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Opinion | Is Wall Street Really to Blame for the Affordable Housing Crisis?

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Well before the coronavirus pandemic, Americans were struggling to keep up Housing expense, and inflation exacerbated the problem. Between September 2021 and September 2022, rental prices for prime residences will be 7.2 percent — a metric that typically increases by only 3% a year — and between July 2021 and July 2022, house prices 15.8 percent.

Who’s to blame? An increasingly popular answer among Democrats, Republican, Wall Street.Earlier this year, Senator Elizabeth Warren defendant The private equity firm said it was “taking advantage of the housing shortage by buying lots of homes and raising rents for families.” In June, the House Financial Services Committee hearing The title is ‘Where Has My Home Gone? Private Equity, Single Family Rentals, and America’s Neighborhoods.’

Affordable housing crisis andrent revolution— Are corporate speculators really to blame? Read the discussion here.

as Francesca Mari explained According to a 2020 New York Times Magazine article, there were no institutional investors in the single-family rental market before the Great Recession. But between 2007 and 2011, about 4.7 million homes were foreclosed. By 2016, with the help of government-backed financiers Fannie Mae and Freddie Mac, private equity Companies acquired hundreds of thousands of single-family homes in desirable neighborhoods at bargain prices, converted them to rentals, and profited as home prices rose as tenants paid off their mortgages.During the pandemic. , the market for single-family rentals was further boosted. Record purchases by real estate investors in Q4 of 2021 18.4 percent The percentage of homes sold in the US increased from 12.6% a year earlier.

Critics of institutional investment in single-family real estate say it’s making homeownership even more out of reach for more Americans. “Regular buyers can’t compete with all-cash offers from institutions, especially when it comes to a high price,” said LG Fairmont, chief executive of New York City real estate brokerage firm LG Fairmont. Aaron Graff is Said last year. “Thus, young people are discounted from the starter single-family homes.”

Many tenants say the trend is hurting renters as well, as private equity firms spend a lot of time trying to maximize profits in a relatively short period of time. “In various studies, corporate landlords raise the rentevict tenants and keep property less than smaller landlords,” said Sophie Kasakove of The Times. report in April. “1 According to the 2018 Department of Housing and Urban Development, owners of large Atlanta businesses were 68% more likely to file an eviction notice than owners of smaller businesses. “

a ProPublica survey This year, we detailed how private equity firms are buying apartments in American cities and using their influence to shape state and local housing policies. giant, Blackstone, has spent more than $6.2 million on a ballot initiative that gives California cities more control over their rents.

In 2019, a United Nations human rights official condemned Blackstone’s practices, accusing six countries, including the United States, of not properly regulating investments in residential real estate. , undermining tenants’ right to safety and contributing to the global housing crisis,” they said. I have written“The financialization of housing in its current form violates international human rights standards and cannot continue.”

Not everyone is convinced that Wall Street’s entry into the single-family rental market is uniformly bad.Like Jerusalem Demusas I got it At Vox, institutional investors tend to buy homes that require major repairs that the typical prospective homeowner would not be happy to do. And because institutional investors have the resources to buy even in a recession, they can provide the lowest prices for the housing market when it threatens to collapse.

But pure evil or not, institutional investors do not have the market power to trigger an affordable housing crisis. many Analyst Say. As of 2021, institutional investors will 3 percent detached house for rent a small part Of the approximately 84 million single-family homes in the United States, “only a handful of companies, which own 300,000 homes nationwide, actually claim to have the ability to influence things like home prices and rents.” is very difficult.” Said David Howard, executive director of the National Rental Housing Council, which represents the single-family rental housing industry, said:

Connor Dougherty and Ben Casselman as reporters for The Times explanationThe bottom line why housing is so expensive in the United States is that there isn’t enough of it. Did. We are building enough homes to meet demand, especially among middle- and low-income families,” Dougherty and his Casselman wrote. “The inability to build these units is the biggest contributor to the affordability crisis that has spread in recent years from some coastal cities to much wider parts of the country.”

The slow pace of housing construction has many causes, including a lack of public investment, industry fragmentation, restrictive local zoning and land use laws, and opposition from homeowners to reforming these laws. there is. investment. NIMBYismthe tendency of homeowners to oppose new developments is arguably a natural consequence of Americans’ fixation on homeownership. Ultimate Sign of Prosperity And the main means of building wealth.

“The greatest villain in America’s housing crisis is not the faceless Goliath of Wall Street who oversees your apartment or home. neighbors, local laws, and local governments. I have written last year. “The reason we can’t see the culprits of America’s housing crisis is because we want to look everywhere but in the mirror.”

as Lydia Depiris in The Times report Last month, landlords of all sizes were wondering if rents will continue to rise as rapidly as they did last year.In fact, rent increases for new leases are already it’s late Significantly.

But Americans hoping for a return to pre-pandemic rent rather than a systematic solution to the affordable housing crisis are most likely to be disappointed. , as the Federal Reserve attempts to raise interest rates to curb inflation, housing construction retreats and the gap between long-term supply and demand widens, making housing even more affordable in the future. You will not be able to

As such, institutional investors may continue to capture an increasing share of the housing that is actually built, and may even choose to build their own single-family rental housing. Some see this as a potential positive. For example, Bloomberg His Opinion columnist Connersen said: claimed The proliferation of single-family rental communities may ease some of the barriers to home construction. “A handful of corporate owners whose tenants are looking to build more as a way to lower rents at the expense of wealthy institutional owners rather than a bunch of individual homeowners who care about their property values. There may be others,” he wrote last year.

But some argue that corporate consolidation of real estate titles, even if it has a beneficial effect on rents, is not a happy one. Alexander Ferrer of Los Angeles tenant advocacy group Strategic Actions for a Just Economy says that small landlords also engage in predatory profit-maximization practices, but they have not been successful against faceless corporate landlords. They argue that it is often difficult to file a complaint.

“Tenants and their advocates are not wary of corporate ownership because the cost of housing rises, but because it magnifies the power imbalance in the landlord-tenant relationship,” he said. I have written last year. “Liberal urbanists, housing professionals, and tenant advocates should all challenge the current entry of corporate owners into the single-family home market. Not because they deserve it, but because corporate landlordship creates distinct harms and increases expansion, and those harms should always be contested.”

Are there any perspectives we missed?Email us [email protected]Please make a note of your name, age and location in a reply that may be included in the next newsletter.

“Rent going up? A company’s algorithm might be the reason.” [ProPublica]

“The housing crisis has led to more politicians saying yes to developers.” [The New York Times]

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