Fewer corporate landlords in states with strong tenant protections, finds new report

This report investigates the ownership of residential parcels of land in nearly 500 urban counties for insights into the rise of corporate landlords. “Corporate real estate investors appear to be particularly active in certain zones, including fast-growing Sun Belt metros and the postindustrial legacy cities of the Midwest, South, and Mid-Atlantic,” the report says. However, in the Northeast and Mid-Atlantic, the report does find clusters of corporate ownership in Baltimore, New York City, Boston, Philadelphia, and Pittsburgh.

Corporate ownership refers to a range of entities, including, but not limited to, small limited liability corporations (LLCs), private equity firms, pension funds, and real estate investment trusts (REITs). Where the authors found cases of corporate ownership, they also investigated whether the entity was in-state or out-of-state, and found, in most cases, in-state corporate ownership significantly more common than out-of-state.

Prior to the 2008 financial crisis, residential real estate was largely owned by individuals or families, and no single investor owned more than 1,000 single family homes until 2011. However, during this period, investors found they could purchase homes at foreclosure auctions with discounted prices and reduced interest rates, and began to purchase geographically clustered homes in bulk. Another surge of investor activity occurred in the aftermath of the Covid-19 pandemic when home prices inflated and large firms gained an advantage by making cash offers.

For example, in St. Louis, despite home prices dropping by 11.8% between 2008 and 2012, rents increased by 8.2%. Therefore, investors found they could purchase homes at a deep discount, but rent them for the same price, or more.

The report found investor activity to be more common in low-income neighborhoods and communities of color, and less common in areas with strong tenant protections. “While there are many reasons why certain areas attract more corporate investment… states with stronger tenant protections appear to be seeing less of this kind of corporate investment activity,” the report says.

One potential reason for concentrated activity in disinvested neighborhoods is the ability for investors to purchase homes at lower prices, but rent them at rates comparable to surrounding areas, where home prices are higher. In other words, “…median home values tend to be much lower than median home values in majority-white neighborhoods due to decades of disinvestment and inequitable housing policies, but rents are still comparable,” the report says.

Twenty-two states put forward a combined 34 bills between 2023-2025 to address investor activity, according to a separate report by the American Enterprise Institute. Of these, 27 bills either died, were withdrawn, or vetoed. Six bills were pending when the report was published. Only 1 bill was signed into law in New York State (A.3009C), which established a 90-day waiting period before institutional investors could purchase a single- or two-family home.

The Lincoln Institute’s report offers several policy recommendations to help mitigate investor activity in residential real estate:

• Establishing a rent registry would enable state and local agencies to understand who owns a property and is responsible for its maintenance.
• Capping the number of new homes investors can purchase (with certain exceptions in place, such as when an investor rehabilitates a distressed home).
• Rights of first refusal would allow tenants or nonprofit developers the opportunity to purchase a property before a corporation.
• Property tax relief could reduce the number of foreclosures.
• Homebuyer assistance programs, such as downpayment assistance, could help more individuals and families purchase homes.
• Tenant protections, such as rental assistance, ‘just cause’ eviction policies, and other eviction diversion programs, could reduce foreclosures and limit the transfer of ownership from individuals to corporations.