Wall Street won’t be relaxing its chokehold on metro Atlanta’s housing market any time soon. From Georgia’s statehouse to the nation’s Capitol, the political will to rein in powerful corporate landlords just isn’t strong enough right now.
Atlanta is one of the top housing markets nationally that investment funds have targeted since the 2008 housing crisis. Institutional investors make up over a third of recent single-family home purchases in metro Atlanta. In fact, three corporate landlords alone own almost 11% of the city’s single-family rental market — over 19,000 homes — according to a recent study from Georgia State University and Rutgers University researchers.
But that doesn’t mean policymakers have to sit back and watch as deep-pocketed investors, often camouflaged by layers of shell companies, buy up scores of entry-level homes and affordably priced apartment complexes, driving up Atlantans’ housing costs and pushing the American Dream of homeownership further out of reach.
“Private equity poses a real problem,” Democratic U.S. Sen. Raphael Warnock told Atlanta Civic Circle in a statement. “A home to them is just a row on a spreadsheet tracking shareholder returns.”
Despite the concerns he expressed, Warnock didn’t point to any direct solutions.
Georgia presents especially appealing opportunities for giant real estate investment funds thanks to state laws that make the eviction process fast and easy for landlords to navigate — and to exploit.
“In Georgia, regardless of the condition of a place, you have to pay rent,” Michael Waller, executive director for the Georgia Appleseed Center for Law and Justice, said in an interview. “The place could be a terrible place to live. There could be a slumlord not living up to their obligations under the lease and under the law. But you still have to pay your rent or you’ll be evicted.”
Congressional gridlock
U.S. Sen. Jeff Merkley (D-Oregon) and Rep. Adam Smith (D-Washington, D.C.) in December proposed legislation to limit the number of single-family homes a single entity, such as a hedge fund, can own by charging a $20,000 federal excise tax for every home owned over 100. The penalty funds would go to a Housing Downpayment Trust Fund to aid single-family homebuyers.
But so far the End Hedge Fund Control of American Homes Act hasn’t gained traction.
Democratic Rep. Nikema Williams of Atlanta’s Fifth District is co-sponsoring the bill in the House. “When people buy homes, doors open to opportunity,” Williams said in a press release announcing the bill. “When hedge funds buy homes, those doors shut. This is painfully true in Atlanta, where my constituents are priced out of homeownership while investors purchase homes 10 or more at a time.”
Williams did not respond to several interview requests.
For now, measures to increase lower- and middle-income residents’ home-buying power, strengthen tenant protections, and boost funding for rental assistance programs and homeless services are better bets for affordable housing advocates trying to mitigate high Atlanta housing prices.
Last month, Congress finally passed a “minibus” appropriations bill for fiscal year 2024 that increased the Department of Housing and Urban Development (HUD) budget by 16% to $70.7 billion. Notably, that included an 11.5% increase to $4 billion for federal Homeless Assistance Grants and a 7.1% increase to $32.4 billion for subsidized housing vouchers.
Last year, Senate Democrats introduced the Neighborhood Homes Investment Act to create a new tax incentive to produce 500,000 starter homes in distressed communities over ten years, while House Democrats introduced the Downpayment Toward Equity Act for HUD grants to first-generation homebuyers in a bid to close racial wealth and homeownership gaps. Williams and another Atlanta Congressmember, Rep. Hank Johnson (D-GA 4), are among the 43 House co-sponsors of the subsidy for first-generation homebuyers.
However, these bills have been languishing in Congress since last summer. And none of these measures would curb the phenomenon of Wall Street investors buying up entire blocks of lower-priced, entry-level homes at a time, often in majority Black and Latino neighborhoods.
“I don’t know of enough political will to stop the process in the short term,” said Waller, Georgia Appleseed’s leader.
“What there is clearly significant political will for is some kind of protections for the lowest-income renters,” he added. “I think part of that comes from compassion, but also because of the recognition that Georgia, across a lot of different service industries, is suffering from a lack of workforce.”
In other words, if lawmakers want to use the free market as an excuse to let Wall Street run amok in local housing markets, they can’t ignore the fact that the lower-wage workers that make local economies tick must be able to afford to live near their workplaces. “If you don’t have homes people can live in, you’re not going to have a workforce,” Waller said.
Investor transparency?
Until local, state, and federal politicians warm up to the idea of regulating corporate landlord behavior, transparency measures could help the country get a handle on the problem.
Thanks to “years of advocacy and really substantial investigative reporting,” Waller said, elected leaders in Atlanta and Georgia have become acutely aware of the challenges posed by institutional housing investors.
The GSU and Rutgers study of corporate homeownership in Atlanta found that the three top players were able to buy over 19,000 houses quietly, by “using an extensive network of more than 190 corporate aliases registered to 74 different addresses across ten states and one territory.”
That research and other revelations about corporate landlords’ below-the-radar homebuying practices makes clear, Waller said, “that policymakers don’t even know where [corporations’] properties are, so they don’t know how to face this.”
Transparency laws requiring landlords to declare where they do business and how they identify themselves on paper could help, Waller said. “The significance of that is not just so you have somebody you can sue and hold accountable, but also you just know who’s involved,” he noted. “You can’t make good policy without good information.”
But in Georgia, that’s far easier said than done.
While there is some political will to beef up tenant protections in Georgia — as the Safe at Home Act’s passage in this year’s legislative session showed — state lawmakers don’t have much of an appetite for regulating landlords.
In fact, two state laws actually prohibit cities and counties from enacting measures to restrict landlord practices: One statute bans them from adopting any rent regulation policies that would limit the rate at which landlords can raise rent annually. Another prohibits local governments from creating rental registries to log identifying information on landlords.
Atlanta Mayor Andre Dickens said last month that the city is conducting a “deep dive” to identify the top investors behind the city’s most negligent and predatory landlords — and that it will then urge them to divest those troublesome properties.
At the end of the day, though, neither Dickens’ office nor state politicians nor Congress are exercising their authority to tell those financiers and landlords what to do.
This is so sad that the one thing that helps middle class people build wealth, especially generational wealth is being bought up by corporations and that there’s no pressure on the politicians to do something about it! This is something people should be protesting.This affects every american and their children in their quest to purchase a home and build the wealth that only home ownership can afford. I would love to see people get up and protest about this!!!