Housing advocates and policymakers worry that large and institutional investors have different business models and less connection to local communities than local mom-and-pop owners, and as a result, are worse landlords, less attentive to property and tenant needs, more profit-driven, and more likely to evict tenants and raise rents. 

The evidence to support this is mixed, somewhat dated, and difficult to sort out—with experts noting that single-family home investors can bring important benefits as well as harms. 

Several notable examples of predatory behavior by investors or large-scale property owners exist. For example, the Charlotte Observer detailed a range of challenges faced by their tenants, including maintenance issues, difficulty contacting the companies that owned homes, and tenants being denied their security deposits at the end of a lease. The Charlotte investigation and similar reporting by the New York Times detailed strategies that institutional investors used to increase profits, which often included adding fees on top of rents or systematically reducing security deposit refunds. However, some previous research, such as a Federal Reserve Bank of Philadelphia report examining the 2006 to 2014 period and a 2015 report from Amherst Holdings and the Federal Reserve Board of Governors, found that institutional investor activity did not appear to lead to higher rents. The Board of Governors report suggested that neighborhoods attracting institutional investors were already likely experiencing rent increases during that time. 

Evidence related to evictions is similarly mixed and complicated by differences in how institutional ownership is defined. The Federal Reserve Bank of Philadelphia report found that institutional investor activity did not appear to lead to higher eviction rates between 2006 and 2014, although the authors note limitations in the data used for their analyses. 

In contrast, studies of Atlanta and Boston found that “large” landlords (defined as owning more than 15 single-family rentals in Atlanta and more than 100 in Boston) were more likely than smaller landlords to file for evictions. Another study found that institutional investors were more likely to file for evictions than other owners. It’s worth noting these studies focus on filings and do not examine whether filings by different types of owners are more likely to result in actual evictions. 

Another common concern is that investors can outcompete individual local homebuyers, raising sales prices or making all-cash offers and effectively reducing the inventory of available homes. Notably, a U.S. House Financial Services Subcommittee survey of the nation’s five largest institutional investors found they typically resold properties through bulk sales instead of sales to individual homebuyers.  

These concerns are hard to untangle or confirm empirically, and updated research that includes the pandemic years is needed. Still, they can be particularly problematic for communities of color—since some evidence suggests that, in a few key housing markets, a disproportionate share of institutional investor purchases of single-family homes occurred in predominantly Black neighborhoods. For example, the House Financial Services Subcommittee found that the populations of the top 20 ZIP Codes where large institutional investors purchased single-family homes were 40 percent Black. An Atlanta analysis found that, as large institutional investors bought homes in majority-Black neighborhoods following the Great Recession, the share of owner-occupied homes declined—suggesting purchases by investors may have replaced purchases by individual homebuyers. However, other research suggests this pattern is less pronounced nationally and that the apparent trend of investor purchases in Black neighborhoods reflects the concentration of investor activity in Southern cities with large Black populations.   

In contrast, arguments regarding the potential benefits of investor purchases highlight positive impacts on rental housing quality and availability, and on neighborhood and local housing markets during economic downturns. Since investors have more resources to buy excess housing inventory during hard times, they can provide security to the housing market. For example, investors may establish a floor on housing prices, as was the case after the Great Recession. 

In addition, investors may purchase distressed properties that would otherwise be unattractive or not financially feasible to individual homeowners or smaller-scale landlords. Many large institutional investors spend significant amounts of money renovating properties and can get repairs done more efficiently than mom-and-pop landlords who lack relationships with suppliers and contractors that can reduce repair times and costs. Existing homeowners in neighborhoods where investor purchases are happening—particularly homeowners of color living in neighborhoods with higher than average Black populations—may build wealth as property values increase. 

Finally, institutional investor purchases can help increase the overall rental housing supply in single-family neighborhoods, especially through the emerging build-to-rent sector. This is important because the rental housing supply remains well below demand nationally: the supply of owner-occupied housing grew by 10 percent from 2015-2020, while the supply of rental housing increased by just one percent during the same period. Some of these rental opportunities may be in neighborhoods dominated by single-family homes previously inaccessible to renters.