Institutional investors buying rental houses ‘serious problem’: COJ report

Report commissioned by Jacksonville City Council says institutional investors are driving up rent, reducing the availability of houses for first-time buyers

JACKSONVILLE, Fla. – The News4Jax I-TEAM is continuing to dig into the role of institutional investors in Jacksonville’s real estate market.

These are companies that have more than 1,000 homes nationwide in their portfolio.

The I-TEAM found more than 9,600 houses across Duval County are owned by such investors.

A December report commissioned by Jacksonville City Council found the trend is driving up rents and reducing houses available for first-time homebuyers.

The Critical Quality of Life report was published in December 2022. It was commissioned to serve as a guide for candidates for city offices.

Related: Why giant investment company rentals are being blamed for affordable housing issues in Jacksonville

The report calls institutional investors a “serious problem” in Jacksonville. Private equity firms and institutional investors have been buying and building rental properties in Jacksonville, and bundling the houses and apartments into portfolios for wealthy investors. University of North Florida sociology professor David Jaffee calls this trend “the financialization of human shelter.”

“If shareholder value is the major factor driving the housing market, there is no prospect for affordable housing, period,” Jaffee said.

Jaffee co-chaired the committee that explored affordable housing for the report. City Councilwoman Ju’Coby Pittman was the committee co-chair. She said she grew up in affordable housing with a mom working two jobs.

“It still exists...some of those issues that went on 20 years ago — it’s still happening today,” she said.

Data from the Northeast Florida Association of Realtors tracks home affordability — an index score of above 100 — like Duval County had for single-family homes in April of 2019, signifies a family earning the median income has more than income to qualify for a mortgage on a median-priced home.

As of last month, the home affordability score had dipped below 100, falling nearly 40% as home prices and interest rates rose.

David Howard, who is the CEO of the National Rental Home Council, told the I-TEAM a short supply of housing as people have moved to Jacksonville is contributing to rising housing costs. He also said high-interest rates are making renting an attractive option for families right now.

“I think we should be doing everything we can to encourage and incentivize more housing supply,” he said.

The City report said there was a supply gap of 12,000 units as of December.

“The key from my perspective is supplying affordable housing rather than simply assuming that building more homes, often in the wrong places, will automatically solve the problem,” Jaffee said.

His research has found that investor-owned homes are associated with a higher risk of eviction.

Mayor-elect Donna Deegan has vowed to tackle what she calls “the affordable housing crisis,” saying the city needs to identify and make available unused city property, require new developments to include some workforce housing, update zoning to support more multifamily units, keep property in local hands, and ensure adequate funding for affordable housing programs.

About the Author:

I-TEAM and general assignment reporter