Wall Street investors’ seemingly insatiable hunger for residential property—and the poisonous effects it’s having on housing affordability in major metros, like Atlanta—has caught the eye of federal officials, and Congress is now considering whether to restrict how many homes hedge funds can buy.
U.S. Sen. Jeff Merkley (D-Oregon) last month introduced a bill to temper Wall Street’s influence on housing markets by fining firms that purchase over 100 single-family homes in a metro market and putting the proceeds into a down-payment assistance fund for homebuyers.
“In every corner of the country, giant financial corporations are buying up housing and driving up both rents and home prices,” Merkley said to announce his proposed End Hedge Fund Control of American Homes Act. “They’re pouring fuel on the fire of the affordable housing crisis that so many of our communities are facing, leaving working families behind.”
In metro Atlanta, hedge funds’ grip on the housing market is particularly strong: Wall Street investors accounted for over 40% of the single-family home purchases in the Atlanta, Sandy Springs, and Roswell metro area in the third quarter of 2021.
When investors buy up scores of single-family homes in a market, they often hike rents, impose “novel and unwarranted fees” for things like pest control, utility service, and renters insurance, and “refuse to provide upkeep and basic maintenance,” Michael Waller, the head of Georgia Appleseed Center for Law and Justice, told U.S. Senators during a February hearing.
In other cases, investors will simply sit on the properties, letting homes fall apart and become eyesores while land values increase, thus depriving communities of affordable housing.
Waller told Atlanta Civic Circle on Friday that Merkley’s proposal could benefit efforts to foster housing affordability in Georgia and beyond, but cautioned that it’s not a silver bullet.
What’s really needed, he said, is stronger tenant protections to offset the damage done by negligent and absentee corporate landlords. “Some institutional investors in the low-cost and affordable rental housing markets cause widespread human suffering, particularly among children,” he said.
“Under our current laws, it can be virtually impossible for communities to hold these owners accountable for the harm they do to the health, happiness, education, and economic wellbeing of their tenants,” he explained. “We need better laws that tie owners to communities and make clear what owners must do to provide safe housing for Georgians.”
Natallie Keiser, who heads HouseATL, an affordable housing advocacy group, said the Senate bill could curb the monopolistic power that Wall Street investors have gained over housing markets. “It seems like a good attempt to rebalance the market for homebuyers by taxing everyone with high-volume holdings, thereby reducing monopoly-like influences on pricing,” she said.
Keiser also praised the legislation’s down payment assistance program. “It will help address the backed-up pipeline [of new homebuyers] which recent years of investor acquisitions have helped create,” she said.
Georgia State University sociology professor Deirdre Oakley, who studies housing, is less optimistic. She said she thinks Merkley’s bill is a step in the right direction, but even if passed, it would take time to reverse Wall Street’s negative effects on housing affordability.
“It could help down the road,” she said, “but what happens to all the hedge fund-purchased property already on the books? They will continue their present rental practices, which haven’t and won’t contribute anything to mitigate the affordable housing crisis.”
Atlanta Mayor Andre Dickens told Atlanta Civic Circle in June that he’d been talking with the Biden administration and the U.S. Department of Housing and Urban Development about possible way to reign in corporate control over the city’s housing market: With Wall Street finding metro Atlanta “ripe for the picking,” he said at the time, he wanted to address how big investors spend money in communities.
Dickens’ office declined to comment on whether those conversations have moved forward.