U.S. Sens. Tina Smith (D-MN) and Sherrod Brown (D-OH) are raising concerns about reported plans by real estate company Zillow to sell a portfolio of single-family homes to institutional investors who could turn those properties into rental homes.
The Senators, along with Sen. Jack Reed (D-RI), sent a letter to Zillow CEO Rich Barton questioning the reported plan to sell some or all of its $2.8 billion portfolio of 7,000 home properties to institutional buyers. One leading candidate to buy the portfolio, Pretium Partners, is a private equity firm that the senators said has “a troubling record” managing rental properties, citing recent press reports. Other private equity backed buyers are also reportedly considering buying the portfolio.
“These large-scale property sales have the potential to destabilize local real estate markets and leave local buyers with few affordable options for buying a home,” the Senators wrote. “Troublingly, these types of sales have the ability to concentrate property ownership in the hands of a few, corporate-driven, out-of-town landlords with little meaningful connection to communities.”
Smith is the chair of the Senate housing subcommittee, while Brown is the chair of the Senate Banking Committee.
In the letter, the Senators said renters of properties owned by Pretium and its affiliates have reported “serious flooding issues, vermin infestations, and other unsafe conditions,” adding that property managers are often unresponsive.
The Senators asked Barton to provide them with the number of properties Zillow plans to sell from its portfolio, as well as the value and location of each, and the number of properties Zillow has sold to institutional investors since the beginning of 2020, compared to the number sold to individual buyers or community-focused non-profits. They also asked If the company intends to allow local buyers a “first look” opportunity to purchase a home, similar to the programs offered by the Federal Housing Administration, Fannie Mae, and Freddie Mac.