Think of it this way: you might have your eye on that more charming three-bedroom corner house, waiting for it to go up for sale. But when it does, who do you think is there first?

It’s not your neighbor Bob or the newlyweds down the street; it’s some Wall Street landlord sporting a fat wad of cash and an eye for the deal. Suddenly, you’re not just bidding against locals; you’re up against serious players with deep pockets and powerful data tools. Welcome to the changing face of neighborhood real estate.

But for the landlords of Wall Street-a relatively new player in residential real estate-the game plan is rather clear: it’s long. And if what transpired in several neighborhoods across the United States is any precursor, big investors buying homes could soon shape housing markets in ways that affect everyone, from first-time buyer to longtime resident.

How We Got Here: A Story of Data and Dollars

Let’s go back in time to over a decade ago. After the financial crisis of 2008, thousands of homes went into foreclosure, leaving entire neighborhoods full of empty properties. Then Blackstone came in-a private equity behemoth with a vision and, more importantly, plenty of cash-buying up foreclosed homes block by block. That turned family homes into a brand-new asset class for institutional investors. Soon enough, Blackstone wasn’t the only one.

Corporate landlords such as Invitation Homes and Amherst dove in, purchasing over 600,000 houses nationwide. But don’t worry, it’s not like Wall Street owns half the neighborhood just yet. Nationally, companies holding upwards of 1,000 homes in their portfolios account for an estimated about 1% of America’s single-family houses. That number is rising, though: If current trends hold, Wall Street’s share of single-family rentals could grow tenfold by the end of the decade, according to estimates by MetLife Investment Management.

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Welcome to the Neighborhood… or Not

When corporate landlords come into your neighborhood, it’s a blessing and a curse. Some people open their arms to them, others plant a “No Wall Street Allowed” sign in the middle of it all. It is not just local grumbling; even Vice President Kamala Harris chimed in with a position that proposed new regulations on such big-time investors.

But where exactly are these Wall Street purchasers concentrating?

That is mainly in states with rapidly growing populations, full of job opportunity offerings, like Georgia, North Carolina, Florida, and Texas. According to Parcl Labs, a firm that analyzes real estate data, in 53 US ZIP codes, corporate landlords own between 4% and 12% of the local housing stock. These landlords prefer a three-bedroom house in about 1,500 square feet, which would be in the suburbs-just right for families to reside there for quite some time.

Bargain Hunting with Big Data

These Wall Street landlords don’t pull anything out of a magic hat. Using data, market analysis, and fancy algorithms, they can pinpoint-pretty much-exactly where the best opportunities are. What they look for is a neighborhood with cheap housing where they can charge relatively high rents. Here’s an example: In Converse, Texas-type neighborhoods, landlords can earn rental yields of about 8%, compared with a 6% return for the average U.S. home. Why? They bought lower and charge market or near-market rents. The corporate landlords can pay in cash, buy properties that need a little work, and speed through the process to get ahead of the first-time buyers who need to negotiate a mortgage or fix up the property.

That is tough competition for the regular people wanting a place to call home up against such landlords. Cash-paying, often over-asking-price, and willing to turn a blind eye to that faucet leak or chipped paint-meaning, again, the regular buyers get priced out, especially first-time buyers.

The Price of Progress?

Housing Costs Rise When Wall Street comes into your neighborhood, it drives home prices up-or rents alike. In those 53 ZIP codes with the most significant concentrations of corporate landlords, prices have surged by as much as 64% over the last five years, above the national average gain of 48%. For renters, it is no different; the median rents in such places are up by 30%, against a gain of 23% nationwide, according to Zillow. What’s behind these increases? It’s difficult to say whether this is the cause of Wall Street landlords or simply a reflection of an upward trend. Whichever way, the effect is being felt. And though great news, higher home values for existing homeowners; renters might feel like they’re on an increasingly expensive merry-go-round.

The Bright Side: A Better-Looking Block

But corporate landlords aren’t just jacking up prices; they might actually be sprucing up the neighborhood, too. Oftentimes, investors put money into improvements, upgrading old properties, putting better lighting in the streets, and adding security features. One study from the University of Texas found that not only do corporate landlords charge higher rents, but they also tend to invest in these small but significant improvements in the neighborhoods. In the eyes of the community, it may be an effort as if they were getting rid of a couple of extra bucks; at the same time, they are making things safer and more eye-catching.

Now suppose you had some run-down house next door that had sat empty for years, till some big landlord came along and bought it and fixed it up. Your street now is a little brighter and maybe the local crime rate falls a notch. That’s upside: better-kept neighborhoods, and a bump in property values for everyone else.

The Risk: Will Wall Street Stay?

But here’s the kicker: What happens if these corporate landlords do a quick about-face? Say, either because the rent growth slowed down, or because the rising interest rates made the cost of holding onto these properties too high. If big investors sell, that could flood the market with homes and drive prices down.

That is not a supposition, for during the pandemic, investors were net buyers, snatching up homes wherever they could. But over recent months, the companies have become net sellers, selling more houses than they are buying. Moreover, the rising interest rates have increased the financial squeeze on landlords. Recently, for example, VineBrook Homes, one of the large players in the rental market, sold a chunk of its portfolio to meet debt obligations.

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According to the data, VineBrook accounted for nearly a third of all home listings in one Milwaukee ZIP code, with some of its properties having sold for 17 percent less than their original asking price. That is not such a big deal when housing prices are rising. But in a weaker market, such a sudden sell-off could hurt the regular sellers who can’t afford to drop as steeply. And if these landlords get out in a hurry, it could create a chain reaction, putting pressure on prices across entire neighborhoods.

Lessons from the Multifamily Market

What does such a mass sell-off look like? For an answer, let’s turn to the multifamily apartment market, where investors already have a much bigger share of the pie. Driven by higher interest rates, U.S. apartment values have fallen around 20% since early last year. That’s due in part to oversupply, but also to the fact that institutional investors-who tend so much more sensitive to interest-rate changes than individual homeowners who lock in a 30-year mortgage-may overreact to those. That volatility has spooked some homedowners and would-be buyers. First-time buyers don’t love the idea of going up against Wall Street investors for a place to call home, and longtime owners might worry about how big investors could impact neighborhood stability.

The Bottom Line

So should you be concerned that Wall Street is moving in next door? It’s a mixed bag, really: good if you are a homeowner who likes rising property values and a better-lookin’ neighborhood. But not so good if you rent, or want to buy and might just get priced out. But at the day’s end, Wall Street’s growing fascination with single-family homes is a tectonic shift in the market for American homes. The full impact remains to be seen, but one thing’s for sure: if these investors hang around, they’re likely to change the face of American neighborhoods-one ZIP code at a time. So, watch out for that three-bedroom on the corner-it may just have a buyer with a bigger plan than that of your average neighbor.

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