Cincinnati agency buys 200 rental homes, elbowing out investors
Authority pays $14.5M to buy homes to fix up and sell to renters
A Cincinnati agency can now add landlord to its title.
The Port of Greater Cincinnati Development Authority agreed last month to pay $14.5 million for 195 houses throughout Cincinnati and surrounding Hamilton County, aiming to thwart investors and keep renters in their homes, according to the Wall Street Journal. It aims to fix them up and sell them to low- and middle-class tenants.
The agency outbid more than a dozen investment firms to pick up properties it plans to operate as rentals at first. Then, “We plan to sell them at as low a price as we can,” said Laura Brunner, the Port Authority’s CEO.
The agency plans to help finance the purchase with tax-exempt bonds. It also hopes to team up with nonprofits to assist with downpayments, financial training and finding mortgage lenders.
The government program is a skirmish in a campaign to keep homes out of reach of professional investors who buy single-family homes and rent them out – often to tenants who can’t afford steep downpayments.
Publicly traded companies, private-equity firms and thousands of smaller investors now account for about 18 percent of all home sales across the U.S., up from about 8 percent in 2009, according to Redfin.
Critics say they’ve helped jack up home prices while whittling down the number of homes for sale. That makes it harder for would-be homeowners and worsens wealth inequality.
Cincinnati, because of its lower home prices compared to many cities, was prone to a stampede by investors. The rush began after the 2008 financial crisis, when many residents lost their homes to foreclosure and prices plunged.
Since then, five landlords have vacuumed up more than 4,000 single-family homes in Hamilton County, according to an analysis of property records by the Port Authority.
Community nonprofits have long tried to defend low-income Americans by buying homes and apartment buildings. With private investors on the prowl, local governments have marched into the fray.
In California, the Oakland Community Land Trust bought houses from such companies as Invitation Homes Inc. and put their tenants on a path to homeownership. In Long Beach, the city teamed up with a state agency to buy a new apartment tower for $144 million, and then rent hundreds of units to middle-income families at lower rates.
[WSJ] – Dana Bartholomew