respectively. Similarly,

Since the onset of the COVID-19

market, respectively.

in HUD Region VI, Fort Worth, Dallas,

pandemic, institutional investors have

and Houston recorded institutional

significantly accelerated their purchases

Institutional investors, defined as inves-

investor-owned rates of 10 percent, 8

of existing single-family homes. Al-

tors with portfolios containing more

percent, and 8 percent, respectively.

though institutional investors make

than 1,000 units, are nonindividual

Among the markets exceeding the

up only a small share of the housing

investors and can include limited liability

national average for institutional

market, their purchases have signifi-

corporations, limited liability partner-

investment, all had a gross rental yield

cantly influenced local housing markets

ships, real estate investment trusts,

exceeding 7 percent.6 At this rate of

across the country. Moreover, the rising

and other entities. 5 As of August 2022,

return, institutional investors can cover

costs of purchasing developable land,

single-family rental properties within

their costs and turn a profit despite

acquiring construction materials and

institutional portfolios accounted for

rising inflation. Unlike other rental

labor, and navigating regulations have

3 percent of investor-owned homes

assets, which typically have longer lease

hindered overall housing development

nationwide. Institutional investor

terms, single-family rentals owned and

in recent years. Minimum lot sizes,

portfolios remained relatively small by

operated by institutional investors are

parking restrictions, and fees, along

market share as of August 2022, but

frequently offered with short-term

with zoning ordinances, have made infill

13

development prohibitively difficult,

population growth from 2010 to 2021

rate of return for large-scale investors.15

effectively limiting multifamily con-

resulted primarily from an increase in

In addition, most condominium hotels

struction in many cities nationwide. 7 As

the portion of the population at or near

require high homeowners association

developable land in high-demand areas

retirement age, generally defined as

dues in addition to management ser-

has become scarcer, construction costs

residents aged 60 and older. This age

vices and taxes.

have increased. 8 The resulting rapid

cohort increased annually by an aver-

rise in home prices and rents has at-

age of 3,200, or 2.6 percent, during the

Characteristics of

tracted institutional investors, who view

period.11 From 2010 to 2021, the number

Communities With the

housing as a good asset with which to

of residents under the age of 18 was

Largest Number of

diversify their portfolios. Rising home

virtually unchanged, declining by an

Institutional Purchases

prices mean that the asset is appreciat-

average of approximately 40 annually.

Because of its strong population

ing, whereas rising rents lead to income

Similarly, during the same period in

growth, Texas is a hotspot for inves-

gains from that asset, which is extremely

the Albuquerque, New Mexico MSA,

tor purchases. According to a 2021

attractive to investors.

the number of residents under the age

report from the National Association of

of 18 declined annually by an average

REALTORS®, 28 percent of Texas home

Determining Factors for

of approximately 1,900, or 0.9 percent.

purchases were made by institutional

Institutional Investment

Residents aged 18 to 44 increased just

investors, the highest percentage in the

Although the market for single-family

290, or 0.1 percent, annually during

nation.16 The same report states that

rental housing demonstrated less

this period. Conversely, in the Char-

areas that attract institutional investors

volatility than did the market for

lotte, North Carolina-South Carolina

to a market include those where the

apartments during the COVID-19

MSA, where the number of single-

number of households grew more than

pandemic,9 trends in apartment vacancy

family rentals owned by institutional

11 percent during the past decade,

rates and rents offer institutional inves-

investors is estimated at 26,900 units, or

renters make up 30 percent or more of

tors important insights into potential

16 percent of the single-family for rent

local households, 12 percent of resi-

rental demand within a market. Me-

market, 12 the population of residents

dents moved within the past year, rents

dian price-to-rent ratios (the median

aged 18 to 44 increased by an aver-

increased more than 30 percent during

home value divided by the median

age of 36,950, or 3.4 percent, annually

the past decade, and home prices rose

annual rent) also illuminate homebuy-

throughout the period. 13

more than 40 percent in the past de-

ing and rental investment decisions.

cade. The Dallas-Fort Worth-Arlington

Real estate investment decisions often

Many markets have unique structures

MSA meets those criteria; it also serves

employ price-to-rent ratios to identify

that also affect institutional real estate

as an interesting case study, because the

areas that are ideal for owning rental

investment decisions. In the Myrtle

MSA is broken into two separate metro-

property and determine how appealing

Beach-Conway-North Myrtle Beach,

politan divisions.

a location might be for rental property

South Carolina-North Carolina MSA, an

investments. Price-to-rent ratios, hous-

estimated 77.2 percent of the existing

Case Study:

ing appreciation, and home prices all

occupied housing is owner occupied.14

Dallas/Fort Worth

factor into an institutional investor’s

Many of the homes for sale in the area

Between 2010 and 2020, the population

decision to enter a market.

are vacation and investment homes.

and the number of households in the

Some of the most common investment

Dallas-Fort Worth-Arlington MSA in-

Along with market-specific indicators,

properties in the city of Myrtle Beach

creased by nearly 20 percent. With such

demographic fundamentals influence

are one-bedroom oceanfront condo-

strong population growth, home price

real estate investment decisions. An

miniums and small vacation rentals

and rent increases during the past de-

increasing number of Americans are

near the beach, because one- and

cade were well above the respective 30

forming households, including younger

two-bedroom condominiums cur-

and 40 percent thresholds that make an

age cohorts aging into household

rently dominate the housing market.

area attractive to institutional investors.

formation.10 Strong population growth,

Many of these units are in investment

The Dallas-Fort Worth-Arlington MSA

particularly among people aged 34 to

condominium hotels, or “condo-tels,”

consists of two metropolitan divisions:

44, is likely to fuel near-term demand

which are multifamily structures that

Dallas-Plano-Irving and Fort Worth-

for rental housing, with high home

often regulate the maximum number

Arlington. The Dallas-Plano-Irving

prices and mortgage rates. Markets with

of units that a single purchaser can

metropolitan division is the larger of

limited institutional investment activity

own. Furthermore, many of these

the two, with a population of more than

tend to have slower population growth

existing structures already have onsite

5.1 million and more than 1.8 million

among key age cohorts associated

management services for a larger fee,

households as of the 2020 decennial

with future demand. In the Chatta-

often between 35 to 45 percent of rent

census; the Fort Worth-Arlington metro-

nooga, Tennessee-Georgia MSA, overall

collected, which reduces the potential

politan division had a population of 2.5

14

million and slightly more than 900,000

larger Dallas-Plano-Irving metropolitan

an average annual increase of 10,400,

households during the same period.

division. In each of the metropolitan

or 1.5 percent, since 2010, whereas

According to data from John Burns

divisions, the highest percentage of cash

the number of households in Dallas

Real Estate Consulting, as of August

home sales occurred in the principal

County increased by an average of

2022, institutional investors owned

county. In the Dallas-Plano-Irving met-

11,000 annually, or 1.2 percent, dur-

more than 15,800 single-family rental

ropolitan division, Dallas County is the

ing the same period. Although Dallas

properties in the Dallas-Plano-Irving

largest county, with a population of more

County gained more households be-

metropolitan division and more than

than 2.6 million. Tarrant County, with a

tween 2010 and 2020, Tarrant County

13,750 in the Fort Worth-Arlington

population of more than 2.1 million,

gained households at a faster pace.

metropolitan division. These investors

is the largest county in the Fort Worth-

Investors also consider the compo-

are buying a larger share of homes in

Arlington metropolitan division.17

nents of change, including the area’s

the Fort Worth-Arlington metropolitan

Between 2010 and 2020, Dallas County’s

average household size, when buying

division (1.4 percent of all housing

population increased by an average

a single-family home to rent. Between

units) than in the Dallas-Plano-Irving

of 24,500 annually, or 1.0 percent,

2010 and 2020, the average size of a

metropolitan division (approximately

whereas Tarrant County’s population

newly formed household in Tarrant

0.8 percent of all housing units).

increased by an average of 30,100

County was 2.89 people, whereas in

annually, or 1.6 percent. The faster

Dallas County the average household

This case study incorporates data on

population growth rate of Tarrant County

size was just 2.22 people. Single-person

cash home sales at the ZIP Code level

is one factor making it a more attractive

households made up 15.7 percent of

to highlight the reasons why investor

location for institutional investors.

all households in Dallas County but

activity since 2017 has grown more

just 11.7 percent of households in

rapidly in the Fort Worth-Arlington

As of the 2020 decennial census, Tar-

Tarrant County.18 Also, 34.8 percent of

metropolitan division than in the much

rant County had 760,700 households,

households in Tarrant County included

Sharp increases in home prices and rents during the past decade made the Dallas-Fort Worth-Arlington MSA attractive to institutional investors.

15

a child under the age of 18 compared

with 53 percent of all housing units in

Taxes are an important consideration

with just 32.0 percent of households

Dallas County.

for the investor as well, especially in

in Dallas County.19 For investors in

Texas, whose property tax rate is among

single-family rental properties, areas

Financial considerations also influence

the nation’s highest. Tarrant County’s

with a greater share of larger households

investors’ decisions, leading to more

tax rate was approximately $0.5836 per

with children would be more attrac-

investment in Tarrant County than in

$100 of assessed value, 21 which is lower

tive than areas with a higher share of

Dallas County during the past 5 years.

than the Dallas County rate of approxi-

single-person households, which tend to

Ideally, investors want not only a steady

mately $0.6165 per $100 of assessed

gravitate toward smaller apartment units.

stream of rental income but also an

value. 22 This difference, while not large,

Tarrant County not only has a greater

asset that holds its value. From 2017 to

can affect the return on an investment,

share of larger households than Dallas

2021, the average sales price of a home

particularly for large investors making

County but also a higher percentage

in Tarrant County increased by an aver-

multiple purchases.

of single-family homes. Single-family

age of $19,150 annually, or 7 percent,

homes made up 67 percent of all hous-

compared with an annual increase of

According to data from CoreLogic, cash

ing units in Tarrant County compared

$13,000, or 4 percent, in Dallas County. 20

home sales accounted for 31.4 percent of

Cash Home Sales in Tarrant and Dallas Counties: 2017

16

16

all home sales in Tarrant County in 2017,

Codes with the highest percentage of

Although the high Tarrant group’s

but by 2021, cash home sales accounted

cash home sales in Dallas County were

ZIP Codes are sequential, they are not

for 39.7 percent of all home sales in the

75210, 75215, and 75216 (hereafter,

contiguous. The 76106 ZIP Code is

county. The rate of growth in cash home

the high Dallas group). The high Dallas

northwest of downtown Fort Worth,

sales in Tarrant County was much faster

group consists of contiguous ZIP Codes

and the other two ZIP Codes are south

than that of Dallas County during the

located in the city of Dallas, just south

of downtown Fort Worth. Like the high

same period. Cash home sales in Dallas

of downtown and Interstate 30. Within

Dallas group, the high Tarrant group is

County accounted for 37.1 percent of all

these ZIP Codes, according to 2020

home to a large population of minority

home sales in 2017 but just 39.6 percent

American Community Survey 5-year

residents; more than 80 percent of all

of all home sales in 2021.

data, minorities account for more than

residents belong to a minority group.

90 percent of the population.23 The

In both groups, a significant percentage

Analyzing the ZIP Code areas with

three ZIP Codes in Tarrant County with

of the housing stock is older. According

the highest and lowest percentages

the highest level of investor home sales

to 2020 American Community Survey

of cash home sales yields additional

in 2017 were 76104, 76105, and 76106

5-year data, more than 77 percent of all

insights. During 2017, the three ZIP

(hereafter, the high Tarrant group).

housing units in the high Dallas group

Cash Home Sales in Tarrant and Dallas Counties: 2017

Cash Home Sales in Tarrant and Dallas Counties: 2021

17

Median Household Income in Tarrant and Dallas Counties: 2016–2020

were built before 1980 compared with

County average of $283,100. 27 By 2021,

to $48,575,29 an increase of 2.5 per-

slightly more than 68 percent in the

cash home sales had declined to 57.3

cent annually. Income growth during

high Tarrant group.24 These older

percent of all home sales, whereas the

this period was already well below the

homes are more likely to transition

average home sales price in this area

rate of increase in average home sales

from owner occupancy to renter oc-

rose to $212,500, an average annual

prices in these ZIP Codes. Income

cupancy. According to 2016 American

increase of $23,300, or 15.5 percent.

growth also fell short of the rate of

Community Survey 5-year data, both

In 2021, the average home sales price in

rent growth in these ZIP Codes, where

the high Dallas group and the high Tar-

the high Dallas group was approximately

rents increased by an average of $42

rant group had homeownership rates of

40 percent lower than the average home

annually, or 4.4 percent, from 2017 to

less than 50 percent,25 and in 2017, the

sales price in Dallas County as a whole.

2021.30 During these years, the costs

average home sales price in these groups

According to 2016 American Community

associated with both homeownership

was less than 50 percent of the average

Survey 5-year data, the average house-

and renting required a larger share of

home sales price in the county overall. 26

hold income in the high Dallas group

income in these ZIP Codes, with home-

was $43,996, 28 nearly 44 percent lower

ownership costs increasing at a faster

During 2017, cash home sales accounted

than the average household income in

rate. The increase in costs contributed

for 68.9 percent of all home sales in

the Dallas-Fort Worth-Arlington MSA.

to a declining homeownership rate in

the high Dallas group, with an aver-

According to the 2020 American Com-

these ZIP Codes. According to 2016

age home sales price of $119,300,

munity Survey, the average household

American Community Survey 5-year

nearly 58 percent lower than the Dallas

income in the high Dallas group rose

data, the homeownership rate in these

18

ZIP Codes was 46.1 percent,31 which

Tarrant group residents and contributed

average annual household income in

Median Household Income in Tarrant and Dallas Counties: 2016–2020

dropped to 44.7 percent according

to a declining homeownership rate.

2017 exceeded $100,000. The low Tar-

to 2020 American Community Survey

According to American Community

rant and low Dallas groups both had

5-year data. 32

Survey 5-year data, the homeownership

average home sales prices in 2017 that

rate in the high Tarrant group fell from

were above the county’s average home

Similar patterns occurred in the high

49.7 percent in 201637 to 47.2 percent

sales price. From 2017 to 2021, the rate

Tarrant group; the early arrival of

in 2020.38

of growth in home sales prices in the

investors in these ZIP Codes contrib-

low Tarrant and low Dallas groups was

uted to more rapid growth in home

In 2017, the three ZIP Codes with

well below that of the high Tarrant and

prices than in the county as a whole,

the lowest percentage of cash home

high Dallas groups. In addition, the

and increases in the average home

sales in Dallas County were 75019,

homeownership rate in the low Dallas

sales price outpaced income growth,

75048, and 75063 (hereafter, the low

group increased from 60.0 percent in

which contributed to a decline in the

Dallas group). The 75019 and 75063

2016 to 60.7 percent in 2020, and in

county’s homeownership rate. In 2017,

ZIP Codes are adjacent, located just

the low Tarrant group, the homeown-

cash home sales accounted for 68.2

northeast of Dallas/Fort Worth Inter-

ership rate rose from 77.4 percent to

percent of all home sales in the high

national Airport, and include parts of

81.7 percent. The housing stock in

Tarrant group with an average home

the cities of Coppell and Irving. The

the low Tarrant and low Dallas groups

sales price of $121,600, which was

75048 ZIP Code is in northeastern

is considerably newer, with just 6.8

more than 50 percent lower than the

Dallas County and includes the city of

percent and 5.1 percent of the hous-

average home sales price of $245,500

Sachse. The three ZIP Codes with the

ing units in the low Dallas group and

in Tarrant County as a whole.33 By

lowest percentage of cash home sales

low Tarrant group, respectively, built

2021, cash home sales had declined

in 2017 in Tarrant County were 75054,

before 1980.

to 52.1 percent of all home sales in

76052, and 76177 (hereafter, the low

the high Tarrant group, and the aver-

Tarrant group). According to 2020

In both Dallas and Tarrant counties,

age home sales price for this group

American Community Survey 5-year

cash home sales tend to account for

rose to $203,600, an average annual

data, the minority population was

a higher percentage of overall home

increase of $20,500, or 13.8 percent.

less than 20 percent in the low Dallas

sales in ZIP Codes where home prices

The average home sales price during

group and approximately 35 percent

are less than the average home price in

2021 in the high Tarrant group was

in the low Tarrant group, both of which

the county overall and where the aver-

approximately 36 percent lower than

were significantly less than the minor-

age household income is well below

the $322,100 average home sales price

ity population in the high Tarrant and

the average household income for the

in Tarrant County as a whole. Incomes

high Dallas groups.39 The 76052 and

metropolitan division as a whole. One

in the high Tarrant group increased

76177 ZIP Codes are adjacent to each

of the implications of these findings

at a much faster rate than that of the

high Dallas group. According to 2016

American Community Survey 5-year

data, the average annual household

Because so many cash home sales are

income in the high Tarrant group was

$38,768, 34 nearly 50 percent lower than

in lower-income neighborhoods, home-

the MSA’s average household income.

ownership becomes even further out of

According to 2020 American Com-

munity Survey 5-year data, the average

reach for people on the lower end of the

annual household income in these

ZIP Codes increased to $51,566,35 an

income spectrum.

average gain of 7.4 percent annually.

Income growth during this period was

less than the rate of increase in the

average home sales price of a home

other in northern Tarrant County, situ-

is that, because so many cash home

in the high Tarrant group but greater

ated along the Interstate 35W corridor

sales are in lower-income neighbor-

than the rate of rent growth, which in-

and west around the city of Haslet.

hoods, homeownership becomes even

creased annually by an average of $37,

The 75054 ZIP Code is in far south-

further out of reach for people on the

or 2.9 percent, from 2017 to 2021.36

eastern Tarrant County in the city of

lower end of the income spectrum. In

During these years, the costs associ-

Grand Prairie, on a peninsula in Joe

2017, cash home sales in Dallas County

ated with homeownership required

Pool Lake. Both the low Dallas and low

accounted for more than one-third of

a larger share of income from high

Tarrant groups are areas in which the

all home sales in 53 out of the 77 ZIP

19

Codes surveyed, but as of 2021, cash

Impact on Other

is a relatively new and increasingly

home sales accounted for more than

Rental Stock

popular concept. As the name implies,

one-third of all home sales in 64 of

New apartment unit construction was

build-for-rent projects involve single-

these ZIP Codes.40 According to 2016

more active in the low Dallas and low

family housing units that are built for

American Community Survey 5-year

Tarrant groups than in the high Dal-

renter occupancy. According to a 2022

data, 51 ZIP Codes in Dallas County

las and high Tarrant groups. In the

article from RentCafé, the number of

had a median household income that

Tarrant County group, nearly 4,625

new single-family homes built specifi-

was below the median household

apartment units were constructed

cally as rentals is expected to reach

income for the MSA overall,41 and of

between 2017 and 2021, and in the

an all-time high of 13,900 in 2022, up

these, 48 had cash home sales consti-

Dallas County group, approximately

from the previous record of 6,740 in

tuting more than one-third of all home

2,825 apartment units were built

2021. 44 Texas, with several fast-growing

sales. In Dallas County, 26 surveyed

during the same period. Apartment

metropolitan areas, is a prime location

ZIP Codes had a median household

building activity was more prevalent

for new build-for-rent subdivisions.

income higher than the MSA’s overall

in the Tarrant County ZIP Codes than

median income, of which only 14 had

in the Dallas County ZIP Codes, partly

Case Study: Houston

cash home sales accounting for more

because land costs were lower in Tarrant

The Houston-The Woodlands-Sugar

than one-third of all home sales. In

County. Most new apartment construc-

Land MSA (Houston MSA) was among

six ZIP Codes in Dallas County, cash

tion in these ZIP Code groups were in

the first metropolitan areas in Texas

home sales accounted for more than

areas with low rates of cash home sales.

to adopt the build-for-rent movement.

50 percent of home sales in 2021, and

Since 2017, 435 apartment units have

Since 2018, 14 subdivisions consisting

the median household income in all of

been constructed in the high Tarrant

of 2,575 single-family homes in the

those ZIP Codes was less than $45,000.

group, and just 230 units have been

Houston MSA have been built-for-rent.45

A similar pattern exists in Tarrant

constructed in the high Dallas group.

According to data from ALN Apartment

County, where, out of 62 ZIP Codes

Although all four ZIP Code groups

Data, the average rent at these proper-

surveyed, cash home sales accounted

experienced rising rents, they rose

ties is $2,279, which is above the average

for one-third or more of all home sales

fastest in the high Dallas group, which,

market-rate rent of $1,901 for apart-

in 31 ZIP Codes in 2017 but rose to 55

with only 230 new units built, saw rents

ment units built since 2018. Although

ZIP Codes in 2021. According to 2020

increase at a rate of 6.6 percent annual-

the average rent for the build-for-rent

American Community Survey 5-year

ly. 43 The high Dallas and high Tarrant

properties may be higher than market-

data, 33 ZIP Codes in Tarrant County

groups had higher rates of rent growth

rate properties, the average rent per

had a median household income

than did the low Dallas and low Tar-

square foot is lower: $1.34 per square

that fell below the median household

rant groups.

foot for the build-to-rent properties

income for the MSA as a whole.42 Of

compared with $1.99 per square foot

these 33 ZIP Codes, 32 had cash home

Single-Family Homes

for apartment units in the Houston

sales accounting for more than one-third

Within Master Planned

MSA as a whole. The larger square

of all home sales in 2021. Twenty-nine

Communities: Build

footage appeals to young professionals

surveyed ZIP Codes had a median house-

for Rent

just starting families who want the ame-

hold income that was higher than

Although investors have traditionally

nities of single-family living but cannot

the median income in the MSA as a

purchased primarily existing homes,

afford the upfront costs associated

whole in 2020, of which 21 had cash

this pattern has recently changed, with

with homeownership. Unlike the cash

home sales constituting more than

developers and builders either sell-

home sales of existing homes, which

one-third of all home sales in 2021. In

ing their inventory in bulk directly to

tend to be concentrated more heavily

eight Tarrant County ZIP Codes, cash

investors or working with investors to

in the central counties of metropolitan

home sales accounted for more than

build new inventory. One example of

areas, build-for-rent properties tend to

50 percent of home sales in 2021, and

the latter is the Amber Pines at Fosters

be constructed in lower-cost suburban

the median annual household income

Ridge subdivision in Conroe, Texas.

areas. Of the 14 current build-for-rent

in five of those ZIP Codes was less than

Real estate investment firm Fundrise

subdivisions in the Houston MSA,

$45,000 in 2020. Of the other three

purchased all 124 homes in this subdivi-

only 4 are located in Harris County,

ZIP Codes in which cash home sales

sion from homebuilder D.R. Horton in

the MSA’s principal county, and none

made up more than 50 percent of

an all-cash transaction with the intent

of the build-for-rent subdivisions in

home sales in 2021, two had a median

to rent. Although single-family rent-

Harris County are located inside of the

annual household income that was

als have long been a part of the rental

Sam Houston Tollway/Beltway 8. Har-

higher than that of the MSA as a

housing inventory as aging homes transi-

ris County, which encompasses 1,778

whole, but the difference was less

tion from owner occupied to renter

square miles and is larger than the

than $1,000.

occupied, the build-for-rent model

state of Rhode Island, still has large

20

Build-for-Rent Properties in Houston-The Woodlands-Sugar Land MSA: 2022

swaths of developable land. In the

nationwide. Much of this growth depends

pullout were Albuquerque, New Mexico;

Houston MSA, 17 build-for-rent devel-

on local economic factors that affect

Myrtle Beach, South Carolina; Lexing-

opments consisting of 3,290 homes are

overall demand in certain markets

ton, Kentucky; Fayetteville, Arkansas;

currently under construction, which

and at certain price points. In markets

and New Orleans, Louisiana; all cities in

will more than double the current

where institutional investors represent

HUD Regions IV and VI with 1 percent

inventory of this type of product. In

less than 1 percent of the market share

or less of the total single-family rental

addition, 8 projects consisting of 1,500

for single-family rentals, barriers exist

market share identified as institutional

build-for-rent homes are planned for

that have capped the segment’s growth. investors in respective metropolitan

the Houston MSA.

Recently, Blackstone-owned Home Part-

areas. 47 The lack of large-scale invest-

ners of America announced that it will

ment in certain markets is tied directly

Markets With Limited

stop purchasing single-family homes in

to evaluations of the risk-return profile

Institutional Investor Activity 38 cities as of October 1, 2022, stating of individual markets, including localized Single-family home investment and

that it “assessed several factors such as

economic factors, market fundamentals,

growth in single-family homes for rent

home price appreciation, state and lo-

assessments of anticipated demand,

has been driven by increasing and

cal regulations and market demand. ”46

and any current or potential regulatory

anticipated levels of rental demand

Cities included in the announced

barriers.

21

Institutional Investor

names to procure multiple licenses. In

percent of the housing stock and limit-

Activity Noticed

2019, in response to requests from local

ing them to areas zoned for multifamily

The geographic and economic het-

advocacy groups, New Orleans passed

buildings; and allowing a combination

erogeneity across the nation is also

a city ordinance requiring new taxes,

of zoning, conditional permitting, and

observed in differences in local

fees, and either a primary residency or

10 percent caps, either citywide or only

policies regarding housing. Local

a Louisiana homestead property tax ex-

within certain neighborhoods.

attention has heightened as large

emption to obtain a short-term license.

investment firms convert single-family

However, the 5th Circuit of the U.S.

By comparison, in February 2022, the

homes to rentals and, increasingly,

Court of Appeals recently struck down

state of Georgia proposed House Bill

construct build-for-rent communities

the 2019 New Orleans law, stating that

1093 and Senate Bill 494, which would

within highly desirable and increas-

restricting short-term rental licenses un-

preempt municipalities from enacting

ingly unaffordable areas. Advocates for

constitutionally blocks nonresidents of

or enforcing any restrictions on resi-

regulation locally — such as homeown-

Louisiana from owning property in the

dential rental agreements of more than

ers’ associations, local governments,

city.49 This decision, which covers Texas,

30 days and threatened to withhold

and advocacy groups — often cite

Louisiana, and Mississippi, has implica-

state funding for violations. Backlash

declining community involvement and

tions for other municipalities attempting

to the proposed bills was strong, and

changing neighborhood character as

to curb short-term rental properties

advocates cited a report for the Fed-

reasons for investor activity increas-

in general.

eral Reserve Bank of Atlanta stating

ing costs of housing, thereby limiting

institutional investors filed 2 eviction

the availability of affordable housing

In Texas, the uptick in investment

notices for every 10 homes they owned,

options. In recent years, the increase

purchasing has prompted various cities

higher than the overall eviction rate

in the number of institutional invest-

and municipalities to enact short-term

in Atlanta. 52 The Georgia Municipal

ments in single-family home purchases

rental ordinances. In the city of Dallas,

Association, representing Georgia mu-

and building single-family structures

no formal short-term rental registra-

nicipalities, opposed the bill because

intended for rent has many residents

tion ordinance currently exists. The

it would take away city and municipal

and local governments looking to

Dallas City Council, however, is cur-

authority to make build-for-rent deci-

regulation to mitigate any current or

rently considering various zoning

sions. Currently, local and city officials

potential concerns. While rental prop-

restrictions such as instituting zoning

statewide are opposing the bills, main-

erties typically take the form of either

requirements, enacting property owner

taining that local governments should

a long-term rental or a short-term

stipulations, limiting the number of

be allowed to regulate construction

rental, regulatory barriers are often

residents per dwelling, and barring use

activity within their jurisdictions.

aimed at short-term rentals locally.

of rental properties for entertainment

purposes. The Dallas City Council

Conclusion

Pushing Back Against

identifies short-term rentals as units

Institutional investment has been robust

Institutional Investors

that rent daily or weekly for periods

in many areas nationwide since the

Although most of the New Orleans-

of less than 30 days.50 The city of Fort

Great Recession. According to a 2018

Metairie MSA lacks developable

Worth has a similar definition for

Shelterforce article by Julia Gordon, “Dur-

land, governments have enacted other

short-term rentals, which currently are

ing the crisis, America’s homeowners

significant regulatory barriers to insti-

allowed only in areas zoned for mixed-

lost $17 trillion of home equity, and mil-

tutional investment in the single-family

use or commercial development. At

lions — perhaps as many as 10 million

rental market. Beginning in 2017, after

the beginning of 2022, Fort Worth

— lost their homes entirely. But home-

investment purchasing significantly

selected Deckard Technologies to iden-

owners didn’t get back all that equity

increased, the New Orleans City Council

tify short-term rentals in the city and

when the market recovered. Instead,

passed a series of ordinances requiring

concluded that more than 89 percent

a significant portion of the gains went

data sharing from online platforms and

of the city’s short-term rentals were

straight to the private-equity funds and

allowing short-term rentals through

either not authorized or operating

other corporate investors who bought

three different licenses: accessory,

illegally.51 The city has proposed four

low and sold high or are still holding

temporary, or commercial. By March

options to regulate short-term rent-

properties as single-family rentals. ”53 Fol-

of 2018, the city granted nearly 4,300

als: continuing to require short-term

lowing the surge in investor purchases

short-term rental licenses.48 An addi-

rentals to move from residential zones

after the Great Recession, the home-

tional 2,750 nonpermitted short-term

to mixed-use and commercial zones;

ownership rate fell from a peak of 69.0

rentals with bookings were found on

assigning owner-occupied short-term

percent in 2004 to a low of 63.4 percent

the Airbnb platform alone as of March

rentals conditional use permits with

in 2016.54 Although the homeowner-

2018. In addition, single operators with

licensing requirements; capping the

ship rate has risen since 2016, concerns

multiple listings were using several

number of short-term rentals at 10

linger that increased investor purchases

22

of homes could cause the homeowner-

Units in Structure,” 2021 American Community

5-year data.

ship rate to drop once again, which

Survey, 1-year data.

32 U.S. Census Bureau. “DP04 ACS Selected Housing

5 Joint Center for Housing Studies of Harvard Univer-

Characteristics,” 2020 American Community Survey,

would inhibit Americans’ ability to build

sity. 2022. “America’s Rental Housing 2022.”

5-year data.

wealth through homeownership.

6 Gross rental yield is the quotient of one year’s entry-

33 CoreLogic, Inc. Home sales prices are annual data for

level home rental amount (minus the property tax)

2017 and 2021.

and the entry-level home price. John Burns Real Estate

34

More recently, concern over these

U.S. Census Bureau. “DP03 Selected Economic

Consulting. 2022. “Single-Family Rental Analysis and

Characteristics,” 2016 American Community Survey,

investments and their potential impact

Forecast,” August.

5-year data.

on local communities has been ampli-

7 Vicki Been, Ingrid Gould Ellen, and Katherine

35 U.S. Census Bureau. “DP03 Selected Economic

O’Regan. 2018. “Supply Skepticism: Housing Supply

fied. Interestingly, as national attention

Characteristics,” 2020 American Community Survey,

and Affordability,” NYU Furman Center.

5-year data.

toward institutional investment has

8 Paul Emrath. 2021. “Government Regulation in the

36 CoStar Group, Annual Data.

grown, the housing market has begun

Price of a New Home: 2021, ” National Association of

37 U.S. Census Bureau. “DP04 ACS Selected Housing

Home Builders, 5 May.

shifting. In the past year, mortgage in-

Characteristics,” 2016 American Community Survey,

9 Claire Gra. 2021. “An Overview of Single-Family Rent-

5-year data.

terest rates have risen, growth in home

als,” National Multifamily Housing Council Research Notes,

38 U.S. Census Bureau. “DP04 ACS Selected Housing

prices has slowed, and the inventory of

28 September.

Characteristics,” 2020 American Community Survey,

10 Richard Fry. 2020. “Millennials Overtake Baby Boom-

new homes has been rapidly increasing.

5-year data.

ers as America’s Largest Generation,” Pew Research

39 U.S. Census Bureau. “DP05 ACS Demographic and

According to a survey by John Burns

Center, 28 April.

Housing Estimates,” 2020 American Community

Real Estate Consulting, 34 percent of

11 U.S. Census Bureau. “Table S0101 Age and Sex,” 2010

Survey, 5-year data.

and 2021 American Community Survey, 1-year data.

all homebuilders sold a share of their

40 CoreLogic, Inc. Home sales prices are annual data for

12 John Burns Real Estate Consulting.

2017 and 2021.

homes to single-family rental operators

13 U.S. Census Bureau. “Table S0101 Age and Sex,” 2010

41 U.S. Census Bureau. “DP03 Selected Economic

in the past 12 months.55 Because tradi-

and 2021 American Community Survey, 1-year data.

Characteristics,” 2016 American Community Survey,

14

tional buyers increasingly are affected

U.S. Census Bureau. “Table B25003 Tenure,” 2021

5-year data.

American Community Survey, 1-year data.

42

by rising mortgage rates, builders are

U.S. Census Bureau. “DP03 Selected Economic

15 BRG Real Estate. 2018. “Buying an Oceanfront Condo

Characteristics,” 2020 American Community Survey,

looking to institutional investors, often

— Part 1,” 3 October.

5-year data.

selling their inventory to them at a 10

16 The National Association of REALTORS® defines

43 CoStar Group, Annual Data.

institutional investors as companies, corporations, or

to 15 percent discount.56 Immediately

44 Alexandra Ciuntu. 2022. “Built-to-Rent Homes Expect-

limited liability companies.

ed to Hit All-Time High in 2022, Fueled by Need for

following the Great Recession, investors

17 U.S. Census Bureau. “Annual Resident Population Es-

Space and Privacy,” RentCafe, 20 January.

were often credited with recovering

timates for States and Counties: April 1, 2010 to July 1,

45 ALN Apartment Data, Inc.

2019; April 1, 2020; and July 1, 2020 (CO-EST2020).”

housing prices, reducing vacancies,

46 Mark Heschmeyer. 2022. “Blackstone’s Single-Family

18 U.S. Census Bureau. “DP02 Selected Social Character-

Rental Firm Pauses Some Purchases in Rare Pullback

and shortening property bank owner-

istics,” 2021 American Community Survey, 1-year data.

for Surging Property Type,” CoStar News, 31 August.

ship timelines. 57 Although the housing

19 Ibid.

47 John Burns Real Estate Consulting.

market has changed significantly since

20 CoreLogic, Inc. Home sales prices are annual data for

48 Airbnb. 2018. “Data Report,” data analysis for the city

2017 and 2021.

the aftermath of the Great Recession,

of New Orleans.

21 Tarrant County, Texas. “2021 Tax Rate Calculation

49 Kevin McGill. 2022. “New Orleans Short-Term Rental

one fact remains: institutional investors

Worksheets” (access.tarrantcounty.com/en/tax/prop-

Rule Struck Down by Court,” Associated Press, 23

are increasing real estate investments

erty-tax/2021-tax-rate-calculation-worksheets.html).

August.

22 Dallas County, Texas. “Past Tax Rates” (www.dal-

outside of distressed markets, and the

50 Matt Payne. 2022. “Dallas City Council Considers New

lascounty.org/departments/tax/past-tax-rates.php).

Rules, Registration Program for Short-Term Rental

overall long-term impact merits future

Accessed 30 November 2022.

Properties,” Community Impact, 4 May.

research.

23 U.S. Census Bureau. “DP05 ACS Demographic and

51 Deckard Technologies. 2022. “City of Fort Worth:

Housing Estimates,” 2020 American Community

Short-Term Rental Final Report.”

Survey, 5-year data.

— Cameron Ehrlich, Economist, HUD

52 Elora Raymond, Richard Duckworth, Ben Miller,

24 U.S. Census Bureau. “DP04 ACS Selected Housing

Michael Lucas, and Shiraj Pokharel. 2016. “Corporate

— Tim McDonald, Lead Economist,

Characteristics,” 2020 American Community Survey,

Landlords, Institutional Investors, and Displacement:

HUD

5-year data.

Eviction Rates in Single Family Rentals, ” Community

25 U.S. Census Bureau. “DP04 ACS Selected Housing

& Economic Development Discussion Paper No. 04-

— L. David Vertz, Regional Director,

Characteristics,” 2016 American Community Survey,

16, Atlanta Federal Reserve.

HUD

5-year data.

53 Julia Gordon. 2018. “The Dark Side of Single-Family

26 CoreLogic, Inc. Home sales prices are annual data for

Rental,” Shelterforce, 30 July.

2017 and 2021.

54 Federal Reserve Economic Data. 2022. “Homeowner-

27 Ibid.

ship Rate in the United States,” Federal Reserve Bank

1 iBuyers, or instant buyers, are companies that use

28 U.S. Census Bureau. “DP03 Selected Economic

of St. Louis.

technology to buy and sell homes quickly.

Characteristics,” 2016 American Community Survey,

55 John Burns Real Estate Consulting.

2 Laurie Goodman and Edward Golding. 2021. “Insti-

5-year data.

56 Will Parker. 2022. “Home Builders Offer to Sell

tutional Investors Have a Comparative Advantage in

29 U.S. Census Bureau. “DP03 Selected Economic

Homes in Bulk at Discount to Investors,” Wall Street

Purchasing Homes That Need Repair,” Urban Wire, Characteristics,” 2020 American Community Survey,

Journal, 3 October.

20 October.

5-year data.

57 Lauren Lambie-Hanson, Wenli Li, and Michael

3 CoreLogic, Inc.; home sales prices are for the 12

30 Costar Group, Annual data.

Slonkosky. 2022. “Real Estate Investors and the

months ending July 2022.

31 U.S. Census Bureau. “DP04 Selected Housing

U.S. Housing Recovery,” Real Estate Economics 50:6,

4 U.S. Census Bureau. “Table B25024 Tenure by

Characteristics,” 2016 American Community Survey,

1425–61.

23

Investments in Affordable Housing

HIGHLIGHTS

ctice

pra

With their access to capital, for- rentals. 2 During the fourth quarter of n Through targeted initiatives to close in

profit investors can purchase

2021, investors bought 41 percent of

the wealth gap, the Atlanta Neighbor-

and renovate distressed housing and

all homes sold in the city of Atlanta —

hood Development Partnership, Inc.,

return units to the market at higher

the highest share in the nation. 3 This

uses capital from various sources to

resale prices and rents, which prices

increase in investor activity has made

acquire and rehabilitate vacant housing

out low- to moderate-income (LMI)

it more difficult for LMI households,

and connects families to downpayment

residents.1 Several local nonprofits,

many of which are households of color,

assistance.

however, are counteracting these prac-

to purchase a home. According to 2020

n The Housing Partnership, Inc., offers

tices and preserving affordable housing

American Community Survey 5-year

residents of Louisville’s West End a

opportunities in their communities.

estimates, 35.4 percent of the city’s own-

lease-to-purchase program, which

The Atlanta Neighborhood Develop-

er-occupied housing units are owned by

holds a mutually agreed-upon sales

ment Partnership, Inc. (ANDP) is taking

Black households, whereas 55.6 percent

price of leased homes to purchase until

families have completed homebuyer

measures to reduce the wealth gap

are owned by White households. 4 Non-

education courses and are financially

between Black and White households,

profit organizations such as ANDP are

stable.

especially in neighborhoods hit hard by

devising solutions to preserve access to

the 2008 foreclosure crisis. Through its

homeownership for households of color n Acts Housing’s homebuyer coaches

prepare families for homeownership, and

loan fund and targeted initiatives to ex-

and stabilize distressed neighborhoods.5

its acquisition fund will help maintain a

pand homeownership, ANDP acquires,

pool of affordable houses in Milwaukee

renovates, and preserves affordable

Raising Capital

for low- to moderate-income families to

single-family and multifamily units and

ANDP was founded in 1991 through a

purchase when they are ready.

provides downpayment assistance to

merger between the Atlanta Chamber

qualifying homebuyers. To preserve

of Commerce’s Housing Resource

homeownership opportunities for

Center and the Atlanta Economic De-

LMI residents in Louisville, Kentucky,

velopment Corporation Neighborhood

homes with less risk. Approximately

the Housing Partnership Inc. (HPI)

Development Department. A particu-

60 percent of the sales from HOME-

maintains a pool of rehabilitated

lar focus of ANDP was to acquire and

funded single-family homes financed

housing and prepares residents for

rehabilitate single-family homes that

the rehabilitation of additional HOME

homeownership through a lease-to-pur-

became vacant because of the 2008

projects.8 HOME funding was an

chase program. In Milwaukee, Wisconsin,

foreclosure crisis. 6 HUD funding was a

“important part of the genesis of our

nonprofit Acts Housing launched the

large source of support for this work.

single-family work,” said Jay Perlmutter,

Acts Homeowner Acquisition Fund

The city of Atlanta and eight surround-

ANDP’s managing director of single-

to purchase and preserve affordable

ing counties received $93 million from

family development, and, combined

single-family homes for LMI families.

the first round of HUD’s Neighbor-

with NSP, the two programs financed

These nonprofits also have received

hood Stabilization Program (NSP)

approximately 90 percent of ANDP’s

HUD funding and program support

in 2008 and $31 million in the third

work in its early years. 9 ANDP also is

for acquisition and homebuyer educa-

round in 2010, which helped local

approved to participate in the Federal

tion, which are critical to expanding

municipalities purchase, rehabilitate,

Housing Administration’s (FHA’s)

homeownership opportunities for LMI

offer downpayment assistance, and sell

HUD-Approved Nonprofit and Gov-

households and stabilizing neighbor-

or rent vacant homes in communities

ernmental Entities Program, including

hoods.

impacted by the foreclosure crisis.7

FHA’s real estate owned (REO) sales

ANDP leveraged more than $34 mil-

program. 10 From 2013 to 2018, ANDP

Investing in Affordable

lion in NSP funds for its single-family

also acquired more than 50 single-

Housing in Atlanta

housing portfolio across seven jurisdic-

family REO properties donated from

Neighborhoods in the Atlanta met-

tions of the Atlanta metropolitan area.

private banks as well as Fannie Mae

ropolitan area were hit hard by the

After the final round of NSP funding,

and Freddie Mac, which gave ANDP

2008 foreclosure crisis, which resulted

ANDP sought certification as a commu-

“first look” opportunities to submit

in thousands of abandoned proper-

nity housing development organization,

offers. ANDP renovated REO homes

ties. As the values of these foreclosed

which allowed it to compete for federal

and sold them to veterans and LMI

homes dropped, many loan servicers

funds from the HOME Investment

households. As of September 2022,

quickly sold the properties to investors,

Partnerships program. HOME funding

ANDP acquires fewer than 10 percent

who often left the homes vacant for

enabled ANDP to scale up its efforts

of its homes using HOME program

years or sold them to other investors as

to acquire and rehabilitate single-family

funding.11

24

As federal funding decreased, staff at

to secure low-cost enterprise debt to

The organization focused on 15 ZIP

ANDP began to pivot to other sources

acquire and renovate existing homes or

Codes in DeKalb County (located east

of capital and examine how philan-

build new homes. In 2012, ANDP sought

of the city of Atlanta) that had low

thropic organizations and banks could

enterprise-level loans from private banks

homeownership rates as a result of

fund program-related investments. In

and social impact organizations in Atlanta

the lingering effects of the foreclosure

addition to its development work, the

and across the country to finance its

crisis. 18 During the Great Recession,

organization also distributes capital to

single-family development work. From

more than 18,000 homeowners in

other developers of affordable housing

2014 to 2022, ANDP’s enterprise loans

south DeKalb County lost their homes

through its ANDP Loan Fund, which op-

increased from $200,000 to $14 million

to foreclosure, and about one-third of

erates as a separate nonprofit subsidiary

and grew from just 2 investors to 10.16

them experienced negative equity.19 By

of ANDP. 12 The fund issues loans ranging

The enterprise capital saves ANDP ap-

2012, DeKalb County as a whole had ap-

from $500,000 to $2 million to local

proximately $14,000 per home, resulting

proximately 7,000 vacant properties. 20

affordable housing developers for pre-

in lower home prices for homebuyers.

In 2019, ANDP partnered with Rein-

development, acquisition, construction,

Enterprise-level investments allow ANDP

vestment Fund, Kaiser Permanente,

rehabilitation, gap funding, and lines

to make all-cash offers, facilitate quick

and The Kendeda Fund, among others,

of credit. The ANDP Loan Fund pri-

closings, and remain competitive for

to launch the Home South DeKalb

oritizes projects serving LMI residents

New Markets Tax Credit (NMTC) pro-

program, which committed financial

in the Atlanta metropolitan area and

gram and Capital Magnet Fund (CMF)

resources to acquire and rehabilitate

throughout Georgia.13 Reinvestment

equity. ANDP has had four suballoca-

100 single-family homes over a 3-year

Fund, a leading national community de-

tions of NMTC totaling $40.5 million

period and improve homeownership

velopment financial institution (CDFI),

that it has used to develop more than

rates, household wealth, and neighbor-

co-lends and provides loan underwriting

220 single-family homes.17

hood stability in south DeKalb County.21

services.14 Because of the partnership

ANDP and its partners invested a total

with Reinvestment Fund, the ANDP

Programs Expand

of $20 million, and by the end of the

Loan Fund has grown from $3 million

Affordable Housing

program, ANDP had exceeded its

to $16 million and is a top CDFI lender

ANDP staff were aware of the many

goal, acquiring and preserving 109

to small, minority, and women-owned

place-based community development

single-family homes, of which 83 were

developers in Georgia. 15

strategies being enacted in the city

affordable homeownership units and

of Atlanta, but very few of these were

26 were affordable rentals. 22

As ANDP scaled up its development

happening in the suburbs, where many

efforts, the organization was also able

LMI families faced considerable needs.

In July 2020, ANDP launched its

Closing the Gap initiative, a 5-year

plan to invest $450 million to create

or preserve at least 2,000 affordable

homeownership and rental units in

predominantly Black neighborhoods

across the Atlanta metropolitan area

and its surrounding counties. The

initiative is financed through several

sources, including enterprise-level debt;

social impact funds; philanthropy; and

federal sources such as NMTCs, CMF,

and low-income housing tax credit

(LIHTC) equity. 23 George Burgan,

senior director of communications and

technology at ANDP, explained that

“While affordable homeownership is of

utmost importance to us, there have to

be more players in the market address-

ANDP ing single-family rentals and affordable

apartments, because 98 percent of [the

apartments] Atlanta has built in the last

decade have been luxury apartments.”24

Photo courtesy of Out of the 2,000 units of affordable

An array of capital sources allows ANDP to list its homes at prices lower than the market rate so that low-income households can become homeowners.

housing in the program, 1,250 will be

25

affordable multifamily rentals, 500 will

both parties share in the loss. “It’s a

Adapting to Market

be single-family homeownership units,

risk-based model based upon mutually

Fluctuations

and 250 will be single-family rentals. 25

agreed upon benefits and rewards,”

Lower mortgage interest rates during

ANDP is on track to meet its 2,000-unit

Perlmutter explained.27

the COVID-19 pandemic allowed po-

goal by 2025. Of the 2,000 single-family

tential homebuyers to purchase homes

homes and apartment units planned for

The varied sources of capital help

even if the sales prices were high.

the program, 1,116 of them were either

ANDP price its homes affordably, ensur-

During the pandemic, higher-income

completed or in development as of

ing that potential homebuyers do not

households began purchasing second

September 2022. 26

have to compete in the mainstream

homes, and investors bought up a great-

housing market and are able to access

er percentage of the housing supply.

Developing Equitable

financial assistance to make homeown-

As interest rates dropped, “everybody

Opportunities

ership a reality. Although ANDP targets

wanted in while those numbers were

Burgan explained that encouraging

households earning no more than 120

good,” said Burgan, “so you have almost

the growth of minority-owned con-

percent of the area median income

this perfect storm of demand, [but the]

struction businesses is as important as

(AMI), most of its clients earn about 70

supply wasn’t meeting the need before

closing the homeownership gap. Half

percent of AMI. Among its homebuyers,

the perfect storm” — and it is still

of ANDP’s contractors and construction

71 percent are Black, 15 percent are

considerably behind. 31 With mortgage

partners are Black-owned businesses,

veterans, and 79 percent receive down-

interest rates above 7 percent as of

many of which struggled during the

payment assistance. The average annual

October 2022, their highest rate in 15

Great Recession. Burgan noted that

household income of ANDP’s home-

years, ANDP is shifting its focus to new

“By 2025, [ANDP] will have invested

buyers is $43,000. Whereas median

construction to help increase the supply

$50 million in Black-owned businesses

sales prices in the Atlanta metropolitan

of affordable housing and because “it’s

in the real estate sector.” He indicated

area were approximately $395,000 as of

hard to do renovations and make the

that partnering with ANDP has helped

September 2022, ANDP sold its homes

numbers work,” explained Perlmutter.32

businesses hire staff, who, in turn,

for approximately $270,000, roughly 30

The combination of rising interest rates,

have become homeowners. “Success is

percent less than the market rate. The

high home prices, and the difficulty

breeding success in that situation, and

renovated homes also include energy-

involved in estimating renovation costs

ANDP likes to incorporate equity and

efficient fixtures and appliances, which

for distressed properties will make

economic opportunity in every phase of

help families save an average of $427

future property acquisition difficult.

our work, whether it’s our lending, our

per year and keep homeownership

In addition, households typically make

development work, who’s on our board,

more affordable for LMI households

their purchase decisions based on

[or] the communities we serve,” said

over the long term.28

their estimated monthly payment, and

Burgan. “It has to be part of the fabric

potential homebuyers likely will have

of who we are.” ANDP’s risk-sharing

In 2019, the ANDP Loan Fund became

difficulty purchasing homes over the

partnerships help private, minority-

a financial member institution of the

next year because of these market shifts.

owned and -operated contractors grow

Federal Home Loan Bank of Atlanta,

The recent increases in interest rates

their businesses with low-cost loans and

which allowed ANDP to participate in

and, in turn, the cost to buy a home,

direct contracts to finance their devel-

the bank’s Affordable Housing Program

means that creating additional afford-

opment work. ANDP reviews project

(AHP).29 ANDP can access AHP fund-

able rental units is even more critical to

proposals from partner contractors and

ing to assist clients and other buyers

ensure that households can budget and

holds the property title in its name.

with downpayments, closing costs, and

save for homeownership. 33

After ANDP closes on the property, the

other housing finance needs. In 2019,

contractor can begin renovating im-

ANDP determined that 93 percent of

Stabilizing Housing in

mediately. ANDP manages the utilities

its buyers had remained in their homes

Louisville’s West End

and insurance on the property so that

for 5 years or more, contributing to

The history of west Louisville begins in

ownership costs do not overburden the

neighborhood stability and student

the late 1830s, when free Black families

small business developer. This arrange-

retention at local schools. As of 2021,

began purchasing property west of 9th

ment helps local developers expand

the buyers had an average monthly

street in what would become the West

their businesses and allows them to

mortgage of $717 and had gained more

End neighborhood.34 Unable to live in

subcontract certain aspects of the proj-

than $135,000 in equity. As Burgan

other areas of Louisville because of racist

ect to others if needed. As Perlmutter

explained, this equity is an important

housing policies, Black families settled

explained, ANDP and its contractors

piece of upward mobility, enabling

in the West End and built a thriving

operate under a shared risk model; if

homeowners to improve their homes,

community with their own businesses,

the projects do well, the proceeds are

finance higher education, or start a

grocery stores, and theaters. Home to

evenly split, and if the project falters,

small business.30

Muhammad Ali and other prominent

26

Black individuals, the area has a rich

with a mission to expand affordable

decade to obtain a single-family FHA

history.35 Beginning in the 1960s, however,

housing opportunities for LMI resi-

203(b) loan in its name. 43 The FHA

urban renewal programs demolished

dents in the West End through real

203(b) mortgage insurance program

many of the area’s businesses and con-

estate development and acquisition,

is FHA’s primary mortgage insurance

structed large-scale public housing

a lease-to-purchase program, home-

program for residential properties con-

projects. 36 Today, the large number

buyer education, and affordable home

sisting of one to four units. 44 Serviced

of abandoned properties and the low

sales with affiliated downpayment

by the Kentucky Housing Corporation

rates of homeownership are reminders

assistance.40

(KHC) — the state housing finance

of the area’s segregated past. In 2021,

agency and a key partner of HPI — the

half of the area’s residents earned less

Preserving Homeownership FHA 203(b) loan program helped pre-

than approximately $25,000 per year,

Opportunities

serve affordability for five houses in the

and approximately 40 percent of the

Federal, philanthropic, city, and private

West End neighborhood.45 According

population lived below the federal

funding sources have enabled HPI to

to Andrew Hawes, president and chief

poverty level.37 The area has struggled

successfully acquire, renovate, and pre-

executive officer of HPI, residents

to rebound from the foreclosure crisis,

serve homes for families in west Louisville.

purchasing homes with the FHA loan

and it has endured an onslaught of out-

In 2017, HPI began participating in the

could spend $300 to $400 per month less

of-state investors who purchase vacant

FHA Mortgagor program, which helped

than they were paying in rent. This savings

properties and landlords whose high

the nonprofit acquire and renovate

is “impact money for a very low-income

rents displace existing residents. 38 In

single-family homes in the West End.41

family. [It is] additional food they can

the West End, the homeownership

The program allows HUD-approved

provide to their family, or furniture, or

rate is approximately 24 percent, with

nonprofit organizations such as HPI

transportation,” said Hawes. The FHA

investors owning most of the housing

to apply for the same FHA-insured

Mortgagor program allowed HPI to

stock. 39 Founded in 1990, the Housing

financing as individual homebuyers. 42

“fix the [monthly] cost and show the

Partnership Inc. (HPI) is a nonprofit

In 2017, HPI became the first nonprofit

residents in true form, here’s what your

real estate development organization

in the United States in more than a

payment will be,” said Hawes. The loans

Photo courtesy of Marian Silliman

Through its Beyond 9th initiative, HPI has acquired more than 370 homes, and as of August 2022, it had renovated 120 homes using public and private sources of capital.

27

Photo courtesy of Marian Silliman

In addition to maintaining a pool of renovated and affordable homes in Louisville’s West End, HPI helps families achieve homeownership through downpayment assistance and HUD-certified homebuyer education courses.

totaled roughly $60,000 per house.

owner-occupied houses to ensure that

As Hawes explained, “It’s really necessary

As of October 2022, HPI had sold two

entire blocks can reap the positive

that we look at the whole transaction —

of the five homes to families.46 HPI is

benefits of increased property values. 49

not just [at] development … [but also]

also a member of the Housing Partner-

Since the launch of the Beyond 9th Ini-

homebuyer downpayment assistance

ship Network (HPN), a collaborative

tiative, HPI has acquired more than 370

and anything [else] we can do for

composed of more than 100 nonprofit

vacant single-family homes with financ-

mortgage affordability. ” 52 To further

housing and community developers. To

ing from private bank loans, HPF and

reduce barriers to homeownership,

support nonprofits striving to increase

other national CDFI grants, Louisville

HPI receives funding for downpayment

homeownership among LMI families,

Metro Government, KHC Affordable

assistance from regional Federal Home

HPN created the Housing Partner-

Housing Trust Fund, and the Louisville

Loan Banks and KHC. In addition,

ship Fund (HPF), a CDFI certified by

Affordable Housing Trust Fund. As

HPI uses grant funding to provide an

the U.S. Department of the Treasury. 47

of August 2022, HPI had completed

HPI Home Access Forgivable Loan.53

Financing from HPF has also helped

the renovation of 120 houses to be

HPI also refers clients to the Louis-

HPI acquire and renovate properties in

preserved for single-family homeowner-

ville Metro Down Payment Assistance

the West End.

ship and lease-to-purchase.50 To finance

Program offered through Louisville

renovations, HPF allocated $6 million

Metro’s Office of Housing and Com-

Launched in 2016, the “Beyond 9th

in NMTC equity to HPI in December

munity Development and connects

Initiative: Revitalizing West Louisville

2020. Several homes previously were

clients to the Louisville Metro Housing

through Strategic Homeownership &

single-family rental units subsidized

Authority Homeownership Program,

Affordable Housing Opportunities”

with LIHTC equity, and the Beyond 9th

in which eligible public housing

focuses on rehabilitating vacant properties

Initiative represents the first time in

residents and housing choice voucher

in distressed areas west of Louisville’s

Kentucky that NMTC equity had been

recipients receive subsidies toward

9th street.48 A major goal of the initiative

used to convert single-family rental units

a monthly home mortgage instead

is to rehabilitate houses near existing

to owner-occupied homes. 51

of rent.54 As of October 2022, HPI

28

had awarded an average of $10,800

stated that “The lease-[to]-purchase

partners. Completing renovations on

in downpayment assistance per pur-

sales are always the most rewarding, be-

120 houses simultaneously and achiev-

chase for a total of $692,277 allocated

cause the families have such a sense of

ing positive outcomes gives donors and

through the Beyond 9th Initiative.55

accomplishment.” 64 The total value of

partners confidence that, with their

these home sales is approximately $6.7

support, HPI can continue this work on

HPI presents families with the option

million, with each home selling for an

a larger scale.70

of a lease-to-purchase program called

average of $104,000, which allows HPI

PATH to Homeownership, which the

to at least break even with its NMTC

Overcoming Challenges

organization has been operating since

investment. 65 KHC services loans from

HPI aims to acquire and renovate 100

2007. Upon entering the program,

institutions such as FHA and the U.S.

housing units per year over the next

residents and HPI agree on a sales

Department of Veterans Affairs as well

10 years to address blight and reduce

price for the home, and HPI holds

as conventional loans, and homeown-

property abandonment. Rather than

that price for the family until they are

ers’ mortgage payments range from

acquiring one or two properties at a

ready to purchase. PATH to Home-

$360 to $628 per month.66

time, HPI plans to collaborate with the

ownership participants typically lease

local government and the local land

for approximately 5 years or longer

Realizing Positive

bank to acquire more properties across

depending on their readiness to pur-

Outcomes

full blocks. HPI plans to acquire 40

chase the home. While leasing, families

By reducing barriers to homeowner-

to 45 homes in 2022 through master

meet regularly with homebuyer coun-

ship, HPI is paving the way for increased

commissioner sales, which are often

selors for advice on how to achieve and

home wealth in neighborhoods that

scattered homes throughout the city.

maintain good credit, reduce debt, and

historically have witnessed disinvest-

The nonprofit is making progress by

save for homeownership. 56

ment because of redlining and other

developing a $10 million capital fund

racist housing policies. 67 For many of

with its philanthropic and financial part-

West End residents learn about HPI’s

the programs, residents must stay in the

ners to buy, build, and sell affordable

services through social media, commu-

home for a minimum of 5 years, which

housing. HPI hosted a capital campaign

nity events, “refer-a-friend” campaigns,

reduces resident turnover and improves

to raise funds to acquire and renovate

and word of mouth among family

members and neighbors. 57 In addition,

HPI board members represent local

All of HPI’s residents, including those

affordable housing stakeholders such as

Habitat for Humanity of Metro Louisville,

in multifamily rental units, have access

community leaders, and local banks,

which can refer clients to HPI for

to homeowner education and financial

homebuyer counseling. 58 All of HPI’s

residents, including those in multifamily

literacy classes.

rental units, have access to homeowner

education and financial literacy classes. 59

Residents enrolled in PATH to Home-

neighborhood stability.68 As of October

homes to create homeownership op-

ownership must participate in HPI’s

2022, most of the homebuyers served

portunities. Because interest rates are

HUD-certified NeighborWorks America

through HPI’s Beyond 9th Initiative

currently high, however, many families

homebuyer education and financial

were female (70%), unmarried (86%),

will need affordable rental properties

counseling program.60 The free courses

and Black (91%) households earning

for longer periods of time. 71

cover topics such as short- and long-

at or below 49 percent of AMI. 69 The

term budgeting, saving, improving

combination of purchase agreements

The jump in 30-year fixed mortgage

credit scores, mortgage readiness and

in leases, homebuyer education, credit

interest rates from around 3 percent

affordability, the appraisal process,

counseling, and downpayment assis-

in 2021 to more than 7 percent in fall

hiring a real estate agent, home inspec-

tance is vital for helping LMI residents

2022 constrains HPI’s ability to increase

tion, and home maintenance. 61 In

and homebuyers of color achieve

inventory and hold houses for long

2018, HPI offered these courses to 305

successful outcomes. HPI’s Beyond 9th

periods.72 In addition, maintaining

new and potential homeowners.62 As of

Initiative is proving that purchasing,

lease-to-purchase agreements for long

October 2022, 65 houses in the Beyond

rehabilitating, and preserving houses for

periods can be risky when interest rates

9th Initiative had been sold, 10 had ac-

affordable homeownership is an achiev-

and property maintenance costs are

tive listings, and 5 were pending closing

able goal. These efforts have gained the

high. “The longer we have to keep the

or under contract. 63 An HPI executive

attention of the investor community,

house in a lease-[to]-purchase relation-

attends every home closing, and Hawes

philanthropy, and local government

ship,” the more expensive it becomes,

29

Acts Housing

Photo courtesy of

With its acquisition fund, Acts Housing can maintain an inventory of affordable houses for families to purchase once they are financially ready.

Hawes explained. HPI will pivot toward

can also leave the property open to theft

because nonprofits can assist each oth-

offering affordable rental opportunities

and vandalism, which can increase the

er in property management, preserving

to ensure that families can remain stably

risks and costs of a project. In addition,

affordable housing, and protecting the

housed. “If we were only a homeowner-

properties that are vacant for more than

West End from outside interests. 74

ship development [organization] and

60 days are at risk of losing insurance

we did not have the ability to do lease-

coverage unless construction activity is

Milwaukee Nonprofit

[to]-purchase, we would be somewhat

occurring, noted Hawes. 73

Works To Increase

stuck with our development pipeline

Homeownership

with rates being at 7 percent,” Hawes

Since 2017, HPI has been advocating

A 2022 Wisconsin Policy Forum study

said. HPI’s lease-to-purchase approach

through HPN and the Homeownership

compared homeownership inequities

adapts well to fluctuations in the hous-

Alliance for a cash-out refinance on its

among 11 U.S. cities and found that

ing market, especially as rising interest

housing stock. Although rehabilitation

Milwaukee had the largest racial dispar-

rates depress home sales. Rather than

loans through the FHA 203(k) pro-

ity in homeownership — a difference of

possibly being unable to sell a house

gram allow borrowers to purchase and

26.9 percentage points in owner-occu-

because of a lack of eligible buyers, HPI

refinance a home that needs consider-

pancy rates between White households

can rent the house to preserve it for the

able repairs, Hawes indicated that the

and combined Black and Latinx house-

community’s benefit and sustain it over

program’s guidelines are too cumber-

holds.75 Since 2010, Milwaukee has

a longer period. By ensuring that funding

some for nonprofits. Resource sharing

been losing 1,000 minority homeown-

is available, HPI can begin renovations

and open dialogue among partners and

ers per year because of investors who

immediately after purchasing a home,

other nonprofit organizations will be

target minority communities for home

which can save money in the long

critical for developing future portfolios.

purchases and convert owner-occupied

run. “Letting houses sit vacant for too

Collaborating with other nonprofit

housing to rental housing.76 Approxi-

long…can happen in… [the] blink of

organizations on where to develop can

mately 40 percent of Milwaukee homes

an eye,” said Hawes. Time spent creat-

help spread impact and have the ben-

listed at $125,000 or less are purchased

ing a development plan for a property

efit of added security, Hawes suggested,

by investors, who quickly convert them

30

to rentals.77 In 2022, 3 out-of-state

develop an acquisition fund, which

received a $2 million award from Wells

investor companies purchased approxi-

became part of a broader strategy to

Fargo, and the city of Milwaukee’s

mately 400 Milwaukee homes.78 These

increase Black and Latinx homeowner-

Housing Trust Fund and Milwaukee

investors often make cash offers with

ship in Milwaukee and a key component

County had contributed $2.5 million

zero contingencies, outcompeting indi-

of the city’s Collective Affordable Hous-

each. The remaining $3 million likely

vidual buyers with traditional financing

ing Plan.80 Acts launched the homeowner

will come from other foundations or

who may want a home inspection before

acquisition fund in summer 2022 and

banks. Dorothy York, vice president of

purchase.79

set a goal to purchase 100 single-

real estate at Acts, explained that the

family homes and duplexes per year

funds collected thus far are being al-

Launched in 1997, Acts Housing (Acts)

and resell them to LMI households for

located toward one-time startup costs.

is a nonprofit housing organization

$90,000 to $140,000. 81 Acts’ goal for the

The acquisition fund will be self-sustain-

working to reverse these trends in Mil-

fund is to raise $11 million for property

ing because Acts will sell the properties

waukee through homebuyer coaching

acquisition, utilities, insurance, and op-

it acquires, and the funds generated

and lending services for LMI house-

erational support. Most of the financial

from property sales will be used to pur-

holds. In 2021, Acts began developing its

support for the acquisition fund will

chase more properties.82

strategic plan, and with board approval

come from philanthropic organiza-

in January 2022, the nonprofit decided

tions. In August 2022, the Zilber Family

Making Homeownership

to expand its real estate department to

Foundation issued Acts a $1 million

a Reality

increase the number of acquisitions. In

grant, which Acts used to hire the

According to York, a significant barrier to

spring 2022, the Community Devel-

staff needed to launch the fund. As of

homeownership in the Milwaukee area

opment Alliance approached Acts to

September 2022, the nonprofit had

is the shortage of affordable homes. Acts

estimates that approximately 17,000

minority households in the Milwaukee

area want to purchase a home, but only

approximately 1,500 homes in the more

affordable $125,000 price range are

available each year. As the acquisition

fund is brought to scale, Acts will be

able to reserve several homes at once

for families to purchase when they are

ready. In addition to acquiring homes,

Acts prepares prospective homebuyers for

homeownership through its homebuyer

program, which includes HUD-approved

homebuyer education courses, home-

buyer coaching, rehabilitation coaching,

downpayment assistance, and loan

programs. These services predate the

acquisition fund and will continue to be

critical tools to help families become

homeowners. York explained that these

efforts must work in concert because

clients must be ready to purchase and

maintain a home, and, at the same time,

an inventory of affordable homes must

be available for them. 83

York noted that word of mouth is one

Acts Housing of the most effective methods for po-

tential homebuyers to learn about Acts’

homebuyer program. Clients who have

purchased a house and worked with

Acts often share information about their

Photo courtesy of homebuying experience with friends

Acts Housing helps prospective homebuyers achieve homeownership through HUD-certified homebuyer education courses, financial counseling, downpayment assistance, and loan programs.

and family members. In addition,

31

Acts Housing

Photo courtesy of

Acts Housing’s homebuyers are required to stay in their homes for at least 5 years, which enables them to increase wealth through home equity.

social media platforms and radio

will be connected to an Acts homebuyer

Administration’s Division of Energy,

stations have helped many families

coach to discuss their finances and

Housing and Community Resources to

become aware of the services that Acts

overall readiness to purchase.86

assist homebuyers with downpayment s,

offers. Senior staff members discuss

closing costs, and gap financing.88

the organization on local radio shows

The homebuyer coach’s role is to

and answer questions about services,

guide clients on their journey to

An Acts’ subsidiary, Acts Lending, pro-

which generates interest from potential

homeownership by removing barriers

vides mortgage and rehabilitation loans

homebuyers. Real estate agents, local

and developing an action plan to help

to families purchasing homes that are

banks, and community partners also

clients achieve their goals. Although

vacant, foreclosed, or in need of signifi-

refer families to the nonprofit.84

clients must have a consistent monthly

cant repair. Acts Lending was founded

income, no income requirement or

in 2013 in response to the fallout of

Prospective buyers interested in pur-

income verification process is needed

the Great Recession, when many banks

chasing a house through Acts must first

to participate in the program. The

refused to lend to LMI families wish-

attend a virtual homebuyer orientation

homebuyer coach helps families manage

ing to purchase distressed homes. Acts

session to learn more about the organi-

their finances and build a downpayment

Lending’s maximum loan amount per

zation’s homebuyer program, services,

by adjusting their budgets and creating

homebuyer is $75,000 to cover the pur-

and timelines. Next, clients must set

debt repayment plans. 87 Acts connects

chase and rehabilitation of the home.

up an online homebuyer portal and

clients to the Milwaukee Home Down

The house must need a minimum of

pay for a credit report.85 Clients then

Payment Assistance Program, which

$20,000 in repairs to qualify. Families

complete a HUD-approved homebuyer

offers forgivable grants of up to $5,000

can use financing from Acts Lending

education course, which has been

to purchase a home in the city of

to purchase their house from available

a longstanding component of Acts’

Milwaukee and up to $7,000 to pur-

inventory attained through Acts’ acqui-

homebuyer program. The homebuyer

chase a home in the city’s community

sition fund and then renovate with the

education course covers topics such as

development block grant area. Acts also

help of an Acts rehabilitation coach,

financial management, affordability,

receives funding from the Housing

who helps clients choose contractors,

occupancy, and foreclosure prevention.

Cost Reduction Initiative adminis-

understand the process of pulling

Clients who complete all the modules

tered by the Wisconsin Department of

permits, collect bids, review contracts,

32

and assess progress.89 Unlike traditional

In 2021, 305 buyers purchased homes

is key to stabilizing neighborhoods,

banks, Acts Lending will accept some

through Acts. Acts’ new homeowners

closing the wealth gap, and increasing

nontraditional lines of credit. Acts also

were predominantly women-headed

equity. Rising interest rates can push

helps families searching for a home

households (65%), and women also

homeownership further out of reach

that is move-in ready arrange financing

made up most of the homebuyers

for many buyers, however, so examin-

through bank partners. According to

(75%) who purchased tax-foreclosed

ing ways to preserve affordable rental

York, many bank partners have exam-

homes. In 2021, Acts invested a total

housing is an equally important goal to

ined Acts’ portfolio and determined

of $42.6 million to purchase and help

give families the opportunity to save for

that, in terms of the number of fami-

families renovate housing. As of August

future homeownership. Collaboration

lies repaying their loans on time, the

2022, more than 1,200 families had

and resource sharing across nonprofits,

nonprofit has actually outperformed

begun the homebuyer counseling pro-

the public sector, and social impact inves-

banks. Traditional banks “looking at

cess, paid for a credit report, and met

tors will be vital to sustaining progress.

our portfolio have realized we’re really

with their homebuyer coach at least

preparing people for homeownership

once. As of August 2022, a total of 198

1 James A. Crowder Jr., Chris Schildt, and Rick Jacobus.

and for that financial responsibility,”

families had purchased homes through

2021. “Our Homes, Our Communities: How Housing

York explained, and they have begun

Acts; according to York, Acts is on track

Acquisition Strategies Can Create Affordable Housing,

Stabilize Neighborhoods, and Prevent Displacement,”

offering financing to families who have

for 2022 to surpass the number of fami-

10–1.

completed Acts’ homebuyer program.

lies who purchased homes through the

2 Dan Immergluck. 2022. Red Hot City: Housing, Race,

Most families (75%) who participate

organization in 2021.93

and Exclusion in Twenty-First Century Atlanta, Oakland:

University of California Press, 153.

in the homebuyer program purchase

3 Joint Center for Housing Studies of Harvard Univer-

homes that are move-in ready with

As of September 2022, Acts had

sity. 2022. “State of the Nation’s Housing: 2022, ” 12.

traditional bank financing. The remain-

acquired two homes through its

4 U.S. Census Bureau. “Demographic Characteristics

for Occupied Housing Units,” 2016-2020 American

ing 25 percent of homebuyers purchase

acquisition fund, and two additional

Community Survey 5-Year Estimates (data.census.gov).

homes with financing from Acts Lend-

homes were under contract. Although

Accessed 4 August 2022.

ing to rehabilitate homes in need of

the acquisition fund is still in its early

5 Atlanta Neighborhood Development Partnership, Inc.

“Our Work” (www.andpi.org/ourwork). Accessed 4

repairs. York stated, “It’s not just about

stages, Acts aims to acquire batches

August 2022.

getting people into houses but [also]

of houses rather than one house at a

6 Atlanta Neighborhood Development Partnership, Inc.

getting them into houses that they can

time to meet its goal of 100 houses per

“About ANDP” (www.andpi.org/about). Accessed 19

September 2022.

maintain and stay in as long as they

year. As of November 2022, Acts had

7 Atlanta Regional Commission, Piece by Piece Foreclo-

choose to be there.” 90

hired three new staff who can bid, view

sure Response Initiative. n.d. “Overview of NSP 1

houses, and support the operations of

Implementation and Best Practices in Metro Atlanta, ” 4.

Early Progress

8 John O’Callaghan and Mandy Eidson. 2021. “Tackling

the acquisition fund. Once Acts has

Vacancy and Abandonment: Strategies and Impacts

Acts is striving to transform single-

an inventory of houses, it will need to

after the Great Recession” in Tackling Vacancy and

family rentals into owner-occupied

manage administrative aspects such

Abandonment: Strategies and Impacts after the Great Reces-

sion, Robert E. Finn, Lisa Nelson, Sarah Stein, eds.

homes. “There’s a [night and] day

as connecting utilities and paying for

Center for Community Progress, the Federal Reserve

difference [in] how people approach a

home insurance.94

Bank of Cleveland, and the Federal Reserve Bank of

Atlanta, 154.

home that they own versus a home that

9 Joint interview with George S. Burgan and Jay

they rent…. When you own a home,

Conclusion

Perlmutter, 27 September 2022.

you stay longer, [and] you stay in that

Investors seeking to maximize profits

10 “Nonprofit Organizations and Governmental Entities

Program Guidelines,” U.S. Department of Housing

community longer. You get to know the

can outbid individual homebuyers

and Urban Development website (www.hud.gov/

other people in the community,” York

and put further pressure on an already

program_offices/housing/sfh/np/sf_np_guideln).

said.91 Families who purchase homes

tight affordable housing market. The

Accessed 9 August 2022; “HUD-Approved Nonprofit

(Roster),” U.S. Department of Housing and Urban

through Acts must stay at least 5 years,

work of nonprofit housing organiza-

Development website (entp.hud.gov/idapp/html/

which not only can help stabilize the

tions such as ANDP, HPI, and Acts

f17npdata.cfm). Accessed 9 August 2022.

11

community but can also increase their

Housing to acquire homes in dis-

O’Callaghan and Eidson, 154–5; Joint interview

with George S. Burgan and Jay Perlmutter.

home equity. Through the acquisition

tressed neighborhoods is critical to

12 Joint interview with George S. Burgan and Jay

fund, Acts will be able to compete with

combating investor practices and

Perlmutter.

institutional investors by making cash

preserving affordable homeownership

13 “Capital for Community Development,” Atlanta

Neighborhood Development Partnership, Inc. website

offers without inspections or contin-

opportunities for LMI households.

(www.andpi.org/alfproducts). Accessed 5 October gencies, leading to quick closings on

By renovating homes and offering

2022.

properties. Holding houses will allow

assistance with downpayments and

14 “Capital for Community Development: ANDP Loan

Fund,” Atlanta Neighborhood Development Partner-

Acts to slow the pace of outside inves-

closing costs, homebuyer education,

ship, Inc. website (www.andpi.org/alfcollaborations).

tor purchases, enabling families who

and counseling programs, these

Accessed 5 August 2022.

15

want to make an offer with contingen-

organizations are further reducing

Atlanta Neighborhood Development Partnership, Inc.

n.d. “Addressing Metro Atlanta’s Affordable Housing

cies to still purchase a house.92

barriers to homeownership, which

Crisis: The ANDP Loan Fund” ; Email correspondence 33

with George S. Burgan, 2 November 2022.

September 2022.

assistance-program). Accessed 4 October 2022.

16 O’Callaghan and Eidson, 158; Email correspondence

43 Hawes; Interview with Andrew Hawes.

69 The Housing Partnership, Inc. 2022; Email correspon-

with George S. Burgan, 2 November 2022.

44 Federal Deposit Insurance Corporation. n.d. “203(b)

dence with Marian Silliman, 31 October 2022.

17 Joint interview with George S. Burgan and Jay

Mortgage Insurance Program.”

70 Interview with Andrew Hawes.

Perlmutter.

45 Interview with Andrew Hawes; “Homeownership,”

71 Ibid.

18 Ibid.

Kentucky Housing Corporation website (www.

72 Interview with Andrew Hawes; Freddie Mac.

19 “Home South DeKalb,” Atlanta Neighborhood

kyhousing.org/Homeownership/Pages/default.aspx).

73 Interview with Andrew Hawes.

Development Partnership, Inc. website (www.andpi.org/

Accessed 4 October 2022.

hsd-overview). Accessed 5 August 2022.

46 Interview with Andrew Hawes.

74 Ibid; “203(K) Rehab Mortgage Insurance,” U.S.

20 Immergluck, 155.

47 Housing Partnership Network.

Department of Housing and Urban Development

website (www.hud.gov/program_offices/housing/

21 “Home South DeKalb”; Joint interview with George

48 Ibid; The Housing Partnership, Inc. 2022. “Snapshot

sfh/203k/203k--df). Accessed 30 September 2022; S. Burgan and Jay Perlmutter; Email correspondence

Report. Beyond 9th: Revitalizing West Louisville

National Community Stabilization Trust. “About

with George S. Burgan, 2 November 2022.

through Strategic Homeownership.” Document pro-

Homeownership Alliance” (www.stabilizationtrust.org/

22 Joint interview with George S. Burgan and Jay Perl-

vided by Marian Silliman, 28 September 2022.

homeownership-alliance/). Accessed 25 October 2022.

mutter; “2019 in Review: Home South DeKalb,” Atlanta

49 Hawes.

75

Neighborhood Development Partnership, Inc. website

Ned Littlefield, Joe Peterangelo, and Rob Henken.

50 The Housing Partnership, Inc. 2022; Email cor-

(www.andpi.org/dekalb). Accessed 5 August 2022.

2022. “Hitting Home: Milwaukee’s homeownership

respondence with Marian Silliman, 7 October 2022;

inequities and how we compare to peer cities, ” Wis-23 “Closing the Gap: ANDP to Develop 2,000 Affordable

Interview with Andrew Hawes.

consin Policy Forum, 5.

Homes by 2025,” Atlanta Neighborhood Development

51 Interview with Andrew Hawes; Email correspondence with

Partnership, Inc. website (www.andpi.org/ctg). Accessed 76 Community Development Alliance. n.d. “Milwaukee’s

Marian Silliman, 7 October 2022 and 1 November 2022.

4 August 2022; Joint interview with George S. Burgan

Collective Affordable Housing Plan: Process, ” 19; 26.

52 Interview with Andrew Hawes.

and Jay Perlmutter; O’Callaghan and Eidson, 155.

77 Interview with Dorothy York, 23 September 2022.

53 The Housing Partnership, Inc. 2022; Email correspon-

24 Joint interview with George S. Burgan and Jay Perlmutter.

78

dence with Marian Silliman, 31 October 2022.

Talis Shelbourne. 2022. “ACTS Housing is launching an

25 O’Callaghan and Eidson, 152.

acquisition fund to combat investor landlord purchases

54 “Down Payment Assistance Program,” Louisville-Jeffer-

26 Joint interview with George S. Burgan and Jay Perlmutter.

in Milwaukee.” Milwaukee Journal Sentinel, 8 August.

son County Metro Government website (louisvilleky.

27 Ibid.

gov/government/housing/down-payment-assistance-

79 Wisconsin Public Radio. 2022. “Milwaukee organiza-

28 Ibid; Redfin. “Atlanta Housing Market” (www.redfin.

program). Accessed 4 October 2022; “Homeowner-

tion launching homeowner acquisition fund to help

com/city/30756/GA/Atlanta/housing-market). Ac-ship Program,” Louisville Metro Housing Authority

residents buy homes.”

cessed 7 October 2022.

website (www.lmha1.org/special_programs/sec-

80 Community Development Alliance, 15; 17; Acts

tion_8_homeownership_program.php). Accessed 4

29 “Capital for Community Development: ANDP Loan

Housing. “Our Process” (actshousing.org/about/).

Fund.”

October 2022; Office of Housing and Community

Accessed 26 October 2022; Acts Housing. 2021. “Acts

Development. n.d. “Down Payment Assistance.”

30 Federal Home Loan Bank of Atlanta. n.d. “Afford-

Housing Impact Report: January 1-December 31,

55

able Housing Program: Homeownership Set-aside

Email correspondence with Marian Silliman, 31

2021” ; Interview with Dorothy York.

Program” ; Joint interview with George S. Burgan and October 2022.

81 Wisconsin Public Radio; Shelbourne.

Jay Perlmutter; Email correspondence with George

56 Hawes; Interview with Andrew Hawes; Email corre-

82 Shelbourne; Interview with Dorothy York; Wisconsin

S. Burgan, 2 November 2022; Atlanta Neighborhood

spondence with Marian Silliman, 7 October 2022.

Public Radio.

Development Partnership, Inc. 2019. “Creating

57 The Housing Partnership Inc. 2022. “Make Your

83

Homeownership & Economic Opportunity: Study

Ibid.

Friends Your Neighbors!” Facebook post. Accessed 4

of Homeowner Savings, Retention, and Wealth Cre-

October 2022; The Housing Partnership Inc. 2022.

84 Ibid; Acts Housing. “Work for Acts Housing!” (acts-

ation for ANDP Homebuyers in Metro Atlanta, ” 10;

“We had fun Saturday at the Parkland Plaza Grand

housing.org/about/work-for-acts-housing/). Accessed O’Callaghan and Eidson, 154.

Opening, coordinated by the Center for Neighbor-

8 December 2022.

31 Ibid.

hoods! ” Facebook post. Accessed 4 October 2022; The 85 “Homebuyer Counseling,” Acts Housing website (act-

32 Jeff Lazerson. 2022. “30-year mortgage rates soar to

Housing Partnership Inc. 2010. “Learn from the Best:

shousing.org/acts-services/homebuyer-counseling/).

6.7%, highest in 15 years.” Los Angeles Daily News, 29

HPI Homeowners Talk About Their Experience,” You-Accessed 26 September 2022; “Homebuyer Program

September; Freddie Mac. “Mortgage Rates Surpass

Tube video, 5 November. Accessed 31 October 2022.

Virtual Orientation,” Acts Housing website (actshous-

Seven Percent” (www.freddiemac.com/pmms). Ac-58 The Housing Partnership, Inc. “Board” (wearehpi.

ing.org/start-now/). Accessed 26 September 2022.

cessed 31 October 2022; Joint interview with George

org/who-we-are/board/). Accessed 4 October 2022.

86 Interview with Dorothy York; Wisconsin Public Radio;

S. Burgan and Jay Perlmutter.

59 “Home Buyer Education,” The Housing Partnership,

“Online Homebuyer Counseling,” Acts Housing web-

33 O’Callaghan and Eidson, 157; Joint interview with

Inc. website (wearehpi.org/home-buyer-education/).

site (actshousing.org/acts-services/online-homebuyer-

George S. Burgan and Jay Perlmutter.

Accessed 4 October 2022.

counseling/). Accessed 26 September 2022.

34 Jermaine Fowler. 2020. “The West End of Louisville

60 Interview with Andrew Hawes; The Housing Partner-

87 Acts Housing. 2022. “Virtual Orientation Part 1,”

(CA. 1835- ),” Black Past, 21 April.

ship, Inc. 2022.

YouTube video, 9 March. Accessed 26 September

35 Ibid; Oscar Perry Abello. 2018. “Louisville’s West End

61 The Housing Partnership, Inc. n.d. “Homebuyer

2022; Acts Housing. 2022. “Virtual Orientation Part

Fighting to Own Its Future,” Next City, 27 November.

Education & Financial Counseling Program”; “Lease

2 Homebuyer Coaching,” YouTube video, 9 March.

36 Fowler.

Purchase Opportunities.”

Accessed 26 September 2022; Acts Housing. “Work for

62

37 Kentucky General Assembly. 2021. “House Bill 321,

The Housing Partnership, Inc. 2018. “2018 Annual

Acts Housing!”

An Act relating to revenue.”

Report, ” 5; 6.

88 Acts Housing. “Work for Acts Housing!”; “Milwaukee

63

38 Fowler; Abello.

Email correspondence with Marian Silliman, 31

Home Down Payment Assistance,” City of Milwaukee

October 2022.

39 Interview with Andrew Hawes, 27 September 2022.

website (city.milwaukee.gov/DCD/NIDC/MILWAU-

64 Interview with Andrew Hawes.

KEE-HOME-DOWN-PAYMENT-ASSISTANCE-PRO-

40 The Housing Partnership, Inc. “Our Mission”

GRAM); “Housing Cost Reduction Initiative (HCRI),”

(wearehpi.org/who-we-are/)

65

. Accessed 9 August 2022;

Ibid; Email correspondence with Marian Silliman, 31

State of Wisconsin website (energyandhousing.wi.gov/

Housing Partnership Network. n.d. “Creating Home-

October 2022.

Pages/AgencyResources/hcri.aspx)

ownership Opportunities for Long-Time West Lou-

66 Housing Partnership Network; “Secondary Market

. Accessed 28

isville Residents” ; “Lease Purchase Opportunities,”

Funding Source,” Kentucky Housing Corporation

September 2022.

The Housing Partnership, Inc. website (wearehpi.

website (www.kyhousing.org/Homeownership/Future-

89 Interview with Dorothy York; Acts Housing. “Work for

org/your-new-home/buying-a-home/). Accessed 25

Homebuyers/Pages/Loan-Programs.aspx). Accessed Acts Housing!”

October 2022.

4 October 2022.

90 Interview with Dorothy York.

41 Interview with Andrew Hawes; Andrew Hawes. 2018.

67 Interview with Andrew Hawes.

91 Ibid.

“Beyond 9th Initiative.” Kentucky Housing Corporation.

68 Limestone Bank. n.d. “Affordable Housing Program”;

92 Shelbourne; Interview with Dorothy York.

42 “HUD-Approved Nonprofit Organizations and

Housing Partnership Inc. 2022. “Step Up. To a Home

93

Government Entities,” U.S. Department of Housing

of Your Own”; “Down Payment Assistance Program,”

Acts Housing 2021; Interview with Dorothy York.

and Urban Development website (www.hud.gov/

Louisville-Jefferson County Metro Government website

94 Ibid; Email correspondence with Claire Britcliffe, 1

program_offices/housing/sfh/np). Accessed 30

(louisvilleky.gov/government/housing/down-payment-

November 2022.

34

Additional Resources

n “Capitalizing on Collapse: An Analysis of Institutional Single-Family Rental Investors” (2020), by Gregg Colburn, Rebecca J. Walter, and Deirdre Pfeiffer, examines corporate filings of publicly traded companies to better understand the characteristics and strategies of these firms. journals.sagepub.com/doi/abs/10.1177/1078087420922910.

n “Can We Prevent ‘Dark Money’ from Destroying Housing Opportunity?” (2022), by Denise Scott, identifies strategies that communities can use to preserve housing and neighborhood stability and protect themselves from predatory investment. www.lisc.org/our-stories/story/can-we-prevent-dark-money-from-destroying-housing-opportunity/.

n “Single-Family Market Rents and Institutional Investors” (2022), by Darryl E. Getter of the Congressional Research Service, outlines the market dynamics underlying institutional investor activity in single-family rental housing and addresses questions about the implications of their increased role. crsreports.congress.gov/product/pdf/IF/IF12225.

n ManufacturedInsecurity:MobileHomeParksandAmericans’TenuousRighttoPlace (2018), by Esther Sullivan, addresses the impacts of investor purchases of mobile home parks for homeowners.

www.ucpress.edu/book/9780520295667/manufactured-insecurity.

n “Lease Purchase Failed Before — Can It Work Now?” (2015), by Sarah Edelman, Michela Zonta, and Julia Gordon, reviews the lease-to-own model, lessons learned from government and nonprofit programs, and recommendations for

landlords of single-family rentals. www.americanprogress.org/article/lease-purchase-failed-before-can-it-work-now/.

n “The Detroit Housing Market: Challenges and Innovations for a Path Forward” (2017), by Erika C. Poethig, Joseph Schilling, Laurie Goodman, Bing Bai, James Gastner, Rolf Pendall, and Sameera Fazili, offers several strategies for reducing barriers to affordable homeownership and rental housing in Detroit through home equity protection, rehabilitation, lease-to-purchase, and shared equity programs.

www.urban.org/sites/default/files/publication/88656/detroit_path_forward_0.pdf.

n “Opportunity to Purchase Policy Options for the City of Minneapolis” (2021), by Scott Bruton and Gretchen Nicholls, presents three options for an opportunity to purchase program in Minneapolis, examines citywide capacity for implementation, and reviews similar policies in other cities and states.

cnhed.org/wp-content/uploads/2021/01/Opportunity-to-Purchase-Policy-Options-for-the-City-of-Minneapolis.pdf.

n “Gentrifying Atlanta: Investor Purchases of Rental Housing, Evictions, and the Displacement of Black Residents”

(2021), by Elora Lee Raymond, Ben Miller, Michaela McKinney, and Jonathan Braun, finds a strong association between investor purchases of multifamily rental units and the displacement of African-American residents in Atlanta.

www.tandfonline.com/doi/full/10.1080/10511482.2021.1887318.

For additional resources archive, go to www.huduser.gov/portal/periodicals/em/additional_resources_2023.html.

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Document Outline

Message From PD&R Leadership

Editor’s Note

Institutional Investors Outbid Individual Homebuyers

Institutional Investors: A Local Perspective

Investments in Affordable Housing

Additional Resources