Abstract
The U.S. Congress authorized the creation of real estate investment trusts (REITs) in 1960 so companies could develop publically traded real estate investment portfolios. REITs focus on commercial property, retail property, and rental property. During the last decade, REITs became more active in regional housing markets across the U.S. Single-family rental (SFR) REITs have grown tremendously, buying up residential properties across the country. In some regional housing markets, SFR REITs own noticeable shares of single-family homes. In those settings, SFR REITs take large numbers of housing units off of real estate markets where homeownership transactions occur and manage these properties as part of commercial rental inventories. This has resulted in a new category of multiple property owners, composed of institutional investors as opposed to individual investors, which further exacerbates property wealth concentration and polarization. This study examines the socio–spatial distribution of properties in SFR REIT portfolios to determine if SFR REIT properties tend to cluster in distinct areas. This study will focus on the regional housing market in Nashville, TN. Nashville has one of the most active SFR REIT sectors in the country. County tax assessor records were used to identify SFR REIT properties. These data were joined with U.S. Census data to create a profile of communities. The data were analyzed using SPSS statistical software and GIS software. Our analysis suggests that neighborhoods with clusters of SFR REITs fit the SFR REIT business model. Clusters occur in communities with newer homes, residents with higher levels of educational attainment, and middle to upper-middle incomes. The paper concludes with several recommendations for future research on SFR REITs.
Highlights
These results suggest that single-family rental (SFR) real estate investment trusts (REITs) were more likely to appear in tracts where: there were fewer residents without a high school diploma, average household sizes were higher, median household incomes were higher, and poverty and unemployment rates were lower
These results suggest that SFR REITs were more likely to cluster in tracts: with smaller Latino populations, were there were fewer residents without a high school diploma, where household sizes were larger, where median household incomes were higher, and where poverty and unemployment rates were lower
An exception to this is found in Waldron’s analysis of Irish REITs, where he cautions that the financialization of housing markets adds to the cost burden of homebuyers and renters at the local level financialization of housing markets adds to the cost burden of homebuyers and renters at the local while siphoning off the profits from real estate speculation to global investors [11]
Summary
The Emergence of Real Estate Investment Trusts. Congress authorized the creation of real estate investment trusts (REITs) in 1960 so companies could develop publically traded real estate investment portfolios [1]. REITs have historically focused on commercial property, retail property, and rental property. REITs became more active in regional housing markets across the country [2,3,4,5]. Growth in single-family rental (SFR) REITS was initiated during the 2007–2009 housing crisis [2] when institutional investors began acquiring foreclosed properties and converting them from owner-occupied units to rentals. The conversion of owner-occupied housing into rental property held in portfolios of institutional investors grew out Societies 2018, 8, 93; doi:10.3390/soc8040093 www.mdpi.com/journal/societies
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