Buying a home is tough: Corporate buyers make it even harder

• Margaret J. Krauss/WESA
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A new study suggests the real estate market in Pittsburgh and Allegheny County is increasingly being shaped by corporate buyers. The Pittsburgh Community Reinvestment Group found that over the last decade, local sales to corporate entities or real estate investors in both the city and county have grown by roughly 9%.

Chris Rosselot, PCRG’s director of policy, said he and his colleagues had been hearing for a while from neighborhood leaders about an uptick in investor purchases.

“You sort of sensed it,” Rosselot said. “But we wanted to take a deeper dive in the actual numbers.”

PCRG’s analysis showed that in 2021, corporate buyers accounted for almost a quarter — 24.8% — of home sales in the city; in Allegheny County, they accounted for 18%.

While that’s lower than cities nationwide, “it’s still pretty high,” Rosselot said. “And it’s impacting our neighborhoods.”

The increased activity is taking place against a background in which increasingly scarce housing has become a hot commodity. As traditional investments offer lower or slower returns, residential real estate has drawn the interest of everyday investors as well as Wall Street heavyweights.

Corporate landlords are more likely to raise rents, evict tenants, and neglect their properties, PCRG’s study argued. In addition, corporate buyers snap up an already limited number of homes and create further barriers for first-time buyers, said Druta Bhatt, PCRG’s research analyst.

Those first-time purchasers already face hurdles, she said, “especially for low-income and minority communities.” And their being crowded out of the market further exacerbates the growing wealth gap, she added, since buying a home remains one of the few American avenues to build generational wealth.

PCRG’s analysis focused on single-family homes of one to four units, and excluded properties purchased by government and nonprofit buyers. The remaining buyers included a broad pool of corporate entities, from mom-and-pop LLCs who may have formed a company to renovate grandma’s house, to out-of-state buyers making bulk purchases. The latter scenario most worries PCRG, Rosselot said, because such entities have no stake in the community.

“Hopefully through more research, more due diligence, more neighborhood leadership involvement in identifying these folks, we’ll flush out irresponsible purchasers,” he said.

Corporate buyers paid just 70% of the price needed to buy other nearby properties, according to the study. They can often do so because they have the resources to pay cash, often with open lines of credit at a bank, Bhatt noted. Those buyers also have the sophistication to navigate legal and financial systems to find and buy homes that may be underwater.

During PCRG’s study period, from 2010 to 2021, corporate buyers paid an average of $75,000 for homes — well below the market rate. That low price suggests it’s the city’s and county’s affordable units being snapped up, the analysis said.

In July, U.S. Sen. Sherrod Brown of Ohio, with the support of Pennsylvania Sen. John Fetterman, introduced legislation to disallow certain tax benefits to corporate entities that own 50 or more single-family homes. Under that bill, corporations wouldn’t be able to write off the interest from those properties or use their depreciation to lower their taxable income.

PCRG supports that measure, as well as a ban on unsolicited offers to homeowners — those letters, calls, and texts to buy their homes. Such offers often target people who may need financial help, or don’t know their home could be worth more than what they’re being offered.

PCRG also urged local leaders to further invest in land recycling, as well as efforts to create and preserve affordable housing.

‘If your housing is in crisis, your life is in crisis’

The PCRG study was released just days after deputies from the Allegheny County Sheriff’s Office attempted to serve an ejectment notice to William Hardison, who was living at a home in Garfield previously owned by his late brother. It was purchased in February 2023 for $25,000 by an LLC, 907 East Street.

Hardison had not responded to earlier ejectment attempts, and had written things like, “Not for sale,” and “private property,” on the door. He was killed in a standoff with law enforcement officials on Wednesday.

Rosselot of PCRG said it was purely coincidence they released their study just after the incident in Garfield, but that he does worry about the escalating human cost of corporate homebuying.

“Longtime homeowners living in a lot of these communities and neighborhoods that are transitioning and a higher-wealth buyer is coming in,” he said. “Yeah, we’re concerned about that.”

Over the last decade, PCRG’s analysis showed that corporate buying has been concentrated in city census tracts that have historically been home to Black residents or residents with low and moderate incomes. Garfield was one of them.

Kevin Quisenberry is litigation director for the Community Justice Project. He stressed that he couldn’t comment directly on Hardison, but noted that similar incidents are happening around the country. Philadelphia City Council held a hearing in June to examine how that city conducts evictions. In March, a landlord-tenant officer shot a woman in North Philadelphia while serving eviction papers.

“If your housing is in crisis, your life is in crisis,” Quisenberry said. “That’s just a fact.”

CJP’s clients are low-income, and don’t have the resources to simply pack up and move. The prospect of losing a home can create extreme distress: Where will I land? what does this mean for my job? my family? my kids’ school? my doctor’s visits?

Quisenberry said “it’s not uncommon for people to pass away” amid that stress. “We’ve had a number of clients who passed away during these events. It is really devastating.”

Many in Pittsburgh and Allegheny County, from government entities like the city’s Housing Opportunity Fund and the county’s Department of Human Services, to groups such as Neighborhood Legal Services, Pittsburgh Hispanic Development Corporation, the Community Justice Project, RentHelpPGH, Just Mediation PGH, and Ebony Law, are working on eviction prevention, Quisenberry said. The hope is to connect people with services or legal assistance to avoid the eviction or displacement altogether.

Quisenberry said that if an eviction can’t be avoided, it should be approached with careful thought and resources. Perhaps people trained in crisis intervention and de-escalation could be present along with law enforcement, he said.

“We need to figure out how to take the trauma out of it as best we can,” he said.