Researchers at the University of Pittsburgh recently reported that corporate buyers have amassed sizable portfolios of single-family houses in the Pittsburgh area.
While business investment in real estate is not new, investor-backed firms have tripled their ownership in the past few years. This increased demand drives up prices and reduces supply for first-time homeowners and small “mom and pop” investors.
While the reasons for any individual home sale are unique, economy-wide effects could play an important role.
Monthly Inflation was as high as 9.1% in June 2022 and has remained above 3% since the spring of 2021. Inflation in everyday goods may erode savings and delay homeownership.
High mortgage rates reduce the purchasing power of buyers. Mortgage rates have ticked up over the course of the year and “will likely be in the 6% to 7% range for most of [2024]” according to the National Association of Realtors’ chief economist.
A third potential factor helping corporate buyers and keeping individuals from buying homes is reduced real wage growth. Even when salaries are rising, if they are not rising faster than inflation, then earners do not actually have more to spend. The Biden Administration reported this month that “real average hourly earnings for all employees decreased 0.2 percent from March to April [2024]” due to inflation outpacing wage growth.
With fewer owners in the community, neighborhoods and local governance may suffer under corporate landlords as maintenance repairs become a line-item instead of a point of pride and accountability. Amanda Settelmaier works with municipalities in Allegheny County and raised such concerns saying it’s a “David vs. Goliath challenge for basic safety enforcement.”
Despite these headwinds and concerns, Pittsburgh was recently ranked second and Philadelphia twelfth on a list of Most Affordable Large Cities in 2023.
