Wall Street moves to the suburbs: assessing the effect of REIT ownership of single-family rental housing (SFR) on nearby house sales prices

Authors: Suzanne Charles*, Cornell University
Topics: Urban and Regional Planning
Keywords: single-family rental housing (SFR), financialization, real estate investment trusts (REITs)
Session Type: Virtual Paper
Day: 4/9/2021
Start / End Time: 1:30 PM / 2:45 PM
Room: Virtual 38
Presentation File: No File Uploaded

What began as an attempt to stabilize neighborhoods with high rates of foreclosures has resulted in the birth of a new real estate asset class—single-family rental housing (SFR)—and a new type of publically owned real estate investment firm specializing in the ownership of single-family rental housing known as a real estate investment trust (REIT). Continued acquisitions of single-family residential properties and a spate of corporate mergers have resulted in the consolidation of corporate SFR ownership into the control of a few firms; the three largest publicly traded SFR REITs own over 25,000 single-family detached houses in the 20-county Atlanta metropolitan area. Some housing advocates claim that SFR, particularly that owned by REITs, has negative effects on surrounding neighborhoods, yet these effects have not been empirically substantiated. This study uses a multilevel mixed effects model with crossed random effects to estimate the effect that REIT-owned SFR has on the sales prices of nearby single-family houses. The study uses a dataset of 232,047 single-family house sales that took place in the 20-county Atlanta metropolitan area from 2014 through 2018. Findings indicate that overall, increasing numbers of REIT-owned SFR within the viewshed of a single-family house are associated with decreases in sales prices, and those effects differ depending on the price of the house.

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