Kamala Harris aims to tackle tough-handed corporate property managers who impact your rental expenses significantly.
Harris has promised to give up to $25,000 in down-payment assistance for first-time homebuyers and enhance new housing construction, as well as tackle "greedy corporate landlords" who she believes contribute to rent hikes.
Over half of all rental households spend over 30% of their income on housing expenses, making them "cost-burdened," according to US Census data released in September.
Although rent prices are clearly escalating, it's unclear whether this surge is primarily due to corporate property investors who acquire multiple properties. Despite a lack of a formal definition for "corporate landlords," Harris has urged Congress to enact legislation that eliminates significant tax advantages for investors who hold more than 50 single-family rental homes.
"Community after community has felt exploited by Wall Street investors and corporate landlords who have amassed thousands of single-family homes during recent economic downturns," Harris's campaign platform states.
A CNN investigation revealed that rent growth has outpaced wage growth in cities with significant investment from large corporations. However, the actual impact of these corporations on the housing market is difficult to quantify, as Michael Seiler, a real estate and finance professor at the College of William & Mary, pointed out.
"I don't think we'll ever have a firm grasp on their impact, but currently, they're a relatively small part of the market," Seiler said. "However, they're all generating demand for housing, and whenever you create that demand, you can expect house prices to increase."
Here are some facts we do and don't have:
Single-family homes in certain cities are more appealing to investors
As of 2021, 71% of single-unit rental properties were still owned by individuals, not corporations, based on the most recent census data available. Corporate landlord ownership, as calculated by users combining limited liability entities, real estate corporations, and real estate investment trusts, was at 16%.
Large investors, or landlords who possess at least 1,000 properties, accounted for approximately 3% of US homes as of June 2022, according to an Urban Institute analysis. Although their nationwide ownership proportion might appear modest, these large investors have acquired a greater share of single-family rental homes in cities such as Atlanta (27%), Jacksonville, Florida (22%), and Charlotte, North Carolina (20%), based on Urban Institute data.
Cities with high investor involvement have observed significant rent increases. Among 20 metro areas with a notable presence of institutional investors, 13 have seen rent for single-family homes increase at a faster pace than wages compared to the previous year, according to a CNN analysis of data from Zillow and the Bureau of Labor Statistics.
However, data reveals that institutional investors typically target markets where rents are already escalating, as pointed out by Laurie Goodman, the founder of the Housing Finance Policy Center at the Urban Institute.
"Simply because you claim that institutional landlords are in areas with higher rent increases does not indicate they caused it," Goodman told CNN. "It could be that they're focusing on those areas with robust population and employment growth."
Polling indicates that renters are deeply concerned about the nation's housing crisis. Twenty-four percent of likely voters who rent their homes stated that the "cost of housing" is their most pressing economic concern, according to a CNN poll conducted by SSRS between September 19 and 22. This is in contrast to only 8% of likely voters who own their homes.
Former President Donald Trump has largely avoided the topic of corporate landlords during his campaign. However, the 2024 Republican platform states it will promote homeownership through tax incentives and assistance for first-time homebuyers. Jared Kushner, Trump's son-in-law, retains an interest in his family's real estate portfolio, which includes multifamily apartment buildings in 13 states.
Investor home purchases have slowed down
Purchases by institutional investors surged in the first two years of the pandemic, with hundreds of thousands of single-family homes being acquired. While investors still buy US homes, purchases in June fell to 80,000 units, representing a 50% decrease from the June 2021 peak of 149,000, according to CoreLogic data. CoreLogic defines any individual or corporation with three or more properties as an investor, broadening its scope beyond Harris' plan.
CoreLogic does not monitor what investors do after they acquire properties. Some properties have been resold and are no longer part of the rental market.
Goodman believes that Wall Street corporations and other investors have probably decreased their home purchases due to higher interest rates, increased prices, and diminished returns.
"There's been a significant slowdown because interest rates are higher, prices are higher, and the return on investment looks less attractive than in the past," she said.
There are other potential explanations for rising rent costs in these areas, including a shortage of available units. Following the 2008 financial crisis, single-family rental home construction drastically decreased and never truly returned to pre-recession levels. Just like house values have recently soared due to the scarcity of available homes for sale, rent costs are also driven by the same supply and demand dynamics.
According to the Census Bureau, the rental vacancy rate in 2021 reached its lowest point since the 1980s. Although it has since recovered, it remains at suboptimal levels.
Given Harris's plans to address high housing costs, particularly by tackling corporate landlords and enhancing homeownership opportunities, here are two sentences that use the word 'business':
Harris's campaign platform proposes to urge Congress to eliminate significant tax advantages for corporations that hold over 50 single-family rental homes.
Despite a lack of formal definition for "corporate landlords," there's ongoing debate within the real estate industry about the extent to which corporate businesses impact the housing market.
