Real Estate Speculators Are Swooping In to Buy Disaster-Hit Homes

This story originally appeared on Grist and is part of the Climate Desk collaboration. It is part of The Disaster Economy, a Grist series exploring the often chaotic, lucrative world of disaster response and recovery. It is published with support from the CO2 Foundation.

When a mile-wide tornado hit St. Louis on May 16, DeAmon White hopped in his car and rushed home. As he navigated downed trees and power lines, turning his 10-minute commute into a three-hour slog, he worried whether his family, neighbors, and home made it through unscathed.

When he turned the corner onto his block, White’s heart sank. The entire back wall of his house had been blown off. Chunks of ceiling plaster littered the floor, windows were shattered, and much of his property was damaged beyond repair.

Next, White checked on his mother, Bobbie, who lives a five-minute walk away. The third floor of her home was gone. But miraculously, her front yard flower garden made it through the 150-mph winds unscathed.

The St. Louis storm, an EF-3, was just one of 60 tornadoes that tore through Missouri, Illinois, Kentucky, Wisconsin, Minnesota, and the Carolinas over 48 hours in May, killing at least 26 people and injuring 168. DeAmon and Bobbie considered themselves lucky: A neighbor of theirs had his leg impaled by a pole that flew through his window. Bobbie went to her sister’s house to get some sleep; DeAmon spent the night in his truck, trading shifts with neighbors to fend off looters.

The next morning, at 8 am, the phone calls started: Would he be interested in selling his home? “They were aggressively going at it,” he said. This continued for the next two weeks, with half a dozen calls every single day.

“Vultures” is what Bobbie and DeAmon called the speculators. Some walked down the street with flyers, some texted, and some called.

In White’s West End neighborhood, an estimated 63 percent of renters and 49 percent of homeowners are uninsured. For many North St. Louis residents, their homes are their only major asset, meaning they don’t have the money to rebuild without insurance. And when federal aid is slow to arrive, quick offers to buy a home in cash can look like a lifeline.

“Hi, this is Paul with H.B. LLC,” read one text sent to a homeowner just north of the tornado’s path on August 4. “Touching base with you … is this Steven?”

Grist tried contacting several of these numbers, but most were not set up to receive call- or text-backs. One, however, did pick up. A woman, sounding like she was in a call center, asked if there was a property to sell. “We’re a ‘we buy homes’ company,” she said, but repeatedly refused to give Grist the company name.

Eight months earlier and 600 miles away, Gina Miceli’s community in Fairview, North Carolina, was devastated by Hurricane Helene, which triggered hundreds of landslides. The rushing earth swallowed up homes and cars and killed 15 of her neighbors. In the months following, she received near-constant texts asking if she’d be open to selling her family’s two plots of land.

“They text really chummy, so they sound like they already know you,” Miceli said. “‘Hey, Gina, it’s so-and-so!’ It’s very, very creepy.”

“Let me know your price,” said one text on July 9, signed simply, “Bella.”

“Hi there Gina, hope you’re having a great day,” said another exactly two weeks later. “My name is Christine, I am a land buyer. I’m reaching out to see if you have any plans to sell the lot.” The text was signed by “Twin Acres.” Twin Acres is not a registered real estate broker. Grist’s attempt to text the number back went unanswered.

Sometimes, Miceli said, she answers the texts. “It depends on my mood. I think there’s been a time or two I’ve said, ‘Go to hell.’” She has no plans to leave. She’s raising her family in the home her husband’s grandparents bought, and she owns a local brewery.

Some theorists call this phenomenon “disaster gentrification,” when real estate investors flood a disaster zone to buy up damaged properties for cheap.

Samantha Montano, a professor of emergency management and author of the book Disasterology, spent years living and working in New Orleans after Hurricane Katrina and saw it happen with her own eyes. In areas like the Lower Ninth Ward, some people displaced by the storm didn’t have the resources to return. Speculators rushed in. Some landowners became instant millionaires, selling their properties to out-of-state developers hoping to rebuild and flip their property.

“The issue of gentrification in New Orleans was there from the beginning,” Montano said. “There were many groups who were warning about that, advocating for housing policy and other recovery policies to account for gentrification. [They] tried to prevent it.” Twenty years later, the demographics of New Orleans have shifted: Lower-income and Black residents have been displaced, and whiter, wealthier new residents took their place. “Certainly that is all very much intertwined in the recovery and in who had access to the resources to return and rebuild—and who didn’t,” she said.

In the wake of the Eaton Fire in Altadena, California, earlier this year, half of home purchases were by limited liability corporations, according to Dwell, the home design news site. That’s nearly double what they typically represent compared to individuals buying homes. Just six companies—among them Ocean Development Inc. and Black Lion Properties LLC—dominated those transactions in Altadena, spending millions of dollars to purchase destroyed properties in historically Black neighborhoods. It’s difficult to find out who these companies are: Often, they contact potential sellers through fake phone numbers or under names that aren’t necessarily attached to real corporations.

The value of disaster-struck land consistently bounces back fast, meaning that buyers can flip the land or homes—sometimes even without making repairs. As climate change fuels more frequent severe natural disasters across the United States, “disaster investors” seem set to make greater profits than ever—and communities like North St. Louis stand to bear the burden.

Justin Stoler, a University of Miami researcher working on urban health disparities, recently published a paper on hazard gentrification. This phenomenon, Stoler told Grist, diverges from our standard understanding of gentrification in its speed. “It’s typically happening in a very punctuated, short-term manner. It doesn’t necessarily take years and decades to roll out.”

“People’s lives are completely upended, and they’ve got to make difficult choices,” Stoler said. “And opportunistic entities, companies, investors try to step in and get a good deal. You end up with this system where people are exploiting the misfortunes of others.”

In DeAmon White’s neighborhood, he saw the signs of gentrification long before the tornado: A community barbershop replaced by a trendy new restaurant; a former school turned into an upscale apartment building inhabited by law students; and “just a lot of white folks moving into what they used to call ‘the hood,’ you know?” he said. And investors were already circling. Signs with “WE BUY UGLY HOUSES” could be found on utility poles and in mailboxes before the May storm. These are markers of real estate wholesalers and house-flippers looking for a quick sale. But they increased in frequency and aggressiveness after the neighborhood was turned to rubble, he said.

It’s a little too soon to say whether the St. Louis tornado will lead to big land buys. But signs—and Zillow search results—are pointing in that direction.

At least 10 severely damaged homes in the tornado’s path have gone up for sale on the real estate platform Zillow in recent weeks. Each one is labeled not as a home for locals to move into, but as an investment opportunity: 4641 Maffit Avenue “offers investment potential” for rehab or brick salvage, with a starting bid of $20,000; 4236 East Sacramento Avenue—“Investor Special!! Tornado damaged property”—in the historic Ville neighborhood is going for $30,000.

100 days after the storm, many St. Louis neighborhoods remain as damaged as they were the day of the tornado in May. Debris still litters streets and yards, blue tarps still stand in for caved-in roofs, and windows are still boarded up—even as the weather cools. Community activist organizations are providing aid where they can. One group, The People’s Response, which mobilized some 10,000 volunteers, estimates that over 2,000 St. Louis households still require housing and shelter assistance.

But even with a robust volunteer network, $30 million from an NFL settlement redirected toward tornado relief, and FEMA aid (slowly) arriving, homeowners have been left in the lurch for months, facing a difficult decision about how—or even whether—to rebuild.

Deserai Anderson Crow, who researches community resilience at the University of Colorado-Boulder, says what is happening in St. Louis follows a pattern similar to other extreme weather disasters: Those who rebuild are more often than not landlords looking for renters, rather than people who intend to live in the homes they’re rebuilding.

“It’s a predatory renting cycle,” Crow said. “These huge industrial-rental landlords are trying to snap up disaster-affected homes because they assume, correctly, that a lot of people want to get out from under those mortgages as quickly as possible, and that they just don’t have the emotional bandwidth or financial bandwidth to deal with rebuilding.”

Bobbie White’s damaged home was built in 1901, back when St. Louis was a thriving Mississippi River transit hub. One of the industries that built St. Louis was brickmaking, with the materials renowned worldwide for their strength and quality. Bobbie’s home, and others on her block, are made of those bricks. “A lot of these houses are 100-year-old structures,” DeAmon said. What is built in their stead likely won’t be as unique or sturdy, and yet will cost far more, he lamented—prices out of reach for many in the neighborhood today.

Stacey Sanders, president of the St. Louis Association of Realtors, says she’s been inundated with reports of speedy post-disaster sale offers. But they often come with red flags: For one thing, multigenerational homes may not have access to a title, or the title might be in the name of a deceased family member. Sometimes, resolving title issues can take years.

Many of the storm-impacted multigenerational homes are in that legal category. Those “heirs’ property” homeowners are stuck, Sanders said. Without a title, it can be harder to access FEMA benefits, filing an insurance claim is extremely difficult, and sales without a title are legally dubious at best.

When Sanders’ own home and car were hit by a tornado this past March, “we had letters, door hangers, people knocking on the door, doing everything.” They were either selling her on repairs or selling her on a home purchase. She was, as a professional real estate agent, able to access resources and recover her damaged property. But she worries others may have a harder time.

“It might be the easiest and the quickest way,” Sanders said, “but it’s not always the best way to go.”

“A lot of the people that are out making these offers on houses are not doing it because they’re like, ‘Oh, these poor people, let’s give them a fair shake,’” she said. Instead, they’re seeing “desperate people” and chasing an opportunity to buy property for far less than it is worth.

There are options to curb this mass sell-off. One tactic, Crow, of the University of Colorado, said, is providing a few months of bridge funding so residents can stay and navigate the rebuilding process. Another is to stymie buyers: This June, the Ohio Senate passed a bill requiring real estate wholesalers to tell homeowners when they may be selling their homes for less than market value. Pennsylvania passed a similar law in January. The market in Missouri, however, remains unregulated at both the local and state level, according to attorney Peter Hoffman of Legal Services of Eastern Missouri, a nonprofit that has been providing pro bono services to tornado victims.

“They find people in vulnerable situations that maybe don’t have equal access to information,” Hoffman said. Those issues—redlining, displacement, exploitation—existed before the tornado. But the storm, he said, brought them to the light.

Talking on the phone between orders of fish, fried okra, and potato salad at his restaurant, Ozell’s Kitchen and Food Mart, DeAmon White reflected on the past few months. Rebuilding his home has been hard. Though he does have insurance, he expects his home won’t be livable until February or March, the better part of a year after the tornado. Because he’s disabled, with a partially amputated foot, he stays mostly on the first floor of his mother’s house. A neighbor of his is still living in a camper on her lot. Others, he said, took the offer to sell. Right now, there are only four families left on his block. On August 21, White said, his mother received an offer in the mail: A man named Chris wanted to buy her home for about two-thirds of what it was worth.

“I really would like the people who are in the line of gentrification to realize what it is they have, and if they can, don’t sell out,” White said. “I know money talks, and when you’re in a stressful situation you got to do what you got to do, but resist, you know?”