The COVID19 pandemic and associated economic recession have transformed the housing terrain in southeastern cities, creating new urgency around providing safe, stable, affordable housing, while straining existing housing systems.
Widespread unemployment during the past two years has resulted in extensive non-payment by renters and declining rent rolls for rental operators. For homeowners, while mortgage forbearance policy has been effective in preventing foreclosures, rising mortgage delinquency suggests there may be at some point an increase in distressed homeowners looking to sell.
Meanwhile, national and international private equity firms and real estate investors view the COVID19 economic crisis as an opportunity to accelerate investments in purchases of residential housing stock, and amassed hundreds of billions of dollars to invest in distressed rental housing in places like Atlanta.1
In a research brief released in January by the Planning + Property Lab at Georgia Tech, the authors (including myself, Yilun Zha, Ethan Knight-Scott and Leah Cabrera) investigate purchases by large corporate trading partners, single-family rental and lease-option or rent-to- own firms in three southeastern cities. The brief describes rising sales of garden-style apartment buildings and sharp increases in prices and the volume of purchases of single-family homes by large corporate buyers. It also describes the demographics of the neighborhoods where large corporate firms invest, and show that these firms increased their buying in places hit hard by the COVID19 pandemic. The brief was funded by the Urban Institute and produced in concert with the Housing Crisis Research Collaborative. This blog post summarizes the results for Atlanta.
In summer of 2021, large corporate investors bought 17% of all single‐family homes that were sold in Atlanta.
We use Zillow’s ZTRAX database to examine the sale of residential housing between spring of 2019 and summer of 2021. The timeframe is evenly divided into five quarters prior to the pandemic, and five quarters since the pandemic began, and the focus of the study is restricted to Gwinnett and DeKalb counties.2 The types of buyers delineated include: large corporate buyers, smaller corporate investors, and households buying homes for owner-occupancy.
Across all kinds of buyers, as shown in Table 1, the total purchases of garden-style apartment complexes increased by 11% between January 2019 and July 2021. Sales prices of Garden- style apartments rose gently (7%) in the pre-pandemic period, and then increased by 21% during the pandemic period. By contrast, purchases of multifamily apartment complexes fell by 12%. The sale of owner-occupied units rose during the pandemic. Sales of single-family rentals (SFR) fell, though large corporate buyers increased their purchases of SFR in that same timeframe.
Table 1. All Purchases by Housing Type.
| | Pre-Pandemic | Pandemic | % change between Pre-Pandemic and Pandemic | Q2 2021 |
| Garden-style (2-5 units) | 269 | 298 | 11% | 75 |
| Multifamily (5+ units) | 227 | 200 | -12% | 47 |
| Owner Occupied | 32,823 | 33,734 | 3% | 7,374 |
| Single-family Rental | 9,084 | 8,259 | -9% | 2,795 |
| Large Corporate Buyers | 3,387 | 3,501 | 3% | 1,494 |
The overall decline seen in single-family rental sales during the pandemic is due to depressed purchases in the first 6 months of the pandemic, as shown in Figure 1. However, by late 2020 and throughout 2021, purchases of single-family rentals recovered and surpassed 2019 levels. For large corporate buyers in particular, the pace of sales had not only recovered, but by Q2 2021, more than doubled the average quarterly transaction volumes of 2019. While Table 1 above shows that single-family rentals decreased by 9% during the pandemic, large corporate buyers increased their purchases by 3%. By summer 2021, large corporate investor purchases represented 53% of all single-family rentals, and 17% of all single-family home sales.
Sales prices for large corporate single‐family rentals increased by 28% a year, compared to 9% a year for owner‐occupied homes.
The swift increases in sales in 2021 were matched by strong price growth. Figure 2 depicts median sales growth by county from the beginning of 2019 through summer 2021. Between January 2019 and June 2021, prices increased 51% in Gwinnett and 78% in DeKalb. As shown in figure 2, most of this price growth occurred in the last year.
2021 price increases for single-family homes may be driven by large corporate buyers.
Large corporate buyers of single-family rentals increased purchase price by 108% over a two- year period, for a quarterly growth rate of 28%. Large corporate Rent-to-Own firms’ median purchase price increased by 18%. Other corporate buyers of single-family rentals increased by 16% annually. By contrast, as shown in Table 2, the median purchase price for households rose by 9% annually. The timing and volume of large corporate investments, alongside their willingness to pay markedly higher prices than households suggests that these firms may have contributed to the spiking prices in these areas during the pandemic. However, we do not control for market tier or the composition of homes sold, so any firm conclusions about the contribution of large corporate buyers to rising prices would require further analysis.
Table 2. Median Purchase Price by Type of Buyer
|
Buyer Type |
2019 Q2 |
2020 Q2 |
2021 Q2 | % change 2019 Q2 – 2021 Q2 |
CAGR |
| Large Corporate Firms | |||||
| Single-family Rental | $132,500 | $119,891 | $275,000 | 108% | 28% |
| Rent-to-Own | $154,700 | $265,000 | $254,000 | 64% | 18% |
| Trading Partner | $215,750 | $190,419 | $280,700 | 30% | 9% |
| Other Corporate Buyers | $147,500 | $160,000 | $231,500 | 57% | 16% |
| Households / Owner-Occupied | $260,000 | $274,000 | $335,200 | 29% | 9% |
An array of firms: trading platforms, rent‐to‐own, and single‐family landlords, are investing in Atlanta housing.
The sample includes three types of firms: trading platforms, such as OpenDoor and Zillow; Rent-to- Own firms, such as DIVVY Homes; and large corporate landlords, such as Pretium Partners’ Progress Residential, American Homes 4 Rent, and Blackstone’s Invitation Homes. Table 3 lists the types of firms, and the specific firms within each type. Trading platforms are entities which seek to replace the work of traditional realtors. These firms create digital platforms which automate the process of selling, buying, or trading owner-occupied homes and investment properties. Rent-to-own contracts are widely viewed as a high-risk product which disadvantages renters and rarely leads to homeownership. Large corporate single-family rental firms have newly emerged out of the foreclosure crisis. While single-family rentals are a well-established segment of the American housing market, large corporate single-family rental landlords emerged during the foreclosure crisis due to new digital technologies, and new financial investment products, and the lure of extremely depressed real estate prices.
Table 3. Large Corporate Buyers of Single-Family Homes in Atlanta.
| Firm Type | Corporate Owner |
| Trading Platform | Opendoor |
| Zillow | |
| Offerpad/Supernove Partners Acquisition | |
| HomeVestors: Hi-Land Properties | |
| Rent-to-Own | Divvy Homes |
| Pretium Partners | |
| Institutional SFR | Sylvan Road |
| American Homes 4 Rent | |
| BNY Mellon / Amherst Capital | |
| Blackstone | |
| Cerberus Capital Management | |
| Starwood Capital Group | |
Many of these business models have historical associations with displacement, dispossession, and rising inequality in housing, or even outright predatory practices. Rent-to-own contracts were the primary form of finance available to redlined communities prior to the Fair Housing Act, and are associated with a history of predatory lending. Large corporate single-family rentals firms emerged in the footprint of subprime lending and the foreclosure crisis. These firms have invested in areas with higher poverty rates and in communities of people of color, displacing existing residents and extracting a generation of home equity.3
Table 4 describes the purchases of each firm with more than 100 purchases between 2019 and 2021. The categorizations of these firms is not clear-cut; some firms house a variety of operations in the single-family rental market, and can operate as trading platforms, single-family rental operators, or home flippers in different contexts.
Large corporate landlords focus on low‐poverty, predominantly Black and non‐white Hispanic neighborhoods.
Concerns about displacement, dispossession, and rising inequality emerge again when examining pandemic purchases. Table 4 describes the average demographic characteristics of the neighborhoods where single-family rental home purchases occurred. 4
Table 4. Demographic Characteristics of the Median Single-family Rental Neighborhood, by Buyer Type
| Pre-Pandemic | Pandemic | Difference | |
| Percent Renters | |||
| Other | 28.1% | 28.1% | 0.0% |
| Large Corporate | 27.3% | 27.3% | 0.0% |
| Percent Poverty | |||
| Other | 8.5% | 8.4% | -0.1% |
| Large Corporate | 11.0% | 11.7% | 0.7% |
| Percent Non-white | |||
| Other | 61.0% | 58.0% | -3.0% |
| Large Corporate | 79.9% | 82.4% | 2.5% |
Prior to the pandemic, large corporate investors invested in areas that are, at the median, 79.7% people of color, while avoiding areas with high percentages of rental housing, or high poverty rates. Other buyers purchase in places that are, on average, 61% non-white. While other single- family rental buyers reduced purchases in areas with non-white neighborhoods, large corporate buyers increased their purchases in these neighborhoods after the pandemic by 2.5%. Prior research has found that these firms entrance in to single-family rentals may reduce homeownership, and leading to lower overall wealth, particularly for Black households.5 As landlords, these firms have established a reputation for high hidden fees, annual rent increases, poor maintenance, and high eviction rates.6
In our regional report, we find that some corporate buyers increasingly focused purchases in areas hit hard by the pandemic. Table 5 examines these patterns for Atlanta and shows that different types of firms reacted to the pandemic in different ways. This analysis relies on the Urban Institute’s COVID19 Impact, Equity, and Housing Instability indices. This provides the index for the median neighborhoods where single-family homes were purchased before and during the pandemic by large corporate buyers.7 The COVID19 Impact index identifies areas with high numbers of uninsured, and high rates of job loss during the pandemic. The Equity Index is a composite measure of poverty rates, immigrant and non-white households. The Housing Insecurity Risk Index identifies areas with high housing cost burden, overcrowding, rental households, poverty rates and unemployment.
Table 5. Large Corporate Buyers Increased Purchases in Places Hit Hard by COVID19
| Pre-Pandemic | Pandemic | Difference | |
| Housing Instability Risk Index | |||
| Rent-to-Own | 0.58 | 0.56 | -0.02 |
| Single-family Rental | 0.61 | 0.58 | -0.03 |
| Trading Partner | 0.43 | 0.50 | 0.07 |
| Equity Index | |||
| Rent-to-Own | 0.85 | 0.83 | -0.02 |
| Single-family Rental | 0.84 | 0.85 | 0.01 |
| Trading Partner | 0.70 | 0.73 | 0.03 |
| COVID19 Impact Index | |||
| Rent-to-Own | 0.73 | 0.57 | -0.16 |
| Single-family Rental | 0.78 | 0.68 | -0.10 |
| Trading Partner | 0.48 | 0.57 | 0.09 |
Trading partners like Zillow, Opendoor, and HomeVestors increased purchases in areas with higher housing instability risk and COVID19 impacts. Other types of large corporate buyers, Single- family Renters, and Rent-to-Own firms, retreated from areas with high housing instability, and places which were impacted heavily by COVID19.
Atlanta landlords and tenants need pandemic relief.
Because the pandemic affected the employment and earnings of low- and moderate-income employees in the transportation and hospitality sectors, unpaid rent should be far higher among rental properties.8 Rising rent debt and the threat of eviction is devastating for tenants; from the landlord perspective, declining rent rolls could create financial challenges for small operators of rental properties.
As the recently released report shows, the sales of garden-style apartments, an important source of unsubsidized affordable housing in Atlanta – rose by 2.6% during the pandemic. Large corporate landlords increased their purchases throughout the pandemic, until they comprised 53% of single-family rental purchases, and 17% of all single-family sales. These firms purchased in predominantly low-poverty Black neighborhoods.
Prior research has identified concerns with large corporate single-family rentals. These firms have an established record of high hidden fees, aggressive rent increases, poor maintenance, high eviction rates, and gentrification of entire areas.9 Large corporate landlord purchases of single-family homes have been found in other studies to crowd out homeownership.10 As these firms have increased their presence, a growing concern is whether rental markets can remain competitive when large firms obtain a high market share in given submarkets.
Trading partners like Zillow make up a substantial portion of these purchases, and halted operations in Q3 of 2021. However, other trading platforms have continued to operate, and market research suggests that Zillow’s portfolio was sold off to large corporate single-family rental firms, several of which operate in the Atlanta area. If trading partners become the purchasing arm for single-family rental and rent-to-own firms, their activities will exacerbate the trends of declining homeownership, rising rents, increasing displacement and dispossession documented in other research.
Georgia has nearly $1 billion in emergency rental relief funds to help landlords and tenants. This money could be a powerful stimulus to the Georgia economy, yet the Department of Community Affairs (DCA) has let this money languish in state coffers. DCA sat on $550 million of the first round of funding for nearly a year. Despite having tens of thousands of applications in their backlog, DCA has spent a paltry 8% of the funds intended for Georgia landlords and renters, leaving Georgia far behind other southern states. It’s hard to say why DCA refuses to spend these funds, but clues can be found in a 2017 audit of DCA in which the state entity refused to spend Georgia’s foreclosure crisis recovery fund in a similar fashion.
Meanwhile, national and international private equity firms and real estate investors view the COVID19 economic crisis as an opportunity to accelerate investments in purchases of residential housing stock, and represent nearly 53% of all single-family rental homes in a context of extremely swift price increases. Because of the array of concerns, it is imperative that the Department of Community Affairs stop slow-walking ERAP finds, and utilize nearly $1 Billion in rental assistance funds to support the Georgia economy, and assist tenants facing eviction as well as local rental housing operators.
Cover Image Attribution: View of Ridgedale Park Lakeside/Kingsboro neighborhood, Atlanta, GA, September 1997. Photograph by Burke Walker. Source: Library of Congress
Citation: Raymond, Elora. “Large Corporate Investors Purchase Thousands of Atlanta Single-family Homes During the Pandemic.” Atlanta Studies. January 28, 2022. https://doi.org/10.18737/atls20220128.
Elora Lee Raymond is an urban planner and Assistant Professor in the School of City and Regional Planning in the College of Design at Georgia Tech. She is interested in the financialization of housing and property in land, displacement and dispossession through housing systems, housing and disasters, housing justice, race, segregation, and the transnational Pacific Islander community. Her work has appeared in venues ranging from Cityscape and Urban Geography to the New York Times Magazine, NPR, and WABE’s Closer Look with Rose Scott.
Acknowledgments: This research was supported by the Housing Crisis Research Collaborative, which aims to address the longstanding inequities in access to safe, stable, and affordable rental housing that have been laid bare by the COVID-19 pandemic. It provides policymakers at all levels of government with the data and analysis they need to design, implement, and evaluate more equitable and effective rental housing and community development responses to pandemic and the ongoing rental housing affordability crisis. For more visit: www.housingcrisisresearch.org.
The Housing Crisis Research Collaborative is supported by JPMorgan Chase & Co. and the Wells Fargo Foundation, and managed by the Urban Institute. We are grateful to them for allowing the Collaborative to advance its goals. Unless otherwise specifically stated, the views and opinions expressed in the report are solely those of the authors and do not necessarily reflect the views and opinions of the funders or their affiliates. Data for this research was provided by Zillow through the Zillow Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found at http://www.zillow.com/ztrax. The results and opinions are those of the author(s) and do not reflect the position of Zillow Group.
Notes
- Sidders, Jack, Benjamin Robinson. “Private Equity Has $300 Billion for Pandemic.” Bloomberg, March 1, 2021, https://www.bloomberg.com/news/articles/2021-03-01/private-equity-has-300-billion-war-chest-for-covid-hit-property.[↩]
- Because the buyers for this research were hand-coded by GRAs, we restricted the sample to two counties where corporate buyers have historically been heavily invested.[↩]
- Gregg Colburn, Rebecca J. Walter, and Deirdre Pfeiffer, “Capitalizing on Collapse: An Analysis of Institutional Single-Family Rental Investors,” Urban Affairs Review 57, no. 6 (November 1, 2021): 1590–1625, https://doi.org/10.1177/1078087420922910; Elora Lee Raymond et al., “From Foreclosure to Eviction: Housing Insecurity in Corporate-Owned Single-Family Rentals,” Cityscape 20, no. 3 (2018): 159–88.[↩]
- Excludes 4.2% of purchases for which the ZTRAX dataset had faulty census tracts, or where geocoding was incomplete.[↩]
- Lauren Lambie-Hanson, Wenli Li, and Michael Slonkosky, “Institutional Investors and the US Housing Recovery,” 2019.[↩]
- Martine August and Alan Walks, “Gentrification, Suburban Decline, and the Financialization of Multi-Family Rental Housing: The Case of Toronto,” Geoforum 89 (2018): 124–36; Todd Frankel and Dan Keating, “Eviction Filings and Code Complaints: What Happened When a Private Equity Firm Became One City’s Biggest Homeowner,” Washington Post, December 25, 2018, https://www.washingtonpost.com/business/economy/eviction- filings-and-code-complaints-what-happened-when-a-private-equity-firm-became-one-citys-biggest- homeowner/2018/12/25/995678d4-02f3-11e9-b6a9-0aa5c2fcc9e4_story.html; Raymond et al., “From Foreclosure to Eviction: Housing Insecurity in Corporate-Owned Single-Family Rentals.”[↩]
- These indices are composite measures created by the Urban Institute using ACS2015-2019 census tract level data meant to predict where housing distress would occur – see https://www.urban.org/features/where-prioritize- emergency-rental-assistance-keep-renters-their-homes.[↩]
- Nathaniel Decker, “The Uneven Impact of the Pandemic on the Tenants and Owners of Small Rental Properties,” Berkeley, CA: Terner Center for Housing Innovation, 2021.[↩]
- Martine August and Alan Walks, “Gentrification, Suburban Decline, and the Financialization of Multi-Family Rental Housing: The Case of Toronto,” Geoforum 89 (2018): 124–36; Todd Frankel and Dan Keating, “Eviction Filings and Code Complaints: What Happened When a Private Equity Firm Became One City’s Biggest Homeowner,” Washington Post, December 25, 2018, https://www.washingtonpost.com/business/economy/eviction-filings-and-code-complaints-what-happened-when-a-private-equity-firm-became-one-citys-biggest-homeowner/2018/12/25/995678d4-02f3-11e9-b6a9-0aa5c2fcc9e4_story.html; Raymond et al., “From Foreclosure to Eviction: Housing Insecurity in Corporate-Owned Single-Family Rentals.”[↩]
- Lauren Lambie-Hanson, Wenli Li, and Michael Slonkosky, “Institutional Investors and the US Housing Recovery,” 2019.[↩]
