'Corporate Landlords and Market Power': Study Surveys the Single-Family Rental Boom

Researchers from the University of California, Berkeley, recently published a report that documents the changes in the single-family rental (SFR) industry—as fueled by the demographic and economic trends of the pandemic and the earlier foreclosure crisis and Great Recession as well as increasing investments from large institutional investors.

“The four largest public and private SFR operators together control over 200,000 homes, and the SFR asset class has boomed in the pandemic, drawing interest from a wide range of investors and spawning new business models and partnerships,” according to the study’s asset.

Using SEC filings and quarterly investor calls from the leading SFR industry companies, the report traces how institutional narratives and market strategies have changed since the Great Recession.

“As the pool of foreclosed properties has largely dried up, SFR companies are developing new strategies to increase growth and returns for shareholders, including build-for rent and partnerships with builders. During the COVID-19 pandemic, corporate SFR landlords pushed major rent increases and devoted energy to increasing revenues through ancillary fees that further add to tenants’ housing costs. Corporate landlords are actively finding ways to cut down costs, particularly through technology and the built environment of homes, as well as appealing property tax assessments.” (Fields and Vergerio)

Totaling nearly 60 pages, the report is expansive, laying out the timeline and identifying the key industry players in this market trend with the potential to completely upend the housing market and the U.S. economy.

As a response to the growing power imbalance evidenced by the trends examined in the report, the authors recommend several steps, with more detail in the report:

1. Fostering greater transparency of property ownership and rental practices.
2. Implementing broad-based tenant protections.
3. Considering limitations on the market share of corporate landlords.

The last recommendation would create a potentially explosive controversy, hence the addition of the word "consider" in the recommendation. Still, the report's authors argue that the regions with the largest number of institutionally-owned single-family rental homes have more of a reason to consider such drastic measures than others.