Chris Raudenbusch lost his rental home and just about everything he owned when a wildfire swept through his Santa Rosa neighborhood in October.
"My girlfriend was renting the house. I had just recently moved in to help her with the rent because her roommate had left," Raudenbusch said. "We grabbed, grabbed the animals and took off. We had no warning -- no nothing."
With the house in ashes, Raudenbusch and his girlfriend, Robin, decided to make a new start in a place they thought would be cheaper -- Sacramento. As someone with four pets, Raudenbusch already faced issues with landlords not wanting pets. But he also has issues with credit -- not terrible credit, but it’s not perfect credit, either.
"Our credit scores weren't that great," Raudenbusch said, "because we weren't planning on moving so we weren't cleaning that up."
So, Raudenbusch joined the glut of people looking for rentals in the Sacramento area, which turned out to be a tough challenge.
A LOOK AT SACRAMENTO’S RENTAL MARKET
The median price for a three-bedroom rental home in Sacramento is nearly $1,800. For a four-bedroom, it is $2,100. That's up nearly 10 percent in the last year.
According to a report by the Capitol Area Development Authority, rental occupancy is at an all-time high of 97 percent. While low supply and high demand account for some of the rent increase, there could be another factor in the mix.
After the housing crash in 2007, investment funds started snapping up single-family homes. These funds are often financed by the very banks that foreclosed on these homes in the first place.
One company in particular, the Blackstone Group, started buying houses at foreclosure auctions in cash.
"They went on a rampage and purchased a few thousand homes in Northern California, so that's new," real estate appraiser Ryan Lundquist said. "So, I think it's uncharted territory in some sense. So, we don't really know what the end product is -- but there are certainly impacts for the market today."
Since Blackstone worked with a lot of commercial property, they kept their hotels and commercial buildings. They created a different company, Invitation Homes, for the express purpose of buying up foreclosed homes in order to strictly rent them out.
WHO IS BLACKSTONE?
The San Francisco tenant rights group Tenants Together said it worries about these so-called "institutional investors."
"I think in California they found that at least a quarter of renters of single-family homes are renting from an institutional investor," Tenants Together spokesperson Aimee Inglis said.
"That's one of the driving forces we're seeing behind the rent increases we're seeing in Sacramento," Sacramento Housing Alliance spokesperson Veronica Beaty said.
She said the alliance is very worried about the effect of Wall Street ownership in Sacramento.
While the number of homes Invitation Homes owns and rents seems low, according to Beaty, it's not. The company owns more homes than most other investors, which means it can affect the market.
IMPACT ON THE HOME RENTAL MARKET
"Owning that much of the market when all the other owners have maybe one or two properties, I mean, it can make a substantial difference," Beaty said. "We see Blackstone and companies like it charging rates above market -- and that leads other folks to follow suit."
That means if Blackstone/Invitation Homes raises the rent it is charging, everyone else in the market will raise their rents, too.
Blackstone/Invitation Homes is also poised to merge with another investment company, Starwood/Sharepoint. That merger will effectively double the number of homes that Blackstone owns in Northern California.
KCRA 3 reached out to Blackstone/Invitation Homes to get its side of the story. The company said in a statement, "corporate ownership is doing a lot to professionalize the experience for residents" and that "it's very positive for the community, very positive for the people who live in these homes."
Invitation Homes spokesperson Claire Parker added, "our rental prices are consistent with what the market is."
Tenants Together said that while rents continue to rise, so will the rate of homelessness and the number of people fleeing for other, cheaper states.
Corporate ownership of these homes and the rent increases are not illegal. And, the 1995 Costa-Hawkins law prevents rent control of single-family homes in particular.
Renters such as Raudenbusch have seen the rising rents firsthand.
Living in an extended-stay hotel, Raudenbusch is constantly on the lookout for a home with a yard for his pets. He has seen rents rise since he moved to the Sacramento area after the wildfire.
"Since we've been up here, the rates have gone up on a couple homes," he said. "Especially in places like Elk Grove and Antelope is another one of the very low rates, started at $1,800 when we got here. And they have gone up to $2,000 and $2,100 in the last week."