Investor Buyers, A Brief Primer
Katharine Nelson, Senior Research Fellow
8, February 2022
Housing markets rebounded after the 2007-2009 housing crisis, but homeownership rates never did. Research explains this by the rapid spread of investor buyers into housing markets following the foreclosure crisis. Large investors bought significant numbers of properties that were foreclosed on, at very low prices, frequently converting single-family (1-4 units) into rental properties. They often acquire properties in low-income and moderate-income neighborhoods. ¹
Coming out of the foreclosure crisis, these investor buyers created a new industry around large-scale single-family rental, and have been increasingly active in rental markets generally. These limited liability companies (LLCs), or “corporate landlords”, have reshaped the legal landscape of rental ownership, in part because they limit investor liability. ² Research shows they are less likely to take care of the properties, causing them to fall into disrepair or remain vacant. ³ They are also associated with higher rents and higher rates of eviction. ⁴ Meanwhile, several reports document that the largest among them (e.g.; Invitation Homes, Equity Residential) are making enormous profits even as we experience a profound housing affordability and eviction crisis. ⁵
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