Institutional
investors
in

single-family
rental
(SFR)
houses
cause
rents
in
a
neighborhood
to
increase
quickly,
but
their
entrance
into
a
neighborhood
doesn’t
cause
gentrification. 

That’s
the
conclusion
from
a
working
paper
released
Tuesday
by
the


Federal
Reserve
Bank
of
Philadelphia.
The
paper
examined
the
impact
of
an
SFR
company
entering
a
neighborhood
by
using
tax
transfer
records,
deed
transfer
records,
and
data
from
multiple
listing
services
from
2010
to
2021.

Rent
increases
can
be
dramatic
when
SFR
investors
enter
a
neighborhood.
The
study
found
that
when
investors
first
acquire
a
property,
they
raise
the
rent
60%
more
than
the
average
increase. 

After
the
initial
big
rent
hike,
increases
were
about
7%
on
average,
which
is
more
in
line
with
the
norm
but
still
elevated
relative
to
noninvestors.
A
higher
share
of
investors
in
a
neighborhood
also
pushes
rent
up
in
houses
that
are
not
owned
by
investors.

Investors
also
tend
to
target
neighborhoods
with
a
higher
share
of
Black
residents.
They
look
for
lower
home
values
that
are
coupled
with
higher
median
incomes
from
residents.
This
gives
investors
a
relatively
cheap
way
into
a
neighborhood,
but
also
provides
room
for
residents
to
absorb
higher
rents
given
their
incomes.

The
study
did
not
find
that
the
entry
of
institutional
investors
into
a
neighborhood
drove
out
minority
residents.
It
actually
found
the
opposite
—
it
reduced
the
share
of
white
and
college-educated
residents
relative
to
other
neighborhoods
in
the
metro
area,
though
this
could
be
related
to
white
residents
having
more
financial
options
for
a
move.

Since
2010,
the
number
of
single-family
homes
owned
by
investors
has
skyrocketed
because
deep-pocketed
private
equity
firms
like


Blackstone
were
able
to
buy
in
bulk
homes
that
went
into
foreclosure
following
the

financial
crisis.

The
became
an
instant
subject
of
controversy
because
of
large
rent
hikes
and
allegations
that
the
companies
were
slow
to
respond
to
repair
requests.
That
didn’t
slow
down
the
expansion
of
SFR
companies,
however,
as
the
number
of
homes
owned
by
institutional
investors
and
SFR
companies
has
ballooned
from
barely
a
blip
in
2010
to
almost
400,000
by
2021.

The
metro
areas
with
the
highest
share
of
investor-owned
SFRs
tend
to
be
in
the
south.
Atlanta
tops
the
list
with
3.03%,
followed
by
Jacksonville,
Florida
(2.97%),
Charlotte,
North
Carolina
(2.65%),
Tampa,
Florida
(2.18%),
and
Memphis,
Tennessee
(2.17%).

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