Geospatial tech can help cities get ahead of real estate speculators

Dina Blaes understands why people want to move to Utah. The state is home to some of the best skiing and hiking in the country, with mountains offering an escape to big-time adventurers and weekend warriors alike. 

But to Blaes’ chagrin, corporate real estate investors and absentee landlords are on the same page—and they’re capitalizing on people’s desire to call the Beehive State home. 

“We hear this all the time,” said Blaes, Salt Lake County’s regional development director. “‘These institutional investors are coming in and gobbling up all this land.’” 

Salt Lake County is not alone. In 2021, investors spent $50 billion purchasing 80,000 homes, accounting for about 18% of all homes sold in the United States that year. And as home prices increase, residential properties grow more attractive to investors who can resell renovated homes for higher prices or charge higher rents. It’s a trend that concerns local leaders nationwide, as homeownership is a powerful tool in building generational wealth and can provide more stable housing than rentals.  

But at the community level, most information about real estate speculators buying homes is anecdotal, making it difficult for local officials to understand the extent of the problem and identify where it’s concentrated, Blaes said. 

That’s a challenge Jeff Allenby wants to take on. 

Allenby is the director of the Center for Geospatial Solutions at the Lincoln Institute of Land Policy. The center launched about three years ago to help communities access the technology and data they need to make informed policy decisions about land and water use. Under the center’s Who Owns America? initiative, Allenby helps local officials and organizations use data to craft better policies to prevent absentee corporate investors from destabilizing neighborhoods. 

Nailing down who owns a property is harder than it seems, Allenby said. A property could be held by a single LLC, making it appear as if it’s owned by a small business or mom-and-pop landlord. But when several LLCs are tied back to the same lawyer’s office, it indicates the extent of corporate ownership in the area, he explained. 

“We're peeling back the onion, if you will, around corporate [home] ownership,” Allenby said. 

Salt Lake County is the center’s first municipal partner. Blaes reached out to Allenby in the hopes of better understanding whether commercial real estate investors are truly a concern in the county, and if so, to what extent.

The center will work with the county to track homeownership trends, identify where investors are most active and give officials the information they need to craft housing policy that supports homeownership for locals. For example, once the county better understands how extensive commercial real estate investment is, officials can make decisions about allocating more funds for a downpayment assistance program to bolster Salt Lakers’ bids, Blaes said. 

Big investors have teams dedicated to working in property analytics, researching and identifying which properties could soon be on the market. By bringing the same resources and information to governments and nonprofits, Allenby said, community leaders can direct resources to specific neighborhoods. With data in hand, cities can apply more effective policy tools. Those can include split tax rates that tax land at higher rates than buildings—which discourages holding vacant land—or right-of-first-refusal policies that give governments and tenants the opportunity to purchase homes if the owner decides to sell.

The Who Owns America? initiative started with Baltimore, a city near Allenby’s home in Annapolis that he was familiar enough with to make a proof-of-concept site. Allenby used a geographic information system, or GIS, to map the city parcel by parcel using public data, noting who owned what land, whether those owners were based in Maryland, which properties were owner occupied and where recurring code violations were happening.

The results from the project painted a grim picture. In one neighborhood, only 53 of the 464 homes sold since 2017 were purchased by owner occupants.The census tracts where corporate investors were most active were low-income areas and neighborhoods of color, indicating their expectations of future development.

GIS can also provide insights on vacant properties, which in some cases signal investor activity, Allenby said. Big investors can afford to buy up properties in neighborhoods that appear ripe for gentrification, even if they are unoccupied for a decade. When properties sit vacant for several years, it negatively affects the dynamics of a neighborhood. No one wants to live on a block of blighted properties; when residents leave, so do stores and transit options. Empty homes not only invite crime and safety hazards, but they also remove housing options for local residents at a time when there’s already a nationwide housing shortage. 

One of the advantages corporate investors have in the housing market is they can pay cash for the properties. In many cases, residents who have been in their homes for decades are unaware of the current value of their property, Allenby said, and if they’re looking to move out quickly, they may be more likely to accept cash offers that are only a fraction of the home’s worth. 

Targeted efforts to educate homeowners about their property’s values can be powerful in preventing out-of-state investors from buying up affordable housing stock, Allenby said. It’s also important to let residents know what their options are when they're looking to sell.

For example, cities are increasingly implementing right-of-first-refusal policies, which give the local governments the first opportunity to purchase a property that is up for sale before it is sold to corporate investors. Tenants can also have a right-of-first refusal clause written into their lease agreements allowing them to purchase the homes they live in before they are resold. But those policies only work if property owners and renters know about them.

“There's the education of the homeowners, but I think equally there's the education of the policymakers” as to what options they have to limit corporate investors, Allenby said. 

Communities have long been using GIS for land-use planning. But working with parcel-level data to analyze housing investment is relatively new, he said. 

Baes said that having detailed information on property ownership overlaid with data on property value declines or code violations will help her identify what factors might be harming one specific neighborhood and not surrounding areas. 

“I want to be able to tell our county council members, ‘Do you all realize the shift that's happening in your council district?’” she said. “I can't do that without the fine-grain information.”