State lawmakers’ eyebrows jumped at a House committee hearing Tuesday, as Georgia State University geographer Taylor Shelton shot off a barrage of statistics about institutional investors’ staggeringly high level of homeownership across Georgia.
“There are over 300 census tracts across metro Atlanta alone where these companies own upwards of 50% of the single-family rental market,” he told the House Governmental Affairs Committee at a Feb. 25 hearing that considered three bills that would rein in institutional investors’ influence over single-family housing in Georgia.
Those 300 census tracts make up almost one-fourth of the 1,250 census tracts for the 11-county metro-Atlanta region. “These companies have collectively cornered the market in many areas, limiting competition or alternative avenues for those who need or wish to live in certain locales,” Shelton said.
For at least 15 state House districts — in urban, suburban, and rural Georgia — over half of the single-family rental housing is owned by hedge funds, private equity, and real estate investment trusts, said Shelton, a housing expert who’s extensively studied large corporate landlord practices.
But what he said next drew an audible gasp from the bipartisan committee — and then a stunned silence. “Even worse is Rep. Mary Ann Santos’ 117th District, in Henry County, where these companies own a full 99.6% of all single-family rental homes.”
All of a sudden, it seemed like the light flicked on for some of the dozen or so state representatives at the hearing, all members of Georgia’s historically landlord-friendly legislature: Institutional investors are taking over our single-family housing markets, and it might be high time to do something about it.
The three bills targeting institutional investor practices — more than have ever been considered under the Gold Dome — reflected a newfound desire to even the playing field between big money and average Georgians simply seeking the American Dream of homeownership.
House Bill 305 would prohibit investment funds with at least $6.25 million in assets or 25 single-family homes in any county from buying more statewide; HB 399 would require out-of-state landlords with that many single-family homes or duplexes to have at least one staffer in Georgia to handle tenant communications; and HB 374 would authorize local governments to create rental registries to track corporate landlord behavior.
That these legislative proposals even earned a House committee hearing this year could signal a shift within the Republican-controlled General Assembly, which traditionally ignores or outright rejects progressive housing policies.
Last year, Senate Bill 278, a proposal to allow rental registries, didn’t even get a hearing. Georgia also became one of the last states in the nation last year to require that rental housing is “fit for human habitation,” when the state legislature finally passed the Safe at Home Act. Even so, some housing advocates have called the new law toothless, since it doesn’t define habitability.
The three bills
Notably, a Republican, Rep. Martin Momtahan (R-Dallas), authored the rental registry bill under consideration at the hearing. HB 374 would carve out an exemption in Georgia’s 22-year-old rental registry ban, so that local governments can monitor property owners who own at least five residential rental units in their jurisdiction.
That bill was tabled for an additional committee meeting, but the Republicans on the House Governmental Affairs Committee were receptive to the other two bills, both authored by Democrats.
When HB 305 came up, which would limit how much single-family housing institutional investors can buy, the committee’s vice chair, Rep. Brad Thomas (R-Holly Springs), emphasized that his commitment to the free market wouldn’t stop him from helping constituents striving for homeownership to gain even footing against Wall Street.
“I love investors,” Thomas said. “I’m fine with capitalism. I think it’s a great thing. But I do get concerned when you have multiple out-of-state companies that are coming in and purchasing property here,” he said in response to the bill, sponsored by Rep. Phil Olaleye (D-Atlanta).
The Republican legislator said he believes Georgia’s housing crisis mostly boils down to a supply-and-demand problem, where there aren’t enough entry-level homes on the market. But he acknowledged that, if institutional investors are gobbling up all the single-family housing stock as soon as it hits the market, even an explosion of new development wouldn’t help.
“I want to get people into these houses [as owners],” he said. “Middle-class wealth is built on homeownership […] but in order to make that happen, you have to be able to have homeowners actually get into that process.”
Local realtor support
Some lobbyists representing real estate brokers expressed cautious support for HB 305’s aim to limit big investment funds to owning 25 homes in a county — or, at least, pledged not to oppose it.
“Thank you so much, Rep. [Olaleye], for bringing this bill,” said Betsy Bradfield of the Georgia Association of Realtors. “We’ve had some really great conversations over the past several months about the corporate ownership problem, and we agree that there is a problem.”
Bradfield suggested tweaking the bill to ensure that it didn’t penalize “mom-and-pop landlords,” but added, “I don’t represent these large corporate landlords.”
For HB 399, requiring out-of-state owners of 25 or more single-family homes to have in-state staff to respond to tenants’ maintenance needs, the Georgia Association of Realtors’ Jeff Ledford said, “We’re well aware of the issue.”
He urged lawmakers to consider writing language into the bill to specify that the Georgia staff should be licensed real estate brokers, whose contact information is publicly available.