Corporate Ownership Growth and the Resegregation of Renters, 2010–2020.

• In Event: Housing, Neighborhoods, and Institutions: Structural Inequality in Urban Communities

Abstract

How has the financialization of the rental housing market shaped neighborhood change and inequality in the United States? In this article, I propose a framework connecting one outcome of financialization, the rise of corporate ownership in the rental market, to processes of neighborhood change and the racial segregation of renters. This framework, which I call “corporate renter resegregation,” occurs in five broad steps: (a) new markets in rental housing which introduced financialized investment logics into the organization of rental housing. (b) bifurcated investment strategies: long-term investment and short-term milking. Both strategies, while available to all investors, confer an advantage to corporate investors who can leverage both capital and scale over mom-and-pop landlords. (c) racialized neighborhood strategizing links each of these two strategies to neighborhoods which differ in their racial composition. While long-term investment might be utilized in the context of rapid gentrification, short-term milking is likely to be employed in lower-value neighborhoods with stable renter demand. In a segregated housing market, these decisions match onto neighborhoods of varying racial compositions (Hwang and Sampson 2014; Korver-Glenn et al. 2023; Taylor 2019). (d) the application of economies of scale powers these strategies, accelerating a racialized neighborhood sorting process even if nominally driven by a “race-neutral” focus on profits. (e) renter turnover and racial segregation links uneven neighborhood turnover to the macro-level resegregation of renters where White renters re-concentrate in ascending neighborhoods while minoritized renters in general and Black renters in particular concentrate in disinvested neighborhoods.

            This paper draws on 22.9 million parcel records from the CoreLogic Solutions Historical Property database. I use parcels in the fifty metropolitan areas in the United States with the most number of renters in 2010 and 2020. Using fixed-effects models, I find that neighborhood-level corporate ownership growth co-occurred with an influx of White renters and a simultaneous loss of Black, Hispanic, and Asian renters in neighborhoods with relatively low proportions of Black residents. Corporate ownership growth coincided with a large population increase of Black renters in places that were predominantly Black and an increase in Asian and Hispanic renters in neighborhoods with moderate numbers of Black renters but not so in predominantly Black neighborhoods. I then conduct a counterfactual simulation study to test the outcome of these on metro-wide renter segregation. I find that ownership changes in this period was predictive of increasing White-non White renter segregation and Black renter isolation in 90% of sample metropolitan areas. Models estimate that the associated increase in Black renter isolation is equal to about 29% of the observed decrease from 2000 to 2010 in sample metros. Furthermore, while predominantly Black neighborhoods only comprised 7.4% of all sample neighborhoods, corporate ownership growth in these places contributed to about 25.9% of the overall predictive segregative effect.  These results highlight the racialized consequences of an increasingly financialized rental housing market and identify a novel mechanism for the persistence of racial residential segregation.

Author

• Renee Louis, Stanford University
  Presenting Author