Study finds Wall Street buying Pittsburgh-area homes puts ownership out of reach
PENN HILLS, Pa. (KDKA) — As Wall Street buys hundreds of homes in the Pittsburgh area, a research study from the University of Pittsburgh found it's putting home ownership out of reach for young families.
KDKA Investigates found Wall Street hedge funds and private equity firms are buying single-family homes by the hundreds and taking them off the market for first-time buyers in middle-class towns like Munhall, Monroeville and Penn Hills.
"It's affecting the housing market," said Sabina Deitrick, an associate professor at the University of Pittsburgh. "It's affecting the prices of single-family houses for sale. It's affecting buyers, it's pushing people out."
A report by Pitt's Center for Social and Urban Research confirmed KDKA-TV's findings that these firms are targeting houses — mostly in the eastern suburbs — in the $100,000 to $200,000 range, outbidding young buyers and limiting supply.
In Allegheny County, Vinebrook out of Ohio has bought 453 houses, Segavepo LLC of Florida has purchased 244 homes, SFR3 of California has 206 homes and Diversified Residential Homes from various states has bought 146 houses. Generally, the companies make minor repairs and put them on the rental market.
KDKA-TV spoke with renters about poor maintenance and unanswered repair calls, something Deitrick found in the report.
"Their upkeep is less than stellar, so the maintenance problems begin," Deitrick said.
But Deitrick says Wall Street is making money. Segavepo is owned by Magnetar Capital, a private equity firm that boosts more than $13 billion in assets, including some 4,000 houses across the country. But despite all that wealth, in Allegheny County, Segavepo is a tax scofflaw.
The county, municipalities and school districts have filed more than 130 liens against Segavepo for non-payment of its real estate taxes. Magnetar has declined comment, but Congress is now considering legislation to curb the buying spree of these companies.
Deitrick says local magistrates need to track down the owners and levy big fines.
"The complaints that tenants have are real and viable, and that's one way public policy can make a stance in this market by holding these owners accountable," Deitrick said.