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Thursday, December 07, 2023

A bill introduced in the House and Senate would prevent hedge funds from owning single-family houses in the United States.

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Good.

Although, if it forces them to sell current inventory, housing prices are going to plummet. Good for buyers, bad for owners.

#1 | Posted by jpw at 2023-12-07 12:07 PM | Reply

From the article: The bills were introduced three months after The New York Times published a story examining the impact of corporate-backed investment on Charlotte, N.C., where, in 2022, investors purchased 17 percent of the city's homes in cash, often outcompeting first-time buyers who rely heavily on mortgages.

In a pattern repeated in cities around the country, corporations focused on modestly priced houses, frequently in neighborhoods with large Black and Latino populations, and converted the properties to rentals. In one neighborhood in east Charlotte, Wall Street-backed investors bought half of the homes that sold in 2021 and 2022. On one block, all but one home that sold during that period sold in cash to an investor who rented it out.

Wall Street entered the single-family rental market in the aftermath of the 2008 housing crisis, plucking up homes in foreclosure. Its influence has been growing ever since. By June 2022, institutional investors owned 3 percent of all single-family rentals nationwide, but in more affordable markets they owned a considerable market share; in Charlotte, they owned 20 percent, according to the Urban Institute. Even as the housing market slows, investors have remained active, buying 26 percent of the single-family homes that sold in June 2023, according to CoreLogic, a data analytics company.

#2 | Posted by qcp at 2023-12-07 01:20 PM | Reply

Seems smart and reasonable. No Republicant will vote for it.

#3 | Posted by LegallyYourDead at 2023-12-07 11:43 PM | Reply

This legislation is A Good Thing in my opinion.

Around here, private equity funds seem to be buying up houses, and then charging ridiculous rents for Gen-Z, making the prospect of Gen-Z owning a house diminish.

The Future of Homebuying: Does Gen Z Have It Even Tougher Than Millennials? (January 2023)
finance.yahoo.com

... Buying a home is no easy feat, but it's grown substantially harder for younger generations of Americans. According to recent Census data, the homeownership rate for millennials stands at 48.6% -- over 20 percentage points below Gen X and nearly 30 below baby boomers.

Even among 40-year-old millennials, the homeownership rate (60%) lags behind older generations at that same age. Apartment List reports that 64% percent of Xers, 68% of boomers and 73% of the Silent Generation owned homes at 40.

It's an alarming trend: Each new generation is experiencing less homeownership than the last. ...

[emphasis mine]

Because private equity (a.k.a., "the wealthy") is buying up single family homes for rentals purposes, and effectively reducing the inventory of single family homes?

Thus driving up the price of single family homes to the point that Gen-Z cannot afford to buy a house and ha to pay monthly rent to the wealthy?

More of the wealthy transferring the wealth of the country from Main Street to themselves?


#4 | Posted by LampLighter at 2023-12-07 11:43 PM | Reply

For example ...

Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession. Here's what that means for rental prices (February 2023)
www.cnbc.com

... Corporations backed by private equity groups such as Blackstone and Pretium Partners bought tens of thousands of homes across the U.S. Sun Belt. ...

Institutional investors may control 40% of U.S. single-family rental homes by 2030, according to MetLife Investment Management. And a group of Washington, D.C., lawmakers say Wall Street needs to back away from the market.

"What we're saying is don't have private equity buying up single-family homes," said Rep. Ro Khanna, a Democrat representing California's 17th Congressional District. Khanna is the lead author of the Stop Wall Street Landlords Act of 2022. "What's outrageous is your tax dollars are helping Wall Street buy up single-family homes," he said in an interview with CNBC. ...



#5 | Posted by LampLighter at 2023-12-07 11:48 PM | Reply

While I agree this would be a good thing to pass, it won't solve the problem of prices increasing elsewhere. The investers will just change what they buy. Instead of homes to rental, likely it will be investing in medical to a greater extent than it is now, making health care ever more unaffordable.

www.cbsnews.com

#6 | Posted by BBQ at 2023-12-08 04:31 AM | Reply | Newsworthy 1

I support this bill 100%
Home buyers who need a home to live in shouldn't have to compete with hedge funds.

#7 | Posted by danni at 2023-12-08 06:06 AM | Reply

I support this bill 100%
Home buyers who need a home to live in shouldn't have to compete with hedge funds.

#8 | Posted by danni at 2023-12-08 06:06 AM | Reply

published a story examining the impact of corporate-backed investment on Charlotte, N.C

Of course they did. It's every liberals dream to escape their progressive utopia and move to NC. I didnt even have to look at this article to know it focused on N.C.

That aside,

I actually do agree with this. Private equity firms should be made to sell single family homes and put more inventory on the market and that would lower prices. I would like to see the bill passed.

#9 | Posted by boaz at 2023-12-08 09:44 AM | Reply

It's every liberals dream to escape their progressive utopia and move to NC

Riiiiiiiight.

#10 | Posted by Doc_Sarvis at 2023-12-08 09:52 AM | Reply

It will never pass. Pro-Wall Street Democrats and ALL Republicans will block it.

#11 | Posted by Sycophant at 2023-12-08 10:14 AM | Reply

Even at risk of losing much of my net worth, on paper, I agree that this is part of what needs to happen to make family housing affordable again.

Another factor that would help. Someone should come up with a reasonable way to compel the huge number of single elderly people and empty nesters to downsize. A move that would also free up a significant amount of family housing... In my neighborhood alone, at least 1/3 of the 3 - 4 bedroom homes are occupied by elderly retirees. These are the people who should be renting.. people who are no longer capable of maintaining a home.

#12 | Posted by Whatsleft at 2023-12-08 02:19 PM | Reply

I support this 100%. It's ridiculous that people making $50k a year are competing against multi-billion dollar hedge funds. For those that worry about the "everyday" landlord that owns multiple houses for rent, I would be good with seeing a, say, 10 home exemption. That would allow folks to landlord a reasonable # of homes while getting the big companies out of the market.

Although, if it forces them to sell current inventory, housing prices are going to plummet. Good for buyers, bad for owners.
#1 | POSTED BY JPW AT 2023-12-07 12:07 PM | REPLY

I do agree that this is a concern, but couldn't the law be written to disallow new purchases while requiring an inventory reduction of 10% of your original value each year for 10 years? That would still bring prices down but not glut the market.

#13 | Posted by bartimus at 2023-12-08 03:39 PM | Reply

The bill would require hedge funds, defined as corporations, partnerships or real estate investment trusts that manage funds pooled from investors, to sell off all the single-family homes they own over a 10-year period, and eventually prohibit such companies from owning any single-family homes at all. During the decade-long phaseout period, the bill would impose stiff tax penalties, with the proceeds reserved for down-payment assistance for individuals looking to buy homes from corporate owners."

Home ownership needs to be an obtainable goal and if we agree Hedge funds buying up homes is driving the price to the point where home ownership is simply unobtainable in many areas of the country where this seems to be quite pervasive then I see this as a reasonable bill.

I'm thinking that if it did pass, then of course the hedge funds would sue claiming it's an unconstitutional law.

But if the argument can be made this ownership of homes is truly rendering home ownership unobtainable then THAT is what's unconstitutional.

#14 | Posted by eberly at 2023-12-08 03:55 PM | Reply

"Although, if it forces them to sell current inventory, housing prices are going to plummet. Good for buyers, bad for owners."

If you look at the long tail, CPI adjusted median home price hovered right around $200K-250K for about a half a century. Since 2001 the price has doubled. dqydj.com
While it's certainly a good financial move to own a home, it's not really supposed to be a lottery ticket.
Nor is it supposed to be a way for moneyed interests to redistribute wealth upwards in form of rents.

#15 | Posted by snoofy at 2023-12-08 03:58 PM | Reply

#15 | POSTED BY SNOOFY

The problem is people think that their house is actually worth what the inflated markets are currently valuing it at.

When in reality, it's only worth current values if you're able to sell. Unless you're willing to partake in the bubble, it's likely worth a significant % less.

Long term thinking applied to short term money grabs.

#16 | Posted by jpw at 2023-12-09 12:00 PM | Reply

Does a hedge fund manager float?

#17 | Posted by redlightrobot at 2023-12-09 09:38 PM | Reply

@#14 ... Home ownership needs to be an obtainable goal and if we agree Hedge funds buying up homes is driving the price to the point where home ownership is simply unobtainable in many areas of the country where this seems to be quite pervasive then I see this as a reasonable bill. ...

Yup.

... Home ownership needs to be an obtainable goal ...

But it does not appear to be so of late.

I just look at the value of my house, and how it has appreciated recently, as real estate "equity firms" seem to be buying up the houses around me as they go on the market. I've seen a nearly doubling of the value of my house from 2019 to the present.

When I bought this house, the mortgage payment was less than the rent I was paying. And I had a 10% interest rate on that initial mortgage.

The wealthy are taking over the economy, unsurprisingly, to skew the economy for their own benefit.



.

#18 | Posted by LampLighter at 2023-12-09 09:50 PM | Reply

@#16 ... When in reality, it's only worth current values if you're able to sell. ...

Yup. The true value of a house is what you can sell it for.

From what I have seen in the areas that concern me, zillow.com has been in "the ballpark" maybe even a bit on the low side.


#19 | Posted by LampLighter at 2023-12-09 09:59 PM | Reply

From what I have seen in the areas that concern me, zillow.com has been in "the ballpark" maybe even a bit on the low side.

#19 | POSTED BY LAMPLIGHTER

I've found Zillow to be overstated in my area. The houses that have sat for a long time on market are the ones that are asking for slightly above Zillow "zestimate" prices because they still think the market is hot.

Without fail, they sell when they shave about 10% off of asking price.

#20 | Posted by jpw at 2023-12-10 10:39 AM | Reply

Home ownership needs to be an obtainable goal and if we agree Hedge funds buying up homes is driving the price to the point where home ownership is simply unobtainable in many areas of the country where this seems to be quite pervasive then I see this as a reasonable bill.

How would you prove this?

I can see an argument being made these HedgeFunds are increasing the supply of housing, via ie rentals. The entity buying the homes has to profit from the purchase, they are renting the home out.

So regardless of owning or not, there housing is being used.

So the argument is going to be how are they increasing the price of housing, or increasing the supply of housing availabe?

Since 2001 the price has doubled.

Well the population increases, but the housing supply doesnt. Are the Hedgefunds helping build more supply? If they disappeared would supply starts fall? OR go up?

Housing Supply Not Keeping Up with Population Increase
landonsellshomes.com

In CA the local communities can severely restrict new housing developments. Are Hedgefunds really the problem in CA?

#21 | Posted by oneironaut at 2023-12-10 11:10 AM | Reply

-How would you prove this?

I would use anecdotal evidence that demonstrates a median income household being unable to afford a median priced home where they earn their median income.

Then dive into why the prices are so high because house after house is owned by a hedge fund.

Median income households should be competing with other median income households when bidding on a home.

Not a hedge fund.

#22 | Posted by eberly at 2023-12-10 11:26 AM | Reply

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