Rent Check Payable to Wall Street
As a 20-something renter, the idea of owning a home makes me break a sweat.
But when I do decide to settle down for my piece of the American dream one day, will home ownership still be an option? Not if Wall Street gets its way.
I’ve begun paying closer attention to an alarming market trend, thanks to my experiences with the East Bay Community Foundation and their work to promote home ownership for strong families and thriving communities.
Wall Street is buying up single-family homes at record rates. Everywhere from Oakland, to Chicago, to Atlanta, huge investment firms are getting into the business of being landlords. They’re buying foreclosed homes and bad mortgages and converting the homes to rentals. Investors like American Homes 4 Rent, Blackstone Group and Colony Capital have purchased over 1.1 million homes in the past three years. As reported by Bloomberg, mega-firm Blackstone already owns $2.5 billion in single-family home property, and in October disclosed averaging $100 million per week in additional buys.
This is disturbing on many levels. For one, the big banks and investment firms whose risky speculation and shady investments caused the housing crisis in the first place are profiting from the destruction they wrought. Most properties fueling the feeding frenzy are foreclosed homes, but they are also buying loans. Families that are still struggling to hang on to their homes have ‘bad loans’ which can be bought and sold among banks—and the equity firms and hedge fund buying them are more likely to foreclose and take possession than offer loan modifications to help families keep their homes.
Secondly, homes coming off the market is bad for neighborhoods and bad for regular people. Owning a home means putting down roots, having something that’s really yours, getting to know your neighbors, and building your family’s wealth. When Wall Street firms come to bid with all-cash offers, families that are ready and able to buy lose out, and neighborhoods lose too—high occupant turnover and disinterested, distant landlords are a toxic mix.
Massive multinationals are actively and profitably putting home ownership out of reach. Even those of us who may not want to buy a home right now can agree that we need to keep the opportunity alive.
There is plenty we can do. We need to beef up financial regulations and tenant protection laws, invest in tenants unions and empower our local foundations and housing organizations to strengthen home-buyer assistance programs. Above all, we need to shine the light on what’s happening and pressure our leaders to take action. The big banks have a debt to American families. Snatching single-family homes away and handing them to giant investment firms is no way to repay it.