Ten Questions that Congress Could Ask about Single Family Rentals

(March 2019) March is a busy month for consumer and financial issues oversight, with seven separate hearings scheduled by the House Financial Services Committee on topics ranging from Wells Fargo’s abuses to disaster recovery funding. Chairwoman Waters previewed these priority areas in her first policy speech back in January, where she also emphasized a renewed focus on the current housing affordability crisis that is rooted in the financial crisis and directly tied to homeownership and rental opportunities.

One important issue NCST is encouraging Chairwoman Waters to explore is today’s single family rental market, a topic we have written and spoken about frequently. This sector has transformed since the financial crisis in a way that has significant implications for tenants, aspiring homeowners, communities, and the nation’s housing market as whole. Long a market dominated by so-called “mom and pop” investors who were often neighbors or other local residents, this sector transformed after the housing crisis. Today, investment in single family rental has been supercharged by billions of dollars of private equity money, foreign investors, single family rental securitization, REITs, bulk sale of nonperforming loans by FHA and the GSEs, and a variety of technology innovations ranging from auction sites to national property management utilities to “ibuyers.”

One of the biggest challenges in understanding the implications of the new single family rental market is there is so little public data. At the most basic level, we don’t even know exactly how many homes have been purchased or built by investment firms. The main way to research homeowners is by combing through individual state and local public databases – and even then, the only available information may be the name of an LLC that is a ‘shell company’ for a larger corporation, making it vastly more difficult for the public to understand homeownership and rental trends, or to even know who truly owns the homes in their neighborhood.

These observations suggest that a House Financial Services Committee hearing on single family rental could provide important insights on the affordability crisis for both homeowners and tenants. A hearing could explore a number of questions, including the following:

  1. What percentage of homes in the single family rental market are owned by investors or firms outside of the community in which the homes are located?
  2. How many single family homes have moved from owner-occupancy to rental in the last ten years?
  3. Have home prices for buyers increased in areas with high concentrations of investor-owned rental homes?
  4. How do rents for locally owned single family homes compare to the rent that is charged to tenants of corporate-owned homes, and how frequently do corporate landlords raise the rent?
  5. Are corporate landlords accepting housing vouchers?
  6. How often do corporate landlords evict tenants compared to local landlords?
  7. What types of tenant complaints have been filed against corporate landlords, and at what scale?
  8. What percentage of vacant and/or tax delinquent single family homes are owned by absentee landlords?
  9. How have auction websites and ibuyers contributed to the transition of single family properties from owner occupancy to rental?
  10. How are new financial instruments such as single family rental securitization working?

Finding the answers to these questions can help guide legislators and other policymakers as they work to support affordable, safe and habitable rental, and increased access to affordable homeownership.

 

Theo Chang serves as a Senior Policy Associate for NCST.