Meanwhile, local officials in Cobb County and College Park said they’ve seen more developers enter into “build-to-let” deals in which they build an entire subdivision with an agreement to sell the homes to an investment company for rent.
“They’re crowding out those hoping to become homebuyers,” event moderator Bill Bolling said of the big investment groups.
But it’s not just potential buyers who should be worried. As investors buy more and more homes, these companies often use their market power to aggressively raise rents and tenant fees to bolster their profits, said Desiree Fields, an assistant professor at the University of California at Berkeley, which studies urban housing markets.
Things could get worse for individual buyers before they get better. To curb inflation, the National Federal Reserve Board raises interest rates, which makes it more expensive to take out a mortgage. This gives another advantage to deep-pocketed investors who can pay cash.
Investor activity is especially pronounced in suburban Atlanta. And African-American neighborhoods are targeted more than white neighborhoods, exacerbating existing racial gaps in homeownership.
In Cobb County, for example, 40% of home sales in the majority of black ZIP code 30106 in South Cobb were purchased by large investors, the highest in the county in 2021, according to a Washington Post map. Only 4% of home sales in the 30339 ZIP code, a largely white area that includes Vinings, have been purchased by investors.
Brian An, an assistant professor at Georgia Tech, found that the activity of large investors in a neighborhood was linked to a 3.5% drop in homeownership rates, but the link disappeared when looking at predominantly areas. white. In African-American neighborhoods, he found up to a 10% drop in homeownership rates.
At Wednesday’s meeting, local officials said they hoped to use their land-use and zoning powers to limit the spread of “build-to-let” development, but some feared their tools to do so would fail them. be removed.
State lawmakers have already blocked cities from establishing landlord registries, and a bill proposed this year, backed by real estate groups that favor unlimited property rights, would have barred city governments from using the powers of owners. land use and zoning to regulate rental properties.
Local politics also represent an obstacle to action.
Cobb President Lisa Cupid said parts of her county have become an easy target for investors because even discussing housing policy in Atlanta’s northwest suburbs has proven politically tense. This spring, large swathes of unincorporated Cobbs campaigned on local control of land use and opposition to Cupid’s support for affordable housing in unsuccessful bids to form three new towns.
“We’re falling victim to these tactics more and more because we’re just not ready to start addressing them,” Cupid said. But, she added, with the rejection of the three city-state movements at the polls in May, “it emboldens me to know that we can have conversations about difficult subjects without people thinking they have to secede. “.