Investors buy into Black neighborhoods, sparking concerns | Business
As Orlando home prices soar,Desiree Stennett Orlando Sentinel (TNS)
ORLANDO, Florida — Nearly every day, Paula Kittrell gets a call, a text or a mailer with the same message: If she is thinking about selling her West Lakes home near downtown Orlando, there is someone willing to pay cash today.
Occasionally, she’ll listen to the pitch. But she turns down every offer, even one for three times what she paid.
“I got three calls over the weekend,” Kittrell said. “I get a call almost every day. … Residents in our community get calls on a regular basis from people that don’t even live here.”
As unprecedented demand sent home prices surging in metro Orlando, real estate investors bought nearly half of the properties sold last year in the predominantly Black ZIP code of 32805 where Kittrell lives.
Stretching west from the edge of downtown, 32805 is roughly bound by Interstate 4, Mercy Drive, Colonial Drive and 33rd Street, and includes the historic Parramore and West Lakes neighborhoods, as well as Exploria Stadium and Camping World Stadium.
For decades, this section of the city was largely ignored by major corporate investors. But as downtown’s growth stretched into the area, those banking on a lucrative payout started showing up. Now, activists worry that the influx of investors and their increasingly higher cash offers will bring down homeownership rates and make the neighborhoods unaffordable to longtime residents.
“The problem with a lot of for-profit investors is just that. They’re only interested in the profit,” says Camille Reynolds Lewis, executive director of the Winter Park-based Hannibal Square Community Land Trust that is building affordable housing in 32805. “They’re not really interested in listening to families that live in the neighborhoods.”
A record year
Of the 266 homes in 32805 sold last year, 43% went to investors, according to data from realty company Redfin. By contrast, investor companies in the ZIP code made up roughly 25% of sales in 2020 and 29% in 2019, according to Orange Property Appraiser records.
Winter Park-based investor Lonnie Thompson, who did not purchase anything in 32805 last year, nevertheless understands what happened. He said the affordability and availability of homes in the ZIP code attracted the attention. “If anything was available … they just look at the numbers,” he said.
Home prices in 32805 are inexpensive for the region. While the median price in metro Orlando hit a record $361,000 in March, the median home price sold in the ZIP is $234,000, according to realtor.com.
But the community is experiencing rapid appreciation as well. Kittrell bought her home for $75,000 in 2012. A decade later, its estimate on zillow.com is $295,800.
Investors buying in historically Black neighborhoods is nothing new, according to Anne Ray, a researcher and manager with the Shimberg Center for Housing Studies at the University of Florida. “We’ve always had properties that are not owner-occupied, so we’ve always had investors with us,” she said.
What Ray says has changed recently is the rise of institutional investors, major banks and hedge funds that have started buying single-family homes en masse, mostly to convert into rentals. “That reduces the supply of lower-cost and mid-range housing that is available for homebuyers,” she said.
Thompson said most investors noticed the presence of these companies over the past year. “There are so many different companies that are getting into the game,” he said.
In 32805, 9% of sales went to entities with ties to the parent companies for Invitation Homes, Main Street Renewal and others in the single-family rental market.
Main Street Renewal lists four properties for rent in the ZIP code, all purchased within the last year, all between $2,095 and $2,595 per month. Median asking rent across Orlando for single-family homes is $2,400, according to rental listing site Dwellsy.
The Texas-based Amherst Group, which owns Main Street Renewal, did not return a request for comment. The Orlando Sentinel reached out to several investor companies that bought property in 32805 last year, but none of them returned requests for comment.
‘Gentrification will occur’
The wave of purchases has drawn concerns that longtime residents across income brackets could soon be priced out of the community, which has long been a bastion for homeownership for middle-income Black Orlando residents.
When homes are converted into rentals, that reduces the inventory, pushing both sales and rental prices higher, Ray said.
“If people who would have bought a home are staying in more moderately priced rental units, that’s not available to new households,” she said.
That means renters could be forced to look outside the area for cheaper options and potential homebuyers can’t afford to compete with high cash payment investors offer. They, too, will have to look elsewhere.
“Unless you create homeownership opportunities for existing residents who want to stay in the neighborhood, then gentrification will occur,” said Tim Ayers, executive director for the West Lakes Partnership, an organization working to increase homeownership in the five predominately Black neighborhoods that make up West Lakes.
Across the ZIP code, about 48% of the homes lack a homestead exemption usually seen in owner-occupied homes, suggesting they are either rentals, second homes or other investment properties, according to data from the Shimberg Center.
Homeownership rates in the area have been in decline since the Great Recession of 2008. In 2000, owners made up 30.6% of homes in Kittrell’s neighborhood of West Lakes, according to data from nonprofit Lift Orlando. By 2019, that was down to 23.5%.
Shan Rose, an activist in Parramore who runs the nonprofit Change for the Community, bought her three-bedroom house in 2018 for $205,000 as part of a city-sponsored revitalization program. Since her purchase, she has seen more homeowners move into newly built homes on her street. She said she welcomes investment when companies are responsible.
“It’s often the outsiders that come in and see something [that] needs improvement and they say, ‘I’m going to go in and check it out because this could improve,'” she said.
She has helped to get more city trash cans to reduce litter near the stadiums, add speed bumps to make Parramore Avenue safer and remove a downed tree that was blocking the sidewalk and forcing children to walk in the street to get to and from school.
She said investors can have a similar positive impact on a neighborhood if they consider the needs of residents as much as their profits.
“The house on the corner of my street, there is an investor that owns it,” Rose said, noting this person owns a lot of properties in the community. “But it’s affordable rent. It’s about having the conversations where we make it known that we welcome investors but we want you to make it affordable.”
‘It’s all about togetherness’
Rose is organizing residents to resist the wave of investors.
“It’s about togetherness. I tell the whole neighborhood, if they ask you (to sell), say it’s $500,000,” Rose said. Investors are “not paying that. They’re going to find another neighborhood to go to.”
And if prices keep rising and $500,000 one day becomes a fair price for a house in Parramore, Rose said homeowners should then demand even more from investors.
Rose stresses to other residents the importance of home maintenance and taking care of their neighborhood themselves.
And she reminds people of the projects that took homes out of west Orlando with little regard for the community, such as when more than 100 homes were destroyed to make way for the original Orlando Arena, where Creative Village sits today.
“I have to remind people … Go back to your roots,” she said. “Remember what they did. Don’t allow history to repeat itself.”
To Ray at the Shimberg Center, Orlando’s lack of housing inventory is driving investors to make offers everywhere. She says the biggest help would be to build more houses.
“If there’s enough housing supply, there’s not as much pressure on existing homes,” she said.
Lewis at the Hannibal Square Community Land Trust wants to increase homeownership in the ZIP.
“If you have a lot of owner-occupied homes, it becomes less likely you’ll have investors … gobbling up houses and turning them into rentals,” she said.
The trust is building The Townhomes at West Lakes, a community of 30 affordable townhomes that will be sold to qualifying residents. Prices for the homes have not yet been determined, but the purchase will be partially subsidized based on applicant income, with half going to families making 65-80% of the area’s median income.
“Young people can buy in the neighborhood, they can become part of the process of revitalizing the neighborhood,” she said. “You can revitalize without gentrifying. You have to invest in the community and not just in your own profit.”
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