Confronting the Private Equity Menace to Restore Housing Affordability

Editors’ Note: This article was originally written for the Summer 2025 issue of Nonprofit Quarterly Magazine, “Land Justice: From Private Ownership to Community Stewardship.”

Today, corporate landlords and private equity investors are acquiring single-family rental properties across the nation. These landlords have especially high market shares in the US South, in cities such as Charlotte, NC (18 percent); Jacksonville, FL (21 percent); and Atlanta, GA, where real estate investment trusts (or REITs), institutional investors, and private equity landlords own an estimated 72,000 homes—or 25 percent of single-family rental homes.

While institutional investors own just over half a million of the 15 million single-family rental homes, this share is growing, representing 29 percent of all single-family home purchases in 2023 and 30 percent in 2024. In multifamily buildings, institutional investors own a far larger estimated 62 percent of homes.

The Impacts of Rising Investor Ownership

If the investors acquiring residential properties were good landlords, this might be a positive trend. Instead, their extremely aggressive eviction tactics and poor maintenance erode family health and wellbeing.

Additionally, investors’ conversion of single-family homes to rentals has been a leading factor in the decline in Black homeownership in cities like Atlanta and has contributed to a rising racial wealth gap, which in 2024 increased to $240,120.

Investor firms in real estate achieve high profits through aggressive rent hiking, sometimes facilitated by monopolistic collusion through digital platforms. On the multifamily side, investor purchases are associated with a 30 percent increased probability of an eviction spike over a six-year period in the neighborhood relative to adjacent neighborhoods and heightened racialized displacement.

The financialization of housing and resulting increasingly distant relationships between landlords and tenants—along with declining opportunities for homeownership—and rising landlord monopoly power—have reduced the affordability of both owner-occupied and rental housing.

Declining affordability also reflects the absence of a robust social housing sector in the United States. Other developed nations treat housing as a basic need.

Private equity firms crow about their ability to raise rents to shareholders in earnings statements and attribute increased profits to their ability to charge tenants higher fees and penalties. At the same time, first-time homeowners find low- and moderately priced single-family homes increasingly out of reach. Meanwhile, tenants find their rent increasing every year—and are hit with unexpected hidden fees that increase their stated rent by hundreds of dollars a month.

Speculative investment is not the sole cause of declining affordability. The foreclosure crisis of 2008–2009 also disrupted construction finance. Residential construction has never fully recovered. Since the Great Recession, new construction has been 20 to 70 percent lower than the 2006 peak of 2.3 million units a year. After a decade of underbuilding, some experts estimate that we need nearly five million new units of housing in the United States.

Declining affordability also reflects the absence of a robust social housing sector in the United States. Other developed nations treat housing as a basic need, and limit housing commodification.

By contrast, the United States replaced the federal public housing program with a tax-credit subsidy to developers (Low-Income Housing Tax Credit) paired with a demand-side subsidy to renters (vouchers) a generation ago. While these federal programs help meet vital housing needs, they do little to limit speculation, and unlike socially owned housing, are time-limited.

This increase in the scale of investor housing ownership is paired with the excessive power that these landlords have both in acquiring housing and over tenants.

This power comes in several forms. In housing markets, institutional investors can outbid families for homes, wielding superior access to cheap debt and the ability to make quick offers with cash on hand. Once institutional investors own units, they extract profit, which can lead to predatory property management practices.

How We Got Here

Corporate investors and private equity have long owned housing, primarily in multifamily rentals. Investors emerged as a force in single-family homes following the Great Recession, when the glut of bank-owned homes paired with policies from the Department of the Treasury and the Federal Housing Finance Agency (FHFA) created this new asset class.

How did this happen? During the foreclosure crisis, some nonprofits sought to create programs in which nonprofits could have the first chance (“first look”) to acquire foreclosed homes at auction and reincorporate these homes into community land trust models, or other forms of permanently affordable housing.

However, the political will and funding for this model was weak. Instead, large banks and the government-sponsored enterprises of Fannie Mae and Freddie Mac turned to Wall Street to absorb the hundreds of thousands of vacant and foreclosed homes. This allowed the removal of these distressed loans from both government-sponsored enterprise and bank balance sheets, but at a high long-term social cost.

Two events in particular created conditions for investment ownership to grow: the 2014 creation of the first single-family rental securitization by Blackstone’s Invitation Homes and Deutsche Bank, and Fannie Mae’s 2017 stabilization of the market for single-family rentals with a $1 billion investment in this new asset class.

Subsequently, single-family rentals became financed through a variety of vehicles—private equity, single-family rental real estate funds, and REITs, among them. Large institutions also entered as short-term investors like Zillow or OpenDoor who broker sales or as flippers who purchase and renovate homes, often sell them to other large firms.

From 2021 onward, investors have purchased around 25 percent of all single-family homes every year.

Investor ownership in single-family rentals continues to grow. At the outset of the COVID-19 pandemic, investors expected that the recession would be an opportunity for fire-sale prices in single-family homes.

Federal pandemic-era policy prevented the pandemic from generating a foreclosure crisis. The low prices that investors had anticipated did not materialize. Nonetheless, institutional investors poured capital into housing markets, contributing to rising prices and outcompeting families for homes in cities across the nation.

In some cities, investors purchased more than half of all homes in the first two years of the pandemic. Prices skyrocketed at first, then stabilized in the third quarter of 2024, primarily in moderate-income starter homes and homes in Black communities and communities of color. From 2021 onward, investors have purchased around 25 percent of all single-family homes every year.

Although investor ownership constitutes just 3 percent of rental housing at present, its share is growing rapidly. It is also a flashpoint for anxiety of a hollowed-out middle class in US society.

How to Win

Tenant organizations have long fought the negative ramifications of investor ownership. During the Great Recession, organizers turned to foreclosure prevention, sometimes through established organizations like City Life/La Vida Urbana in Boston, or formed new groups, like Occupy Our Homes Atlanta.

They worked with homeowners facing foreclosure, studied investor purchasing tactics, documented the spatial concentration and aggressive eviction tactics of these firms, advised residents on the use of distressed mortgage repair and refinance programs, and blocked foreclosures through direct action.

Where they could not keep homeowners in their homes, they sought to use land banks, first look, and right-to-purchase tools to allow nonprofits, community development financial institutions, tenant organizations, and governments to buy homes to create permanently affordable housing.

Today, work on preserving existing affordable housing can be supported through critical mapping projects that document existing affordable housing, and by connecting mission-oriented housing organizations with financing and development opportunities to preserve homes and buildings. States and municipalities can support nonprofit and tenant organizations through first look programs, tenant opportunity to purchase (TOPA) programs, and supportive finance.

Supportive programs can be paired with corporate-buyer waiting periods and related measures. These policies may require creating a landlord licensing program or rental property registry to accurately determine the market share of corporate landlords. In some states, local legislation may be preempted by state law, and may require organizing a statewide initiative to enact these laws.

Once a city’s land assets are catalogued…assessed, and…reappraised, this public land can be used as an equity investment for city-owned social housing.

Another challenge is housing construction. Many city zoning codes are relics of a form of 20th-century urban planning that was frankly anti-urban. Zoning reform can support new construction in sustainable places where we need housing most.

However, construction alone will not solve the housing crisis. Cities, states, and organizers need to find ways to build more permanently affordable housing. At the same time, funding new construction, especially for families of modest means, can be challenging.

One way to accomplish this goal is by leveraging locally owned public land. Cities around the country have begun to identify land that is publicly available or institutionally owned. For example, Atlanta has identified 500 acres of publicly owned land; in New York City, the Furman Center identified millions of square feet of institutionally owned land, much of which is owned by faith-based organizations. Once a city’s land assets are catalogued, location and zoning assessed, and the land value reappraised, this public land can be used as an equity investment for city-owned social housing.

This approach of identifying municipal lands and using them as equity investments in social housing is distinct from an ill-advised program of the Trump administration to fully privatize federal lands. Instead of giving away public assets and natural resources to private interests, cities can turn vacant lots, parking lots, and underdeveloped parcels into sustainably located, permanently affordable housing.

When an equity investment in land is paired with a revolving fund to finance new construction, as seen in Atlanta, GA; Montgomery County, MD; and a January 2025 proposal by Governor Kathy Hochul in New York; this can become a self-sustaining model for permanently affordable housing, as demonstrated by existing models in Austria and other nations with high rates of social housing.

The structure of this social housing can vary. These models can use a community land trust model, in which residents can purchase units via long-term leases, and the organization is controlled by a tripartite board bringing together residents, local nonprofits, and government. Another model is the limited equity cooperative, where residents purchase shares and own the building cooperatively.

Cities themselves may retain an ownership stake in the building, contributing land as equity but retaining control and becoming long-term stakeholders. Cities may not need to raise taxes. Instead, by tapping city-owned land and the ability to issue subsidized finance through tax exemptions, cities can support new housing construction while keeping housing affordable over the long term.

Advocates also need to push for stronger tenant rights, particularly in Southern states. It is no accident that institutional investors have concentrated their purchases in cities like Dallas and Houston, TX; Atlanta, GA; and Charlotte, NC. These cities inherited the priority accorded to landlords over tenants from highly inequitable 20th-century “Jim Crow” sharecropping law, and have some of the highest eviction rates in the country.

Institutional investor landlords like this ability to evict tenants freely—and are profligate in using eviction to extract higher fee revenue from tenants. Rather than abandoning renters in Southern states to predatory landlords, reforming landlord-tenant laws in states where they are the weakest should be a movement priority.

Supporting housing movements, organizing tenants, and advocating for tenants’ rights are at the heart of any movement to counter landlords’ rising monopoly power. Other important work involves helping tenants, nonprofits, and cities identify existing housing to be preserved, or underutilized public land that could provide an equity investment in new social housing.

Project 2025 threatens to eviscerate federal government action on affordable housing. Already, the disruption to the US Department of Housing and Urban Development (HUD) budget and programs is alarming, with private equity executive Bill Pulte now heading the Federal Housing Finance Agency. Yet, at the same time, this year we see strong action to support affordable housing at the local level, with the City of Seattle raising $54 million through a new tax to support the construction of social housing.

Fifteen years ago, during the Great Recession, federal leaders unwisely trusted private equity firms and relied on investment markets to solve a housing crisis. In 2025, we rely on local communities and government capacities to tend to the public weal, to recover housing from the vicissitudes of market pricing, and to meet our housing needs.

Hope is a discipline, and we choose optimism. Effective tools at the state and local levels—from rezoning to public equity investment in social housing to the creation of state and local financial tools to support construction—light a path forward for housing justice in America.

Housing is a human right, and with coordination between local organizers and local governments, our communities can build the shelter we need.