1 in 4 Philadelphia Homes Is Snapped Up by Investors—Here’s What It Means for Renters

Investors snapped up about a quarter of all single-family homes sold in Philadelphia over a period of six years, concentrating in predominantly Black and Hispanic neighborhoods with lower prices—raising concerns about affordability and the quality of available housing, a new study reveals.   

Most of the investors, ranging from small outfits to large corporations, who purchased properties between 2017 and 2022 are renting them out instead of flipping and selling them, according to the report published by the Reinvestment Fund, a Philadelphia-based community investment nonprofit, and the Center for Law, Inequality, and Metropolitan Equity (CLiME) at Rutgers Law School.

The study's authors contend that one of the main concerns is that the investor buying spree in Philadelphia has squeezed out local homebuyers by reducing supply and driving up prices and rents.

"Philadelphia is a city of homeowners, and we've had a pretty large decline ... in the homeownership rate over the last 10 years," Katherine Nelson, assistant director of CLiME at Rutgers Law, tells Realtor.com®. "The presence of investors makes it harder for homebuyers, particularly lower-income and first-time homebuyers, to compete for homes."

The reason for that is that corporations tend to purchase real estate with cash, and even if they do take out mortgages, they do so at lower interest rates than the typical home shopper.

"It makes it more difficult for homebuyers to buy into this market," adds Nelson. "And the data showed very clearly that the investors were heavily concentrated in the most affordable, lowest-income parts of the city, where the housing stock is going to be the most affordable." 

Housing data from Realtor.com supports the Reinvestment Fund report's fundings: In October 2017, the median list price in Philadelphia was $250,000. By October 2022, the price had climbed to $335,000.

As of last month, the typical home in the City of Brotherly Love cost $380,000, or 52% higher than in 2017.

Over the same period, which included the COVID-19 pandemic years, Philadelphia's housing inventory shrank dramatically: Between October 2017 and October 2022, the number of for-sale homes had decreased by more than half, leaving only 11,200 listings on the market.

"As home supply falls, still-strong demand can drive prices higher, especially if the market sees a significant share of large investors, who often have access to more capital than a typical homebuyer," explains Realtor.com senior economic research analyst Hannah Jones.

Meanwhile, Philadelphia's median rent rose moderately, from $,1620 in 2019 to $1,807 in 2022.

Pros and cons of investors buying

Jones notes that there are both advantages and downsides to investors coming to a neighborhood. On the one hand, they have the money to fix up run-down homes and expand rental options for locals who may not be in a position to buy yet. But on the other hand, they can crowd out low-income homebuyers and destabilize the community.

In fact, researchers found that larger corporate landlords in Philadelphia—defined in the study as those that snapped up more than 100 properties over the course of six years—were much more likely to evict tenants than their smaller counterparts, a revelation the authors labeled as "troubling."

During the study period, 14% of homes purchased by high-volume investors had an eviction filing within five years, compared to a 4% filing rate for smaller investors—and they were also more likely to try to evict tenants through the courts.

"It creates a more tenuous living situation and increases ... risks and fears of displacement," says Nelson. "And displacement is often something that's associated with gentrification. But on the other hand, we don't see a whole lot of evidence of the sort of arrival of a more affluent set of residents moving in."

At the same time, big-time real estate players were more likely than small-volume landlords to obtain permits to carry out renovations on the homes, which Emily Dowdall, president of policy solutions at Reinvestment Fund and the study's co-author, says is a key factor in a city like Philadelphia.

"Philadelphia is a city with an older housing stock that needs real capital investment to keep homes maintained, to renovate them, or update them," Dowdall tells Realtor.com. "And abandoned, vacant homes are certainly not a good thing for neighborhoods."

According to the report, both large and small investors were much more likely to rack up code violations than individual homebuyers: Based on the data analysis, within five years of purchase, roughly 20% of homes owned by landlords had violations, compared to just 9% of owner-occupied dwellings.

Dowdall stresses that maintaining balance is crucial in neighborhood investment.

"We do need periodic reinvestment in our neighborhoods," she says.
"However, we also need to ensure that landlords are responsible, that they're not exploiting their tenants, and we need solutions for those tenants who are struggling to pay their rent from month to month."

Changing roster of investors

The character of the highest-volume investors coming to Philadelphia changed during the pandemic.

From 2017 through 2019, eight of the 10 largest real estate buyers were based locally. From
2020 through 2022, the four highest-volume investors were either new to the city or had stepped up their purchasing dramatically.

Data revealed that during that time period, 13 investors bought 100 or more properties and eight bought more than 200.

Notably, Reinvestment Fund researchers found no evidence that "mega investors" with thousands of properties across multiple metros in their portfolios, such as Tricon/Blackstone or Invitation Homes, are active in Philadelphia, likely because the city has tenant protection and eviction reduction programs on the books that are making it a less favorable market for them.

Investors were especially active in about a dozen neighborhoods, among them some of Philadelphia's most economically challenged areas like Brewerytown, Tioga, and Harrowgate.

One of the high-volume outfits identified by the study, the Philadelphia-based TCS Anika acquired its first properties in the city in 2020. Two years later, the buy-to-rent company owned 204 homes across Philadelphia.

Daniel Edrei, managing partner at TCS Anika, tells Realtor.com the company typically buys homes that are in "unlivable" condition and renovates them according to a budget created at the time of acquisition.

"Communities often appreciate our involvement as the properties we purchase are often a blight and the improved renovated values increase the values of other homes in the community," Edrei says.

Asked about TCS' eviction rate, the managing partner says the firm resorts to evictions "as seldom as possible" because the process is "long and egregious" as well as very costly.

However, Edrei notes that some tenants are interested in getting their delinquent rents paid through the city’s Targeted Financial Assistance program, which provides landlords with funds to cover past due and sometimes future rent.

But in order for the tenants to qualify for this benefit, the landlord has to file for eviction.

What comes next?

The authors of the study make several policy and regulatory recommendations to address some of the potential pitfalls associated with corporate home acquisition, including improved licensing and proactive inspections, as well as more transparency and accountability.

"The process of identifying the largest corporate buyers of single family homes in Philadelphia was challenging and time-consuming," they write. "The murky ownership of corporate rentals can make it difficult for tenants and local governments alike to identify who is responsible for fixing problems with a property."

Researchers suggest that state and local lawmakers pass new laws and adopt policies that would require limited liability companies that own rentals to disclose the identities of the owners. 

To that end, Nelson says that she has been in contact with community groups that have expressed interest in trying to identify who the investors are in their individual neighborhoods. 

"A future of people organizing and advocating and creating proactive policy solutions ... is a real possible vision for the future," she says.