The Role of Investors in the Single-Family Market in Distressed Neighborhoods: The Case of Atlanta

Dan Immergluck

W13-2: Investing in single-family homes is not a new business. However, the magnitude of homes flowing through foreclosure and into investor ownership since 2007 in many parts of the country—and especially in many distressed urban neighborhoods—has been unprecedented. Changes in credit markets, continuing income inequality, and other factors may be pushing a significant segment of modest-income households towards a new rentership paradigm. Investors appear to be responding to these changes and are increasingly purchasing properties for rental rather than for resale.

In Atlanta, the housing crisis has resulted in large numbers of single-family properties flowing into the hands of investors. The principal way that this has occurred is the sales of lender-owned properties (called "real estate owned" or REO) to investors. The purpose of this study is two-fold. First, it seeks to describe the flow of single-family properties coming out REO status and what happens to them in Fulton County, the core county of the Atlanta metropolitan area, with a population of just under 1 million. The City of Atlanta (population of under 440,000) comprises about half of the county by population. The county includes a range of suburban communities to the north and south, which range from moderate-income to quite affluent. This analysis also centers on neighborhoods with high levels of investor activity.

The second major purpose of this study is to examine the practices and behavior of single-family investors in distressed neighborhoods within Fulton County. This part of the study focuses especially on the activities of investors who have managed, with mixed levels of success, to rent out their properties. It also concentrates on investors active in Atlanta’s south and southwest side neighborhoods, hereafter referred to as the city’s south/southwest side.