The Charlotte suburbs are becoming lucrative revenue streams for corporate investors with the cash to buy up single-family homes and turn them into rental properties, adding another layer of competition to an already stressed housing market that’s seeing low inventory and high demand.
According to data obtained by Mecklenburg County staff, corporations owned an estimated 13,600 single-family homes in Mecklenburg as of summer 2021, concentrated within six companies, with the majority of their portfolios located in west, north and east Charlotte. That’s just over 5% of the county’s total supply of single-family homes.
What’s more, these corporate investors gobbled up nearly a third of homes sold during the fourth quarter of 2021 for an average sale price of $305,000, often in cash offers.
Mecklenburg County has been looking into the issue since January, when staff shared information on the prevalence of corporate-owned rentals during the Mecklenburg Board of County Commissioners (BOCC) annual retreat.
On April 12, county staff presented further research and findings during a BOCC public policy meeting. Commissioners also heard from a panel that included Charis Blackmon, executive director of West Side Community Land Trust; Ely Portillo, assistant director of outreach and strategic partnerships at UNC Charlotte Urban Institute; Yongqiang Chu, director of Childress Klein Center for Real Estate at UNC Charlotte Belk College of Business; and attorney Tim Sellers from Sellers, Ayers, Dortch & Lyons.
Pros and cons of corporate home ownership
Monica Allen, Mecklenburg County’s director of strategic planning and evaluation, told commissioners on April 12 that her team looked into advantages and disadvantages of institutional home buyers and found that corporate rental companies may increase the inventory of single-family rental homes for those who cannot afford to buy.
That may bring down neighborhood segregation and allow families to move to higher-performing school districts.
On the flip side, Allen said, increased competition and rising home prices tend to push first-time and lower-income buyers out of the market, preventing them from building generational wealth. This often disproportionately impacts communities of color and the ability of low- and moderate-income neighborhoods to preserve affordable housing, Allen said.
Blackmon echoed those concerns, calling corporate-owned rental investments “another speculative practice.”
West Side Community Land Trust is a resident-led nonprofit focused on creating permanently affordable housing with community-centered development in west Charlotte and beyond. Blackmon said corporate-owned rentals make home-ownership less accessible and causes residents “to be pushed out of the communities they’ve known and called home for so long.”
“Although it is niche in how it shows up with an exorbitant amount of spending power, it has the same effects on our communities as gentrification and other conventional speculative practices,” she said.
Chu offered BOCC an opposite perspective by saying he hasn’t seen any hard evidence that corporate buyers have a negative impact on the housing market. Instead, he lauded investors for their positive role in stabilizing the housing market after the 2007-2009 recession.
“If you want to do something now, next time I’m not sure who’s going to be stepping up to help stabilize the housing market,” Chu said. “That will be a big unintended consequence of whatever policies we might implement.”
Chu’s comments raised a few concerns from city leaders on social media.
“I listened to the head of a local real estate institute make a claim to [BOCC] that institutional landlords entering the market stabilized the housing market post-2008. This is a ridiculous position,” Charlotte City Council member Braxton Winston tweeted after the meeting, following that up with a series of tweets debunking Chu’s claims.
Winston ended his Twitter thread by stating, “Charlotte, we are in more trouble than I thought when I woke up this morning.”
Allen said there are legal limitations to what Mecklenburg County can actually do to combat corporate landlords.
Aside from expanding affordable housing programs and need-based rental assistance, Allen said the county could add actions for de-incentivizing corporate landlord home ownership to the legislative agenda, but that could upset investors and drive investment out of the area.
The county could also engage homeowners’ associations to update bylaws to cap single-family rental properties in communities, but that may disproportionately benefit wealthier communities that have HOA’s to legally engage in NIMBYism, an acronym meaning “Not In My Backyard” that’s used to refer to people who do not want affordable housing or high-density developments built near their homes.
Several commissioners shared that they’ve heard from constituents in their districts who have either been contacted by investors or are seeing their neighborhoods change due to corporate buyout.
“I’m sitting here burning up as I sit here and know the issues of what we’re facing today is in my district,” said Commissioner Vilma Leake. “Every time I talk to people on the phone somebody has called to get their land so they can build in their community — the community that happens to be Black and poor.”
Commissioner Mark Jerrell said corporate investors are not doing anything illegal by buying up single-family homes and turning them into rentals, “but it’s not ethical.”
He referenced a map showing the majority of corporate-owned homes are located in west, north and east Charlotte, calling it “disgusting.” He said the prevalence of corporate landlords in Mecklenburg County is a racial justice, social justice issue and civil rights issue.
“This is taking advantage of our most vulnerable, the most marginalized, in our community,” Jerrell said. “There’s a disconnect with what the data is saying and what we’re hearing from our constituents and we’re going to have to make a decision to be on one side or the other.”
Mecklenburg County Manager Dena Diorio said county staff will conduct more research on possible mechanisms of controlling corporate influence on the housing market and bring them to the commission at a later date.