Private Equity Stakeholder Project (PESP) Executive Director Jim Baker testified in front of the U.S. House Subcommittee on Oversight & Investigations at: “Where Have All the Houses Gone? Private Equity, Single Family Rentals, and America’s Neighborhoods.” This hearing spotlighted the negative effects private equity ownership of single-family homes has on the country’s housing stock and communities of color.
These private investor landlords have consolidated single-family rentals (SFR) at record rates since the aftermath of the 2008 foreclosure crisis. Between 2011 and 2021, the five largest rental home operators have increased their cumulative ownership of rental homes to almost 300,000 units across the country. The foreclosure crisis, coupled with the efforts of private companies to increase their ownership of housing stock, has purposefully locked large numbers of Americans out of home ownership and steamrolled them into a growing pool of permanent renters.
“The Wall Street-backed segment of the single-family rental industry has grown dramatically over the past decade,” Baker said, “while families across the country have struggled with displacement, loss of their homes and financial devastation since the foreclosure crisis.
“If the COVID-19 pandemic was a test of how landlords would deal with renters in challenging times – then some of the largest single-family rental landlords failed that test miserably,” Baker added.
Those who have been most adversely affected by these corporate housing efforts have demonstrably been Black Americans. A report by the House Financial Services Committee released for today’s hearing found that the five largest SFR companies purchased homes in neighborhoods with significantly larger Black populations than the national average.
Specifically, Committee staff found that 40 percent of these acquisitions were in majority Black counties—considerably higher than the overall population. The average population represented across the five companies’ top zip codes was 40.2 percent Black, which is astonishingly more than three times the Black population in the entire United States.
Additionally, the SFR companies increased their fees per lease by 40 percent from 2020 to 2021, and the total number of tenants behind on rent and fees almost doubled from 2018 to 2021.
Baker’s testimony to the House of Representatives will help illuminate the growing role that private equity firms have in America’s housing crisis. From skyrocketing rents to record-high eviction rates, PESP has linked private equity-owned companies to many of the housing problems faced by Americans across the country, especially in communities of color.
Baker suggested two main recommendations to protect tenants and homebuyers and limit corporate control of homes:
- Transparency into corporate landlords and practices—including requiring large, corporate landlords to provide regular disclosures of numbers of eviction filings and evictions as well as average rent increases
- Enact broad tenant protections—including implementing and funding Right to Counsel laws
Additional specific policy recommendations within these tenets can be found in PESP’s statement.