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WSJ: Wall Street Has Spent Billions Buying Homes. A Crackdown Is Looming.
Posted on 4/29/24 at 10:05 am
Posted on 4/29/24 at 10:05 am
quote:
Wall Street went on a home-buying spree. Now, more lawmakers want to stop it from ever happening again.
Democrats in the U.S. Senate and House have sponsored legislation that would force large owners of single-family homes to sell houses to family buyers. A Republican’s bill in the Ohio state legislature aims to drive out institutional owners through heavy taxation.
Lawmakers in Nebraska, California, New York, Minnesota and North Carolina are among those proposing similar laws.
quote:
These lawmakers say that investors that have scooped up hundreds of thousands of houses to rent out are contributing to the dearth of homes for sale and driving up home prices. They argue that investor buying has made it harder for first-time buyers to compete with Wall Street-backed investment firms and their all-cash offers.
Investors of all sizes spent billions of dollars buying homes during the pandemic. At the 2022 peak, they bought more than one in every four single-family homes sold, though more recently their activity has slowed as interest rates rose and supply became tighter. Two of the largest home-buying firms, Invitation Homes and AMH, are publicly traded companies, while a number of other companies, backed by private equity, hold portfolios of tens of thousands of homes nationwide.
Companies that buy single-family homes say their businesses provide renters the opportunity to live in desirable neighborhoods where they otherwise couldn’t afford to buy.
With home prices and rents near record highs around the U.S., legislators and officials at all levels of government have become more active on housing issues. States have passed new measures to fund more affordable housing, to allow builders to bypass local zoning laws and to make the eviction process more favorable to tenants.
Most calls to block large companies from snapping up homes come from liberals, but some conservatives also show an inclination to crack down.
This “corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home,” Republican Gov. Greg Abbott wrote on X last month. “This must be added to the legislative agenda to protect Texas families.”
Close to equal numbers of voting-age Republicans and Democrats said they would support a measure to block Wall Street firms from buying homes, according to a new study funded by the University of California, Santa Barbara, and the Manhattan Institute, a conservative think tank.
quote:
Advocates for the single-family rental industry, such as the National Rental Home Council, oppose such legislation and blame rising prices on an undersupply of new-construction homes. They also point to the relatively low number of homes owned by institutional investors, defined as those companies with portfolios of 1,000 homes or more. Some research estimates these companies own 3% to 5% of American rental homes.
In some American cities, institutional investors hold a much larger share of homes than they hold nationally. In Atlanta, nearly 11% of all rental homes in the five-county area are now owned by three real-estate companies, a recent study by researchers at Georgia State University found. A 2022 analysis by the U.S. Department of Housing and Urban Development said 21% of Atlanta rental homes were owned by some large institution.
quote:
The bills in the House and Senate would cap rental-home ownership at no more than 50 homes for many companies, requiring them to sell off any more they already own. A bill in Minnesota, meanwhile, would limit ownership to 20 homes.
Bills to block landlords in the Ohio and Nebraska state legislatures were written in response to a small number of investors buying up hundreds of homes in a handful of Cincinnati and Omaha neighborhoods.
Louis Blessing III, a Republican representing suburbs of Cincinnati in the Ohio Senate, introduced a bill to tax large landlords so heavily that they would likely feel compelled to sell their properties. Blessing said he is concerned about real-estate companies developing monopoly power in some neighborhoods, while putting starter homes further out of reach for home buyers.
LINK
Posted on 4/29/24 at 10:07 am to ragincajun03
People gonna love seeing their “equity” go poof.
Posted on 4/29/24 at 10:07 am to ragincajun03
Let's be honest, the right people will get paid off and it will continue.
My personal theory is home "ownership" will be considered a right, and a lot of these homes will be moved to a section 8 style situation. PE gets their money, government gets their kickbacks, and people get to live in houses.
My personal theory is home "ownership" will be considered a right, and a lot of these homes will be moved to a section 8 style situation. PE gets their money, government gets their kickbacks, and people get to live in houses.
This post was edited on 4/29/24 at 10:09 am
Posted on 4/29/24 at 10:08 am to ragincajun03
Institutional buying is not great.
OTOH, forcing massive selloffs will cause its own set of problems. The markets are generally flooded now and buying is at a low point in part due to interest rates.
This sounds like a recipe for people with a lot of cash on hand to continue buying up property, such as happened during COVID, as long as they aren’t considered “institutional buyers.”
OTOH, forcing massive selloffs will cause its own set of problems. The markets are generally flooded now and buying is at a low point in part due to interest rates.
This sounds like a recipe for people with a lot of cash on hand to continue buying up property, such as happened during COVID, as long as they aren’t considered “institutional buyers.”
Posted on 4/29/24 at 10:11 am to ragincajun03
quote:
Companies that buy single-family homes say their businesses provide renters the opportunity to live in desirable neighborhoods where they otherwise couldn’t afford to buy.
They Gon get that NIMBY treatment
Posted on 4/29/24 at 10:12 am to teke184
Almost no one loses a bidding war with an institution. They have to own with an ROI in mind, and it’s impossible to outbid a crazy mom that wants a certain location. People get stupid emotional buying, institutions don’t.
If you take away whatever institutional buying and owning is out there, you take away the bottom of the market. When the bottom is soft, everything will fall to some degree.
ETA: you know what else hurts the market? Section 8 housing. Why can the government pay rents but institutions can’t own homes? Is it not the same thing essentially? Both are inflating the market.
If you take away whatever institutional buying and owning is out there, you take away the bottom of the market. When the bottom is soft, everything will fall to some degree.
ETA: you know what else hurts the market? Section 8 housing. Why can the government pay rents but institutions can’t own homes? Is it not the same thing essentially? Both are inflating the market.
This post was edited on 4/29/24 at 10:14 am
Posted on 4/29/24 at 10:12 am to ragincajun03
I don’t know how this all ends up
But every time the US government gets involved in
shite hits the fan
But every time the US government gets involved in
quote:
A Crackdown
shite hits the fan
Posted on 4/29/24 at 10:12 am to Dawgfanman
quote:
People gonna love seeing their “equity” go poof.
That's gonna happen anyway if we no longer have an affordable market and everyone turns to the mindset of being OK to just be renters.
I own rentals so I will wait and see how they structure any bill. Merely taxing it will only hurt the consumers and do nothing to slow it down. Rental rates will just increase.
I am never for regulation but I am pro middle class. I still think home ownership is the greatest wealth-building tool for the middle class but institutional buying is OOC and killing that dream for many.
Posted on 4/29/24 at 10:13 am to ragincajun03
quote:
introduced a bill to tax large landlords so heavily that they would likely feel compelled to sell their properties
This, friends, is how you tank a market.
Posted on 4/29/24 at 10:15 am to stout
quote:
That's gonna happen anyway if we no longer have an affordable market and everyone turns to the mindset of being OK to just be renters
Have you seen rent prices? Why does anyone think renting is cheap? Sure, buying isn’t cheap but renting isn’t cheaper.
It’s like saying new car prices are expensive so I’ll just lease. (Yes I know there’s some good deals on leases, blah blah)
Ultimately if you have a down payment owning is still going to be cheaper than renting. You aren’t paying a middle man to manage your home.
Posted on 4/29/24 at 10:15 am to Dawgfanman
quote:
People gonna love seeing their “equity” go poof.
If the only thing that drove up equity was Wall Street buying up inventory that is artificial equity.
Tough pill to swallow, but you aren’t taking peoples houses away, you are only making it more difficult to move. You also open up inventory to a lot of people who are completely boxed out in the current market.
Posted on 4/29/24 at 10:15 am to baldona
quote:
If you take away whatever institutional buying and owning is out there, you take away the bottom of the market. When the bottom is soft, everything will fall to some degree.
This isn’t a bad thing, its a good thing.
Otherwise we end up like Canada, which has completely run amok.
Posted on 4/29/24 at 10:16 am to stout
quote:
I am never for regulation but I am pro middle class. I still think home ownership is the greatest wealth-building tool for the middle class but institutional buying is OOC and killing that dream for many.
Govt devaluing the dollar and flooding the country with money since 2020 caused this, institutional buyers are just their bogeyman.
Posted on 4/29/24 at 10:17 am to PrecedentedTimes
quote:
This isn’t a bad thing, its a good thing. Otherwise we end up like Canada, which has completely run amok.
What about the guy that owns 10,20, or 30 rentals?
Where does an institutional buyer start and stop?
Posted on 4/29/24 at 10:17 am to baldona
quote:renting doesn't make you have to come up with a 20% down payment...the problem with many wanna-be first time buyers, unless they are getting help from family, will have trouble coming up with the down payment, even if homes cost significantly less than now.
Have you seen rent prices? Why does anyone think renting is cheap? Sure, buying isn’t cheap but renting isn’t cheaper.
Posted on 4/29/24 at 10:21 am to ragincajun03
I read in the other thread that investor bought houses was minor. Somewhere between 1/20 to 1/5 houses being bought and owned by Wall Street/Venture Capital seems like a major portion of the market.
Posted on 4/29/24 at 10:21 am to baldona
quote:
What about the guy that owns 10,20, or 30 rentals? Where does an institutional buyer start and stop?
I doubt he is a C corp.
IMO, the only rentals that should be allowed (besides vacation rentals) are owner occupied rentals. It would prevent slums from spreading.
Posted on 4/29/24 at 10:22 am to Dawgfanman
quote:
Govt devaluing the dollar and flooding the country with money since 2020 caused this,
Yea rates were too cheap for too long
quote:
institutional buyers are just their bogeyman.
Not really. We get calls weekly from hedge funds wanting bids to do their maintenance because they are looking to buy a block of houses from DSLD or something. I have been in the business of managing properties for institutions (99% bank repos) since 2008 and the amount of SFH being bought by these firms is escalating.
One of the largest companies in my industry has set up warehouses in cities like Houston, Dallas, Phoenix, Tampa, Vegas, etc and staffed them just to get contracts from hedge funds to manage their inventory.
This isn't a boogeyman. It is a growing problem that perhaps should be reviewed as it only hurts the middle class considering low-income already have a ton of housing programs including Section 8, tax credit development, etc
Posted on 4/29/24 at 10:25 am to Chicken
quote:
renting doesn't make you have to come up with a 20% down payment..
You can get a house with as little as 3% down. Stated income loans are also back as well as other forms of subprime. You are correct though. Many people can't even afford groceries due to inflation much less saving 3% for a $250K purchase.
The problem is income growth had no possible way of keeping up with house price increases on top of rates now at 7.5% for 30 years.
This post was edited on 4/29/24 at 10:27 am
Posted on 4/29/24 at 10:26 am to Chicken
quote:I may be wrong, but aren't there federally backed HUD loans for first time buyers that only require a 5% down payment?
renting doesn't make you have to come up with a 20% down payment...the problem with many wanna-be first time buyers, unless they are getting help from family, will have trouble coming up with the down payment, even if homes cost significantly less than now.
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