FTC seeks feedback on the largest investors in single-family homes
In a 5-0 vote, the committee authorized publication of a notice in the Federal Register seeking comment on potential 6(b) orders. These orders would target more than thirty of the largest investors in U.S. single-family homes—those who own more than 1,000 SFR properties—and force them to report information about their “corporate structure, current and historical housing information, rental and fee income,” as well as strategic business plans and other information for investors,” the FTC explained in an announcement.
The FTC plans to use this feedback, including the entities that may qualify as mega-investors, to craft a comprehensive investigation. This survey would include a list of SFR properties associated with their owner.
“As Americans face a housing shortage and rising rents, it is critical to understand the role that large institutional investors play,” FTC Chair Lina M. Khan said in a statement. “This proposed study would shed much-needed light on the mega-investors who have amassed vast portfolios of single-family rental properties and may have contributed to the housing problems facing Americans.”
“The rise of mega-corporate landlords has deeply troubling consequences for renters,” said Hannah Garden-Monheit, director of the FTC’s Office of Policy Planning. “The FTC is committed to uncovering the extent of these major companies’ assets and their effects on housing costs.”
The public has 60 days to submit online comments before the FTC reviews them and begins working on any 6(b) orders.
A report issued in May 2024 by the Office of Government Accountability (GAO) has found that institutional investors such as Blackstone Group And Invitation Houses may have contributed to rising house prices since 2009, but it is more difficult to assess whether they have hindered homeownership opportunities.
The GAO said the studies it reviewed did not identify any investors who owned at least 1,000 SFRs at the end of 2011. However, in 2015, these companies collectively owned 170,000 to 300,000 homes nationwide.
KernLogic economist Thomas Malone reported last month that “institutional investors are not the biggest players in the housing market.” Company data for the third quarter of 2024 showed that homebuying activity among all investors grew just 2% from the previous quarter and that the vast majority of investors are small landlords who own ten or fewer homes.
In some of the nation’s largest metropolitan areas – including Atlanta, Los Angeles, Las Vegas and St. Louis – investors’ share of home sales exceeded 30% in the third quarter of 2024. But mega-investors were only responsible for a small part of this activity.
“All signs indicate that investor share will continue to represent approximately 25% of total sales for the foreseeable future as mortgage rates and home prices remain elevated,” wrote Malone.
HousingWire Lead analyst Logan Mohtashami also debunked the persistent claim that institutional investors account for more than 40% of all U.S. home sales. Data from John Burns Research and advice showed that their market share peaked at less than 5% after the COVID-19 crisis and has since fallen below 2%.
Rising rents have been the target of some high-profile politicians lately. During her presidential campaign, Kamala Harris said she planned to “tackle price gouging and drive down costs” by, among other things, restricting “unfair rent increases.”
Around the same time, President Joe Biden made the call Congress to limit annual rent increases to 5% for two years for anyone managing 50 or more rental units. Those who didn’t comply with the cap would have been denied federal tax benefits.
Senate Democrats, led by Amy Klobuchar of Minnesota and Sherrod Brown of Ohio, introduced the Housing Acquisitions Review and Transparency (HART) Act in July 2024. The bill would require large home buyers to disclose their purchases to the FTC and the Department of Justice for review. potentially putting an end to “anticompetitive transactions that could increase rents, reduce services and push homebuyers out of the market.”
The HART Act did not progress beyond the committee stage during the previous congressional session. And the likelihood of significant action against business owners appears less likely now that the Biden administration will give way to the second Trump administration next week. Khan will be replaced as chairman of the FTC at that time by one of the current commissioners, Andrew Ferguson, who does not require Senate confirmation.
