“We’d much rather see people being able to acquire housing if they’re ready for homeownership and not having to compete with [these investors],” Rollins said.
Instead, Rollins said they’re seeing people priced out of their homes, in both the rental and homeowner markets. “We talk to people every day who are facing these outrageous rent increases,” she said. Even properties reserved for people making less than the average income are dishing out triple-digit rent increases.
The impact these investors have on the housing market is still uncertain, but it’s a question that’s sparked a congressional investigation.
The Congressional Subcommittee on Oversight and Investigations has been looking into the influx of investor home-buying. A June 23 memo from the committee explained that the 2008 recession created a huge supply of for-sale homes, made available by all the foreclosures at the time. That’s when corporate ownership of single-family homes began to rise.
In 2011, no single investor owned more than 1,000 homes, according to the memo. But there’s been a shift in the last 10 years, with investors making 52% of 2021 home purchases in Tarrant County, and 43% in Dallas County. Counties in many parts of the country are seeing similar numbers, especially in communities of color.
On June 28, the subcommittee held a hearing over the findings of its investigation. Party lines divided the committee when it came to what consequences they thought investors have on the housing market.
"This is a recipe for disaster: in housing, it translates into exorbitant rent increases.” – Sofia Lopez, Action Center on Race and the Economy
U.S. Rep. Tom Emmer, a Minnesota Republican and a ranking member of the subcommittee, said their investigation was misguided and that institutional investors were being used as a scapegoat for the real problems at hand: poor housing policy decision by Democrats and rising inflation.
“Today, Americans are being punched in the face with 8.6% inflation," he said at the hearing late last month. "When our constituents go to the grocery store, the gas pump or when they look for housing, the stark failure of Congress’ spend-your-way-to-prosperity policy starts to sink in."
Emmer added, “While many Americans can’t afford a full tank of gas or to buy meat at the grocery store, our subcommittee is focusing on institutional homeownership in the home rental market.”
He said that single-family rentals serve a large portion of the population who “prefer or need to rent.”
“We cannot demonize institutions for facilitating this supply of quality housing that otherwise would be out of the realm of possibility for many Americans due to the economic consequences of inflation,” he said.
Alternatively, Chairwoman Maxine Waters, a Democrat from California, said these investors are going into communities and buying up homes that would be available to individuals if financial institutions gave them the loans they needed to become homeowners.
The witnesses at the hearing were a bit more unified in their thoughts.
“Institutional landlords have seized the COVID-19 pandemic as an opportunity to expand their reach even further into our homes,” Sofia Lopez, a deputy campaign director at the Action Center on Race and the Economy, told the committee. “Private equity’s business model hinges on boosting revenue, cutting costs, and maximizing efficiencies. … This is a recipe for disaster: In housing, it translates into exorbitant rent increases.”
But there was an outlier on the witness list, Jenny Schuetz, a senior fellow at Brookings Metro. “The growth of institutional investors is a symptom, rather than the cause, of extremely tight housing markets,” Schuetz told the committee. “Institutional investors benefit from tight housing supply, but they did not create the problem.”
In the last decade, the demand for housing has grown, but the production hasn’t kept up. Schuetz said local governments are partially to blame.
“Since the Great Recession, the U.S. has not built enough housing, leading to historically low vacancy rates and rapidly rising costs,” she said. “Local governments across the U.S. have adopted policies that make it difficult to build more homes where people want to live.”
Dallas City Council member Chad West told the Observer something similar last week. “We are not building enough homes both for sale and for rent in Dallas to accommodate everyone that wants to move to Dallas,” West said. “That’s why prices are going up so much.”
Whatever the cause, the high prices are making it even harder for the people Rollins works with to one day become homeowners.
“It’s a concern that the housing that’s coming on the market and the existing housing on the market is very expensive. And the conditions aren’t very good,” Rollins said. “Not everybody wants to be a homeowner but obviously many people do and have not been able to get into homeownership.”