The housing crisis set the stage for the modern single-family rental industry.

More than six million Americans lost their homes to foreclosure during the Great Recession, and Atlanta was hit especially hard. More than 100,000 metro Atlanta homes entered foreclosure each year from 2009 through 2012.

With the global financial system reeling in the aftermath, the federal government did what it refused to do on behalf of underwater homeowners.

It intervened.

At the encouragement of Federal Reserve Chairman Ben Bernanke, the Obama administration launched a pilot program for investors to buy foreclosed homes in bulk, and convert them to rentals.

“It was ‘get this off of our balance sheet and our plate’ kind of thinking,” says Desiree Fields, an associate professor at the University of California-Berkeley. “And it was a real once in a generation opportunity for these investors.”

The pilot program flopped in Atlanta. But the federal government’s endorsement mattered more, Fields said.

“That really gave the industry a green light to start pulling together their sources of capital and really going for it,” said Fields, who researches financialization in the housing market.

Private equity firms like Blackstone Group (Invitation Homes), Pretium Partners (Progress Residential) and Amherst (Main Street Renewal) convinced public pension funds and other large institutional investors to bankroll their homebuying sprees.

The Fed’s gambit stabilized a housing market in free fall. But the federal government kept aiding the industry’s growth long after the crisis had abated.

Under the Trump administration in 2017, Fannie Mae guaranteed a $1 billion loan to Invitation Homes, reducing its borrowing costs. Freddie Mac followed suit, backing $1.3 billion in single-family rental purchases.

It was a profound shift in policy.

Fannie and Freddie were created by Congress to make homeownership affordable for individuals. Instead, they used their clout in financial markets to redirect the profits of homeownership from families to investors.

In the aftermath of the housing crisis, Federal Reserve Chairman Ben Bernanke encouraged a pilot program for investors to buy foreclosed homes in bulk, and convert them to rentals. (Manuel Balce Ceneta / AP file)

At the end of 2017, Congress passed the Tax Cuts and Jobs Act, which cut corporate tax rates and carved out new breaks for the real estate industry, like ramping up companies’ ability to reduce their tax bills through depreciation.

Many individual homeowners, by contrast, lost one of their tax advantages. The bill increased the standard deduction, dramatically cutting the number of taxpayers who claim the mortgage interest deduction.

“It seems as if the TCJA’s intended purpose was to give investors and developers a leg up to do long-term business in the real estate market, an advantage single-family homeowners can only dream of receiving,” Brandon Theus, a tax attorney, wrote in a review of the law for the American Bar Association.

In 2011, no one company owned 1,000 homes in the entire country, a Congressional review found. Today, 11 firms own more than 1,000 in the Atlanta area alone, an Atlanta Journal-Constitution investigation found. And five companies own more than 280,000 single-family homes nationwide combined, according to the Congressional review.

In 2019, Blackstone sold its remaining stake in Invitation Homes for $1.7 billion. But the private equity giant, which has $975 billion in assets, hasn’t left single-family rentals behind. In 2020, it invested $395 million in the Canadian firm Tricon Residential, Atlanta’s fourth-largest homeowner. A year later, it bought Home Partners of America, Atlanta’s eighth-largest, for $6 billion.

Few of their homes are affordable for most renters.