A recent article in the New York Times entitled, “What Happens When Wall Street Buys Most of the Homes on Your Block,” ignores the role of housing supply and its impact on homeownership, makes the startling claim that more investment in housing is somehow not a positive, and presents a view of homeownership that is almost completely at odds with the reality of today’s housing market.
In North Carolina, and many other states across the country, the primary challenge facing the housing market is simple: supply. The supply of housing in the U.S. has not kept pace with demand – for years. As a result, America faces a housing deficit of between four and six million homes. This issue was highlighted just last week in a hearing of the U.S. Senate Banking Committee’s housing subcommittee where Brookings’ senior fellow, Jenny Schuetz testified, “The past decade has seen increasingly tight housing markets due to strong demand and limited supply. Since the Great Recession, the U.S. has not built enough housing to keep pace with demand created by job and population growth, leading to historically low vacancy rates and rapidly rising costs.”
As it relates to North Carolina, a recent study of housing supply conditions by the BiPartisan Policy Center reveals the extent of the problem: over the past decade, the statewide population has increased by nearly 1,040,000 residents, while the housing stock has grown by only about 480,000 homes. Further, BPC’s research shows the number of single-family home building permits issued in North Carolina over the last decade was almost 40% below the number issued in the prior decade.
The simple fact is, America – and virtually every market across the country – needs more housing of all kinds to support families no matter where they are in life. Every person, no matter their income, background, or profession, deserves access to quality neighborhoods, and single-family rental homes provide access to the kinds of housing many Americans need.
However, the New York Times article ignores this fact and repeatedly cites the role of single-family rental home providers as a factor negatively impacting homeownership in the Charlotte area. Yet, the article fails to point out that homeownership rates in the city of Charlotte and Mecklenburg County are higher today than they were five years ago, according to U.S. Census Bureau data comparing second quarter 2023 rates with those for the second quarter of 2018. For Mecklenburg County, Federal Reserve data show a homeownership rate of 60.0% for the second quarter of 2021 (the latest date for which data is available), and 58.6% for the corresponding quarter in 2018. More broadly, homeownership rates for all six of North Carolina’s largest counties are higher today than they were in 2016.
In terms of first-time homebuyers, Axios reported recently on the results of a LendingTree survey showing the Charlotte metro area having the seventh highest level of Gen Z mortgage applications in the entire country.
To the article’s claims concerning Black and Hispanic homeownership, an Urban Institute analysis of the top 20 MSAs in the U.S. – including Charlotte – published this spring, concluded, “institutional single-family operators” are not disproportionately concentrated in nonwhite areas.
In an environment where rising interest rates have pushed homeownership out of reach for many, single-family rental homes offer an option that may be more in line with the economic realities and lifestyle preferences of families who have determined leasing a home makes the most sense, at a given point in time. Data from housing industry research firm, John Burns Research & Consulting, has shown leasing a single-family home is now $1,000/month less expensive than owning, a point brought further to light this week when Redfin reported median monthly mortgage payments are now at an all-time high. In many cases, leasing a home may allow families to continue saving for a down payment, paying off debt, and taking further steps to prepare for homeownership.
The article also neglects to include several other significant points. For starters, large providers of single-family rental homes own just 0.4% of the housing in America, and of all the rental housing in the U.S., large providers own just about one percent. In the Charlotte MSA, the percentage of the housing market owned by large providers is slightly higher than the national average, but at just 2%, is a far cry from the article’s exaggerated claims about the outsized role of large single-family rental home providers. Though the article would have readers believe otherwise, data from the National Rental Home Council reveals the share of the single-family housing market accounted for by rental homes has actually fallen nationwide by 1.4% over the last decade. And in Charlotte, the share of the single-family housing market accounted for by rental homes has fallen from 20% to 17% between 2016 and today.
The article also points to the use of “all cash” offers by large rental housing providers, without also mentioning the growing use of “all cash” offers among all homebuyers, not just rental home providers, as covered in a recent Redfin report showing one-third of all home purchases are all-cash.
Finally, in portraying housing “investors” as some kind of ever-present force in the housing market, the article fails to include the widely-reported fact that investor purchases have fallen by unprecedented amounts over the past year. Redfin data show investor home purchases falling nationally more than 45% in each of the past three quarters. In the first quarter of 2023, in fact, investor purchases fell almost 50%, the largest decline on record. And in Charlotte, declines of 61%, 66%, and 62% over the three most recent quarters are notably steeper.
At the National Rental Home Council, members are working diligently to address the supply challenges confronting today’s housing market. Over the past year, our members have invested over $2 billion in home upgrades, renovations, and rehabilitations. All five of NRHC’s largest member companies maintain A+ ratings by the better business bureau. As an organization and an industry, improving the resident experience is our highest priority, and that won’t change. We will continue to invest in communities and neighborhoods, and we will continue to enhance and expand the diversity of housing opportunities available for families considering the advantages of leasing a single-family home.
The bottom line is this: whether in Charlotte or across the U.S., working families deserve access to great homes in great neighborhoods. No matter where Americans are in life, they should have options to meet their individual circumstances. This is what the New York Times article’s flawed analyses of the single-family residential market misses — housing is a continuum, and single-family rental opportunities occupy an important place in that continuum. They are a solution to many families’ financial challenges, and often unlock opportunity – access to quality schools in quality neighborhoods – for those who need it.
Housing, put simply, should not be viewed as zero sum. We need more supply, of all types, to help ensure we meet the needs of today – and tomorrow.
And single-family rental homes are an important component for working families in any housing market.