As potential homebuyers were busy placing bids and sending love letters to homeowners, Georgia resident Carlotta Harrell knew It was time to take advantage of a seller’s market and downsize.
In 2021, Harrell, who serves as the chair of the Henry County Commission, listed her home for sale and immediately began receiving offers. While some bids were from traditional homebuyers, most were from investors who wanted to purchase the property and then convert it to a rental property.
“I refused to sell it to an investor,” Harrell told The Atlanta Journal-Constitution. “I sold it to a family.”
She reportedly sold the property to Oriana Wyche, who had placed 11 bids over previous months, hoping to purchase a home.
“A lot of them told me it went to an investor who could close sooner, who could put more money down,” she told the AJC. “You just couldn’t compete.”
And once Harrell sold her home, she, too, felt the sting as a homebuyer–it took 16 bids before her offer was accepted for a three-bedroom, ranch-style home in McDonough.
Harrell’s experience reflects the current housing market in the metropolitan Atlanta area: Institutional investors are purchasing homes not to renovate and flip — but to rent.
Since 2012, investors have acquired more than 65,000 homes — mostly single-family — in 11 counties in the metropolitan Atlanta area. And in 2021, investors purchased an estimated 50 homes in predominantly minority communities, according to The Atlanta Journal-Constitution.
The highest home appreciation was documented in Clayton County, a majority African-American area. From January 2020 to December, home value increased by 71 percent. Other majority African-American counties such as Rockdale, 69 percent; Douglas, 68 percent; and Henry, 64 percent, have seen increased home values with properties purchased by investors.
Investor-Owned Properties Change Neighborhood Demographics and Access to Affordable Housing
While the “buy-to-rent” practice may appear to be a mere business transaction, it reportedly impacts African-American neighborhoods more than any other community in the metropolitan Atlanta area.
According to data compiled by The Atlanta Journal-Constitution, home values in the metro Atlanta region steadily have risen between 2012 and 2022. However, the rise in value in areas populated by investor-owned properties appreciated at twice the rate as zip codes where investor presence was not prominent.
Scooping up properties within a specific area allows investors to flood the market with higher rents, making it less affordable to residents.
“These are the drivers of corporate investments in housing, and they don’t care how high rent is,” Georgia State University sociology professor Deirdre Oakley told Atlanta Civic Circle.
Investors actively cause housing prices to rise as they offer cash bids. Then they wait for the homes to appreciate in value or transform into luxury rentals while actively keeping low-income residents from identifying affordable housing.
“Once you start changing the dynamics in terms of where people get to live, it has an impact not just on that individual but generations down the line in terms of their health, their education, their jobs and also their general ability to generate wealth,” Samyukth Shenbaga, manager of the Atlanta Regional Commission’s Community Development Division told the AJC.
Access To Homeownership Also Thwarted
Home ownership has long been one of the greatest ways to build generational wealth in the United States. In metropolitan Atlanta, an estimated 53 percent of African-American households are also homeowners — greater than the national average of 44 percent. Yet this is still a significant difference compared to white residents in the Atlanta area, where 79 percent are homeowners.
From lack of capital for a down payment, or for closing costs and other fees, to not understanding the home0buying process, or even to having poor credit, there are many reasons why Black homeownership is significantly less than that for whites. And in metro Atlanta, corporate investors being able to entice sellers with higher bids is adding to the lower Black homeownership rate.
A recent study by the Georgia Institute of Technology revealed that investor presence resulted in a 1.4 percentage point drop in homeownership rates in metro Atlanta between 2007 and 2016. At the same time, African-American homeownership dropped an estimated 4.2 percentage points, while white homeownership was not impacted.
“The pathway to homeownership is not created equal, and affordable housing is often not available,” Ashley Bell, CEO of Ready Life told Atlanta Civic Circle.
Appealing to Federal Government
As investors continue to purchase more homes in the metropolitan Atlanta area, Mayor Andre Dickens is seeking support for the Biden administration in curtailing these practices.
“I’ve made it known to the administration that somewhere around 30 percent of home purchases in Atlanta were done by outside investors that had no desire to actually be a resident or live in Atlanta, so people that have good intentions of living in Atlanta are competing with hedge funds,” Dickens said during a Feb. 1 press conference. “They are competing with private equity and big banks.”
Dickens, other county officials and nonprofit groups collectively believe in holding these investors accountable for their purchases and protecting metro Atlanta residents.
“We need a shared horizon of goals with federal, state, and local coordination for funding, housing safety enforcement, accountability, and meaningful protections for families and children, Michael Waller of the Georgia Appleseed Center for Law and Justice, told Atlanta Civic Club in an email. “…to get to a future where “children in Georgia would live in stable, safe, and healthy homes.”
