Investor-owned housing spotlighted in Cobb affordability talks

Sep. 28—MARIETTA — It's hardly news that housing has become a dear commodity in Cobb County.

The innovation these days is the slow creep of investors buying up houses across metro Atlanta (and the nation), and renting them to aspiring homeowners — a new "build for rent" model.

Mike Carnathan, the Atlanta Regional Commission's data expert, told the Cobb Board of Commissioners at an affordable housing discussion Tuesday that investor-owned houses make up a relatively small portion of the market.

The meeting was called by Chairwoman Lisa Cupid, who organized an "attainable housing task force" earlier this year to examine problems around housing shortages and rising prices. Cupid said she would provide the membership of the task force to the MDJ, but it was not available before press time.

The "big six" firms — who collectively hold about a quarter of investor-owned houses — own about 2.5% of the homes in Cobb. Those firms are Invitation Homes, First Key Homes, American Homes 4 Rent, Progress Residential, MainStreet Renewal, and Tricon Residential, each owning 5,000 or more parcels each.

In some neighboring counties, that rate's as high as 6% (Douglas) or approaching 7% (Paulding). And the total number of business-owned homes in Cobb is closer to 8%.

Other analyses have come back with more eye-popping figures. Georgia Tech professor Elora Raymond found nearly one-fifth of all single-family homes purchased in Atlanta were bought by corporate investors last summer.

But Carnathan said tracking the full scope of the trend isn't easily done. Privately owned firms can set up endless cut-out companies, without disclosing them, which effectively disguise who owns what.

"All these companies, whether they're private equity or publicly traded, they'll have literally 100 to 200 different names," he told the MDJ. "Invitation Homes, for example — if you look at the deed records, there'll be Invitation Homes, there'll be IH1, or IH2, IH6."

While the purchases generate income for the firms, the rents generated by the homes are a valuable investment vehicle.

Courtney Knight, an investment banker and member of the Development Authority of Cobb County, said finance firms will package rents as investment products much like the infamous mortgage-backed securities at the center of the 2008 financial crisis.

"They're buying up homes, renting those homes, and then packaging up the rental income into securities. And because of that, you've got a very low likelihood that those homes will ever come back on the for sale market," Knight said.

The ARC found the "big six" are concentrating their purchases in a 'U' shape around metro Atlanta, focused on middle-income neighborhoods with growing numbers of Black residents. Many of those residents are on the cusp of being able to afford buying a home.

"It's concerning because ... you have all these private equity firms coming in and buying up homeownership opportunities, and putting them for rentals. They're putting them in neighborhoods where the residents could actually benefit from having that stock in homeownership," Carnathan added.

Commissioner Monique Sheffield said she visited a development in Gwinnett County this year where every home was to be rented, not sold, with rents around $2,800 per month. Though mortgages have skyrocketed in Cobb as of late, the average payment is still about $1,700.

"(The developer's) argument was that, well, people can't afford a down payment. My position is naturally, there are other arrangements that can be made to save for the down payment. Because at least you'll have in your crosshairs an opportunity to purchase a home," Sheffield said.