Suburbia is standing up to Wall Street investors who are scooping up houses, 'bullying people out with cash offers,' and making the neighborhood 'shabbier'

• Suburban homeowner associations are blocking big investors from buying up their neighborhoods.
• They say that the investors don't maintain their properties, and keep families from buying homes.

Homeowners are banding together against a common enemy: Investors.

That's according to a recent article by The Wall Street Journal's Will Parker and Nicole Friedman, who reported that groups of neighborhood volunteers are thwarting companies looking to buy single-family homes, using their power as homeowner associations to regulate how homes are used.

Some of these HOAs believe that rental investors buying homes in their neighborhoods has made it difficult for local families to buy, the groups told the Wall Street Journal, and led to a decline in home maintenance, which has made their neighborhoods less desirable.

To combat these purchases, homeowners will often place caps on the number of homes that can be rented in a particular neighborhood, or require that potential tenants be vetted by an association board. Both tactics stymie the attempts of large landlords to rent the spaces.

"They're coming in, and they're basically bullying people out with cash offers," Chase Berrier, president of the Whitehall Village Master Homeowners Association in North Carolina, told The Wall Street Journal. He said that some of the homes in the subdivision owned by investors in his Walkertown neighborhood now look shabbier, and that their owners are difficult to contact to resolve problems.

Corporate landlords have been overtaking US suburbs in recent years, pricing out many first-time homebuyers — who are usually younger — and fueling the difficulties Gen Z and millennials have had seeking homeownership. According to one recent analysis, investors bought a third of all US homes for sale in January, the highest portion in at least a decade. And some analyses show that these companies are mainly overtaking communities of color.

The strategies adopted by suburban homeowner associations for single-family homes are already common in apartment communities in metropolitan areas like New York City's, in a way that can often be exclusionary to Black and brown homebuyers. Suburban neighborhoods adopting these strategies to keep out powerful investors is not only novel, as the Wall Street Journal reported — it's flipping the playbook.

Investors have been purchasing up a storm — and keeping potential homebuyers out

As investors flock to the real estate market, they're pricing out locals and disrupting housing ecosystems.

In 2021, investors purchased a record $64 billion worth of homes — the most in at least two decades, according to Redfin. As they looked to cash in on growing housing and rental prices, investors bought a record 18.2% of the US homes purchased during the third quarter of 2021, up from 11.2% in 2020.

"Increasing home prices fueled by an intense housing shortage have created opportunities for investors to reap big profits," Sheharyar Bokhari, Redfin senior economist, said in a housing study. "Those same factors have pushed more Americans to rent, which also creates opportunities for investors because investors typically turn the homes they purchase into rentals and can now charge higher rents."

According to Redfin, average monthly rents rose 10.7% year over year in September, representing the fastest growth in at least two years. For homeowners, the median home sale price increased 13.9%, pushing housing affordability further out of reach for prospective buyers.

"With cash-rich investors taking the housing market by storm, many individual homebuyers have found it tough to compete," Bokhari said.

For many Americans, the increase in housing costs has been devastating. Millions of homebuyers have been priced out of the market since the start of the year, and renters have been forced to decide whether or not to move or pay increases as much as 40%.

In Atlanta, which Redfin says has the highest market share of investors, rents have increased as much as 30% while home prices have risen nearly 25% year over year. With more than 32% of home purchases belonging to investors, developer activity has contributed to housing affordability plummeting in the Big Peach.

"At some point, there's not going to be anywhere for people to go," Courtney Anderson, a law professor at Georgia State University, told the Atlanta Journal-Constitution.

Anderson's fear is shared by many Americans. As investors overcrowd neighborhoods across the country, local organizations are gathering to protect their communities and keep residents from displacement. Whether or not they stand a chance against big investment firms has yet to be seen – but their calls have been heard.