Nearly a quarter of all U.S. working households, and over 80 percent of the nation’s lowest-income working renter house-holds, faced a severe housing cost burden in 2010, spending at least 50 percent of their income on housing costs.1 Figures like these have jumped dramatically in recent years. Since 2007, the number of renter households experiencing severe housing cost burdens surged by 43.5 percent, or 2.5 million households; the same measure rose just 3.2 percent between 2001 and 2003.

Though the overall housing market continues its steady recovery and home prices are reaching affordable levels in many markets across the country, two issues make it difficult for LMI households to enter or rejoin the market as homeowners. First, since early 2012, market trends in several large metropolitan areas reveal the rapid rise of institutional and individual investors purchasing distressed properties in large quantities for cash, elbowing out potential homebuyers who lack these cash resources. In markets with a large stock of foreclosed properties, including Phoenix, Las Vegas, and Miami, investors seeking to buy properties with cash are now a strong force in the market, with large institutional investors behind more than 20 percent of sales in some markets. Investors purchase these distressed properties in bulk and hold them off the market or convert them into single-family rental homes, a fast-growing segment of the housing market. While not yet a national phenomenon and largely concentrated in certain metro areas, particularly in the South and Southwest, this investor activity drastically changes the landscape of homeownership opportunity in these markets.