What Percentage of Homes Are Owned by Corporations?

Corporate ownership in the single-family housing market has garnered increasing public attention in recent years. Many individuals are seeking to understand the extent to which investment firms and other corporate entities are acquiring homes, and what implications this trend holds for the broader housing landscape.

Understanding Corporate Ownership in Housing

The percentage of single-family homes owned by corporations varies depending on how “corporate” or “institutional” ownership is defined. Large institutional investors, such as Real Estate Investment Trusts (REITs) and private equity firms, own a relatively small but growing share of the total U.S. single-family housing stock. For instance, institutional operators owning at least 1,000 homes held approximately 0.73% of the total U.S. single-family housing stock as of late 2023. However, when focusing specifically on the single-family rental market, the share held by these large institutional players is more pronounced, estimated to be around 2% to 4% of the total single-family rental housing stock nationwide.

These “corporate” entities encompass a range of investors, from publicly traded REITs like Invitation Homes and AMH (American Homes 4 Rent), which manage tens of thousands of properties, to private equity firms and other large-scale investment vehicles. In contrast, smaller, local investor groups or limited liability companies (LLCs) also contribute significantly to investor-owned properties, often owning fewer than ten homes, and collectively represent the vast majority of single-family rental ownership, accounting for approximately 80% of the market.

The types of single-family homes often targeted by these larger entities are entry-level or mid-priced properties, particularly in specific geographic regions. Investors accounted for nearly 30% of all purchases in the least expensive tier of homes in the first quarter of 2024. This acquisition activity is often concentrated in fast-growing areas, especially in Sunbelt states like Florida, Georgia, Arizona, Texas, and the Carolinas, where rental demand and population growth are robust.

Drivers Behind Corporate Acquisitions

A primary motivation for corporations acquiring single-family homes is stable rental income. Beyond immediate income, these entities also anticipate property value appreciation, contributing to long-term capital gains. Such investments diversify large investment portfolios, offering an alternative asset class to traditional stocks and bonds.

Corporations benefit significantly from economies of scale in property management and maintenance. By owning hundreds or thousands of homes in a concentrated geographic area, they can streamline operations, negotiate better rates with contractors, and efficiently manage tenant services. The historical period of low interest rates also provided favorable financing conditions, making large-scale acquisitions more financially viable for these firms. Access to substantial capital, including the ability to make all-cash offers, grants them a competitive edge over individual buyers.

The fragmented nature of the single-family home market, traditionally dominated by individual owners and small landlords, has presented opportunities for consolidation. Following the 2007-2009 financial crisis, institutional investors capitalized on a glut of foreclosed properties, purchasing them in bulk at discounted prices. This initial surge established the foundation for their current market presence, as they converted these acquired properties into rental assets.

Market Dynamics and Corporate Holdings

The purchasing behavior of corporate investors can significantly influence housing inventory in specific areas. By acquiring a substantial number of homes, particularly in targeted neighborhoods, these entities can reduce the supply of properties available for individual homebuyers. This dynamic can intensify competition for homes, especially in markets where supply is already constrained.

Corporate demand can also exert upward pressure on home prices. Their ability to make cash offers and expedite closing processes gives them an advantage in competitive bidding situations, often outpacing individual buyers who rely on mortgage financing. This can lead to higher sale prices, affecting overall market affordability.

The growing presence of corporate owners has implications for the rental market as well. It has led to an increased supply of professionally managed rental properties, which can offer tenants a more standardized experience, including centralized maintenance and online portals for payments. However, this trend can also lead to shifts in rental pricing strategies, with some corporate landlords implementing additional mandatory fees on top of base rent, such as those for smart home technology or utility billing management. In some areas, studies indicate that large-scale corporate investors may contribute to increasing rents.

Corporate holdings are not evenly distributed across the United States. These investors tend to concentrate their acquisitions in markets characterized by strong job growth, favorable demographics, and robust rental demand. As a result, cities in the Sunbelt, such as Atlanta, Charlotte, Phoenix, Jacksonville, and Tampa, have seen a higher concentration of corporate ownership in their single-family housing markets.

Evolving Landscape of Corporate Investment

Corporate investment in single-family homes continues to adapt to changing economic conditions and market realities. Recent shifts, such as rising interest rates, have led to a moderation or slowdown in corporate buying activity compared to the peak acquisition periods. This adjustment reflects a sensitivity to financing costs, which directly impact the profitability of their investment models.

These corporate investors demonstrate adaptability in their strategies. Some firms have shifted from primarily acquiring existing homes to engaging in “build-to-rent” initiatives, constructing new communities specifically designed for rental purposes. This approach allows them to control the supply chain and design properties optimized for rental operations. Other adaptations include selling off properties with lower capitalization rates to repay debt or fund new, more profitable acquisitions.

The industry also increasingly leverages sophisticated data analytics and technology. These tools enable firms to precisely identify target markets, assess property values, forecast rental demand, and efficiently manage large portfolios of homes. This technological integration enhances their operational efficiency and strategic decision-making.