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Prices will have to fall. What happens to all these corporate owned homes when they are underwater? This could be 2008 all over again with a side order of 1979.
if its anything like last time the Fed will buy them. So what do they have to worry about?
The owner- occupied housing rate is about 65.6%
It peaked during the housing bubble and then understatedly, declined when the bubble popped.
Real Estate Investment Trusts ( REIT) were approved by Congress in 1960 as a way for small investors to have access to income producing property. Today, REITS control about $3.5 trillion in real estate assets, of which about $2.5 trillion is publicly- traded. The remainder is private placements.
The first REIT was American Realty Trust owned by Thomas Broyhill, cousin of Representative Joel Broyhill, who sponsored the REIT legislation and pushed the Eisenhower Admin to support it.
REITS are not limited to residential housing. It includes cell towers, industrial, high end malls, data centers, self storage, healthcare etc.
Then there are the private equity firms ……in 2017, Blackstone spun off its subsidiary Invitation Homes as a public company. It is the single largest owner of single family rental homes in the US- about 80,000 in 16 markets. That’s 80,000 out of 84 million single family homes in the US.
Because it concentrates on relatively few markets and neighborhoods within those markets, some folk have a perception, it owns everything.
No question, well capitalized corporations can borrow funds at lower rates than individual consumers. As it relates to housing, this enables a corporate buyer to pay a substantial premium for property compared to an individual buyer. It’s a win for the individual seller.
Congress could take action to better level the playing field with the tax code.
The federal government already took strong steps to make sure individual investors think twice about renting and charge a premium in case they're told they have to not evict anyone for "a while"...and maybe collect, or not.
Also, extremely low interest rates and rampant inflation.
Where are you confused by extremely high rents and home prices in all of that?
I got my first home pretty cheaply in 1995. Interest rate was over 9%.
P.S. I built up my down payment by living in a craphole or having multiple roomates, no cable TV etc.
Part of that might be supply. I know early in the virus our neighborhood was averaging 150-300 listings at any given time. When the lockdowns started until late summer new listings averaged 25-50.
Indeed... this pandemic really screwed up a lot of things in society in retrospect... mostly the exaggerated central bank responses to try to print our way to prosperity... I think people underestimate how bad a problem this will become if we don't see central bank tightening and basically a forced recession to cool off the economy.
I still have yet to find a clear answer as to where all these immigrants they are flying and bussing in during the middle of the night are living, if they are using up rentals and how much the government is paying for them to live and whether it's further putting pressure on rent prices and vacancy rates. Top and bottom continue to squeeze the middle.
Exactly, Brandon and the Democrats have to house their millions of "Illegals" somewhere Which only exacerbates the shortage of housing for Americans.
Perhaps we will become a nation of renters with most of the homes owned by big corporations. Paying rent will be like paying one’s cell phone bill or any other monthly expense. Owning a home will eventually be for the wealthy.
"Biden will destroy your neighborhood and your American Dream"
And that is exactly what is happening
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