Investor Purchases of Rental Housing and Gentrification in Atlanta
Sept 15, 2022
Sept 15, 2022
Article: “Gentrifying Atlanta: Investor Purchases of Rental Housing, Evictions, and the Displacement of Black Residents”
Authors: Elora Lee Raymond, Ben Miller, Michaela McKinney and Jonathan Braun
Date of Publication: 4 February 2021
DOI: https://doi.org/10.1080/10511482.2021.1887318
Authors: Elora Lee Raymond, Ben Miller, Michaela McKinney and Jonathan Braun
Date of Publication: 4 February 2021
DOI: https://doi.org/10.1080/10511482.2021.1887318
Investor Purchases of Rental Housing, Evictions, and the Displacement of Black Residents In Atlanta, Georgia
Are investor purchases of rental properties linked to evictions, gentrification, and the displacement of Black residents? A new analysis of rental investment activity in metro Atlanta, Georgia by Elora Lee Raymond, Ben Miller, Michaela McKinney and Jonathan Braun reveals exactly this. Over a 6-year period, neighborhoods in Atlanta where investors purchased apartment buildings saw a 33% increase in the likelihood of an eviction spike. Over a 6-year period, these neighborhoods lost 166 Black residents, and gained 109 White residents, compared to adjacent neighborhoods without such purchases.
A Background on Evictions and Gentrification in Atlanta
While Atlanta has been a majority Black city since the civil rights era, from 2000 to 2010 there was an 11.3% decline in the Black population. Meanwhile, the White population increased by 16.5%. Research has linked this racial transition to the subprime lending and foreclosure crisis of 2008 (Immergluck, 2011). In the 2010s, large increases in renter cost burdens and a 16% decrease in the number of affordable rentals in the Atlanta region increased the departure of low income residents, many of them Black.
Existing literature suggests that corporate investment has played an important role in the displacement of Black residents and communities from the city of Atlanta. Increased corporate investment in single-family rentals has been tied to extremely high eviction rates in this category, with a disproportionate impact on historically Black neighborhoods (Raymond, Duckworth, Miller, Lucas, and Pokharel 2018). Other research has linked apartment sales in greater Atlanta to increased eviction rates for the three years following a sale (Immergluck, Ernsthausen, Earl, and Powell 2020).
Still, the exact nature of the relationship between private rental investments, eviction-driven displacement, and racial transition has remained unclear. In “Gentrifying Atlanta: Investor Purchases of Rental Housing, Evictions, and the Displacement of Black Residents”, the authors bring new clarity to this question.
Methods
In conducting this research, the authors aimed to explore two questions:
To answer these questions, the authors used data from US Census Bureau’s American Community Survey (ACS), eviction data from Princeton’s Eviction Lab, and resale deeds transactions from CoreLogic that specify whether a property was purchased for investment purposes.
First, the authors conducted a series of logistic regression models with 8,789 observations to estimate the relationship between investor purchases of multifamily properties and spikes in foreclosures, evictions judgments, and eviction filings (which was the most common measurement of displacement in past research) at the block-group level (i.e. a spatially-defined subset of a census tract) between 2000 and 2016. The authors defined a “spike” in evictions as a year in which eviction judgments or filings were at least 25% higher than the block-group average between 2000 and 2016. The researchers used fixed effects to control for differences between neighborhoods that do not change over time, and included measures for population and the foreclosure rate in a neighborhood, two relevant factors which did change during the study period.
Turning to the question of racial transition, the authors conducted a difference-in-differences analysis, comparing neighborhoods [1] where investors purchased apartment buildings with neighboring areas (in the same census tract, i.e. location and socioeconomic range) where they did not. The authors compared changes in the Black and White population. This analysis was made by combining the data on real estate transactions, and racial demographics within the three time periods of 2004, 2010, 2016. The authors included controls for both population size and the foreclosure crisis as these factors would affect both the number of residents in a neighborhood and their movement from each neighborhood.
Finally, the researchers conducted a cluster analysis to generate a classification system of neighborhood change between 2009 and 2018 in Fulton County. The four cluster variables were changes in the number of affordable rental units (defined as having a rent of $1,000 or less, or 30% of Average Median Income), the number of residents with bachelor’s degrees, the number of Black residents, and the overall number of households.
Findings and Conclusions
In terms of baseline statistics, researchers found an increase in both evictions and rent prices in the study area. Evictions rose during early years of the housing crisis and briefly fell during the recovery period, but overall doubled in Fulton County from 4,406 to 10,753. Similarly, apartment prices collapsed during the crisis, and then rose continuously after that, now selling for 5.5 million more in 2018 than in 2005. Researchers also mapped both investor-ownership (such as Bear Stearns, JP Morgan, and Deutsche Bank) and eviction in Atlanta, showing that while evictions were concentrated along the north-south spine of Fulton County, investor purchases were more scattered.
For the test analyzing the relationship between investor purchases and displacement, the results showed that investor purchases of apartment buildings were significantly associated with a 33% increase in the likelihood of a spike in eviction judgments, in which a landlord secures the legal right to remove a tenant. The odds were even higher in the case of investor purchases of garden-style apartments and mid-rise apartments, which tend to be older and therefore cheaper, thus falling into the category of naturally occurring affordable housing. Meanwhile, there was no relationship between investor purchases and spikes in eviction filings [2], which have a looser connection with physical displacement, nor was there any association between non-investor purchases and eviction spikes.
For the test analyzing the relationship between investor purchases and changing racial demographics, researchers found that investor multifamily purchases resulted in 166 fewer Black residents and 109 additional White residents in a neighborhood compared with adjacent neighborhoods that did not have an investor purchase of an apartment. These changes were significant and large, considering that the average block group in the sample had only 1,635 residents.
The cluster groupings had interesting findings as well, with four distinct clusters emerging:
These patterns of neighborhood change are not consistent with the stark North-South divide in race and income segregation in metropolitan Atlanta. Instead, they show that racial displacement is happening at a granular scale in a wide range of neighborhoods, often occurring on the local level due to events such as apartment purchases.
These findings have important implications for policy. They point to the need to include corporate investment in residential real estate in local early warning systems for gentrification and displacement, which could better allow for timely and targeted interventions.
About The Authors
Elora Lee Raymond is an assistant professor in the School of City and Regional Planning at Georgia Institute of Technology.
Ben Miller is a senior lecturer in the English Department and the Department of Quantitative Theory and Methods at Emory University.
Michaela McKinney is a graduate of the MCRP program in the School of City and Regional Planning at Georgia Institute of Technology.
Jonathan Braun is a graduate of the MCRP program in the School of City and Regional Planning at Georgia Institute of Technology.
Works Cited:
Immergluck, D. (2011). Foreclosed: High-risk lending, deregulation, and the undermining of America’s mortgage market.
Ithaca, NY: Cornell University Press.
Immergluck, D., Ernsthausen, J., Earl, S., & Powell, A. (2020). Evictions, large owners, and serial filings: Findings from
Atlanta. Housing Studies, 35(5), 903–924.
Raymond, E. L., Duckworth, R., Miller, B., Lucas, M., & Pokharel, S. (2018). From foreclosure to eviction: Housing insecurity
in corporate-owned single-family rentals. Cityscape, 20(3), 159–188.
Are investor purchases of rental properties linked to evictions, gentrification, and the displacement of Black residents? A new analysis of rental investment activity in metro Atlanta, Georgia by Elora Lee Raymond, Ben Miller, Michaela McKinney and Jonathan Braun reveals exactly this. Over a 6-year period, neighborhoods in Atlanta where investors purchased apartment buildings saw a 33% increase in the likelihood of an eviction spike. Over a 6-year period, these neighborhoods lost 166 Black residents, and gained 109 White residents, compared to adjacent neighborhoods without such purchases.
A Background on Evictions and Gentrification in Atlanta
While Atlanta has been a majority Black city since the civil rights era, from 2000 to 2010 there was an 11.3% decline in the Black population. Meanwhile, the White population increased by 16.5%. Research has linked this racial transition to the subprime lending and foreclosure crisis of 2008 (Immergluck, 2011). In the 2010s, large increases in renter cost burdens and a 16% decrease in the number of affordable rentals in the Atlanta region increased the departure of low income residents, many of them Black.
Existing literature suggests that corporate investment has played an important role in the displacement of Black residents and communities from the city of Atlanta. Increased corporate investment in single-family rentals has been tied to extremely high eviction rates in this category, with a disproportionate impact on historically Black neighborhoods (Raymond, Duckworth, Miller, Lucas, and Pokharel 2018). Other research has linked apartment sales in greater Atlanta to increased eviction rates for the three years following a sale (Immergluck, Ernsthausen, Earl, and Powell 2020).
Still, the exact nature of the relationship between private rental investments, eviction-driven displacement, and racial transition has remained unclear. In “Gentrifying Atlanta: Investor Purchases of Rental Housing, Evictions, and the Displacement of Black Residents”, the authors bring new clarity to this question.
Methods
In conducting this research, the authors aimed to explore two questions:
- Do investor purchases of multifamily residential real estate result in eviction-led displacement within a neighborhood?
- Do investor purchases of multifamily residential real estate cause racial transition within a neighborhood?
To answer these questions, the authors used data from US Census Bureau’s American Community Survey (ACS), eviction data from Princeton’s Eviction Lab, and resale deeds transactions from CoreLogic that specify whether a property was purchased for investment purposes.
First, the authors conducted a series of logistic regression models with 8,789 observations to estimate the relationship between investor purchases of multifamily properties and spikes in foreclosures, evictions judgments, and eviction filings (which was the most common measurement of displacement in past research) at the block-group level (i.e. a spatially-defined subset of a census tract) between 2000 and 2016. The authors defined a “spike” in evictions as a year in which eviction judgments or filings were at least 25% higher than the block-group average between 2000 and 2016. The researchers used fixed effects to control for differences between neighborhoods that do not change over time, and included measures for population and the foreclosure rate in a neighborhood, two relevant factors which did change during the study period.
Turning to the question of racial transition, the authors conducted a difference-in-differences analysis, comparing neighborhoods [1] where investors purchased apartment buildings with neighboring areas (in the same census tract, i.e. location and socioeconomic range) where they did not. The authors compared changes in the Black and White population. This analysis was made by combining the data on real estate transactions, and racial demographics within the three time periods of 2004, 2010, 2016. The authors included controls for both population size and the foreclosure crisis as these factors would affect both the number of residents in a neighborhood and their movement from each neighborhood.
Finally, the researchers conducted a cluster analysis to generate a classification system of neighborhood change between 2009 and 2018 in Fulton County. The four cluster variables were changes in the number of affordable rental units (defined as having a rent of $1,000 or less, or 30% of Average Median Income), the number of residents with bachelor’s degrees, the number of Black residents, and the overall number of households.
Findings and Conclusions
In terms of baseline statistics, researchers found an increase in both evictions and rent prices in the study area. Evictions rose during early years of the housing crisis and briefly fell during the recovery period, but overall doubled in Fulton County from 4,406 to 10,753. Similarly, apartment prices collapsed during the crisis, and then rose continuously after that, now selling for 5.5 million more in 2018 than in 2005. Researchers also mapped both investor-ownership (such as Bear Stearns, JP Morgan, and Deutsche Bank) and eviction in Atlanta, showing that while evictions were concentrated along the north-south spine of Fulton County, investor purchases were more scattered.
For the test analyzing the relationship between investor purchases and displacement, the results showed that investor purchases of apartment buildings were significantly associated with a 33% increase in the likelihood of a spike in eviction judgments, in which a landlord secures the legal right to remove a tenant. The odds were even higher in the case of investor purchases of garden-style apartments and mid-rise apartments, which tend to be older and therefore cheaper, thus falling into the category of naturally occurring affordable housing. Meanwhile, there was no relationship between investor purchases and spikes in eviction filings [2], which have a looser connection with physical displacement, nor was there any association between non-investor purchases and eviction spikes.
For the test analyzing the relationship between investor purchases and changing racial demographics, researchers found that investor multifamily purchases resulted in 166 fewer Black residents and 109 additional White residents in a neighborhood compared with adjacent neighborhoods that did not have an investor purchase of an apartment. These changes were significant and large, considering that the average block group in the sample had only 1,635 residents.
The cluster groupings had interesting findings as well, with four distinct clusters emerging:
- Cluster 1- “Rising Black middle class” – 7% of block groups saw an increase in college educated residents, overall rentals available, and Black residents, but a decrease in affordable rentals.
- Cluster 2- “Declining rentals and displacement” – 15% of block groups saw a decrease in number of total rentals, affordable rentals, and Black residents
- Cluster 3- “Priced out” – 56% of block groups saw the total amount of rentals staying the same, while both the amount affordable rentals and Black residents decreased
- Cluster 4- “Rising affordability” – 5% of block groups saw an increase in overall rentals, affordable rentals, and Black residents
These patterns of neighborhood change are not consistent with the stark North-South divide in race and income segregation in metropolitan Atlanta. Instead, they show that racial displacement is happening at a granular scale in a wide range of neighborhoods, often occurring on the local level due to events such as apartment purchases.
These findings have important implications for policy. They point to the need to include corporate investment in residential real estate in local early warning systems for gentrification and displacement, which could better allow for timely and targeted interventions.
About The Authors
Elora Lee Raymond is an assistant professor in the School of City and Regional Planning at Georgia Institute of Technology.
Ben Miller is a senior lecturer in the English Department and the Department of Quantitative Theory and Methods at Emory University.
Michaela McKinney is a graduate of the MCRP program in the School of City and Regional Planning at Georgia Institute of Technology.
Jonathan Braun is a graduate of the MCRP program in the School of City and Regional Planning at Georgia Institute of Technology.
- Roughly 1,635 residents per block group for each of the 1,427 observations
- As eviction filings were used as the primary measure for eviction-based displacement in the past, this finding indicates that future research on physical displacement would benefit from using eviction judgements as a measure of displacement instead.
Works Cited:
Immergluck, D. (2011). Foreclosed: High-risk lending, deregulation, and the undermining of America’s mortgage market.
Ithaca, NY: Cornell University Press.
Immergluck, D., Ernsthausen, J., Earl, S., & Powell, A. (2020). Evictions, large owners, and serial filings: Findings from
Atlanta. Housing Studies, 35(5), 903–924.
Raymond, E. L., Duckworth, R., Miller, B., Lucas, M., & Pokharel, S. (2018). From foreclosure to eviction: Housing insecurity
in corporate-owned single-family rentals. Cityscape, 20(3), 159–188.