New homeownership patterns emerge in large investor portfolios

In this analysis, we examine institutional investors of single-family homes with holdings between 100 and 500 properties, which we refer to as large investors. This work builds on MARC’s previous research on investor ownership in the region’s rental housing market. Previously, we examined mega-investor holdings, or owners with 500 properties or more. 

This report finds most large investors are out-of-state owners. Many are equity and property investment firms. On average, the geographic concentration of these owners’ properties is in communities of color, areas with lower household incomes, lower median housing values and homes built earlier than those held by landlords with fewer than 10 properties or more than 500 properties.

Implications of Large Investor Ownership Patterns

Aging housing stock creates challenges for both property owners and tenants. Maintenance and upkeep are more frequent and costly, and the stakes are higher in ensuring both the health of tenants and neighborhood stability. Research demonstrates bulk ownership can contribute to a decline in housing stock in particular in areas with older housing, lower household incomes and longer histories of disinvestment and segregation (Sisson 2023).

There are 27 companies holding 5,606 single-family rentals in the region categorized as large investors (100-500). Nearly 75% of these companies are located out of state and most are operating in other regions throughout the U.S. Only one local company owns more than 200 properties. The other six local operators hold no more than 180 properties each. 

Across the large investor category, most companies’ holdings are illustrative of business strategies focused on housing at particular price points and properties located in urban or suburban areas. Unlike mega investors, whose holdings are concentrated in the region’s suburbs, some large investors are concentrating within the urban core, older neighborhoods and older communities. These patterns are evident in the portfolios of both out-of-state and local investors. Though some companies have holdings in both suburban and urban areas, investments are typically concentrated in one area or the other.

On average, large investor holdings are more concentrated in communities of color than any other investor-ownership category. In these areas, median household income is lower, education levels are lower and tract-level vacancy is higher than the mega-investor category while mirroring the averages for smaller investors. 

Overall, 40% of companies in the large investor category have concentrated holdings in the urban core in Kansas City, Missouri. These areas have seen decades-long patterns of disinvestment and segregation within the region. Concentrated investment in these areas is primarily from out-of-state investors who account for eight of the 11 companies concentrated in urban areas. For the remaining 16 companies, suburban investment is the dominant practice, with heavy investment throughout eastern Clay, Johnson, Wyandotte and eastern Jackson counties. 

Six companies account for 45% of all single-family rental properties held by large investors. All these companies are located out of state. Half operate as equity or real estate investment firms. The other half operate as investment and property management companies. 

The seven locally based large investors own between 100 and 225 properties. Five of the seven companies have holdings concentrated in the region’s suburbs. Only two have concentrated holdings in the urban cores in Kansas City, Missouri, and Kansas City, Kansas.  

Over 20% of the region’s single-family rental market is held by owners with 10 or more properties. The largest investors in the region, those with over 100 properties, control over 44% of single-family homes held by bulk owners. As prior research has shown, the combination of bulk ownership, aging housing stock and low incomes creates a myriad of challenges for tenants, neighborhoods and local governments. Creating vibrant and equitable neighborhoods requires attention not only to housing access and affordability but also to the social determinants that contribute to safe and adequate housing and access to opportunity. MARC’s next data story will examine the intersection of investor ownership, and environmental and economic inequality in the region.

Citations
Sisson, P (2023) The Other Housing Crisis: Too many sick, aging homes. Bloomberg. Nov. 27. Accessed Jan. 22, 2024 https://www.bloomberg.com/news/features/2023-11-27/america-s-aging-housing-stock-takes-toll-on-public-health