Among prices for just about everything else, house prices have been rising in recent months and years. Though inflation and other economic factors are affecting this market, there is another force behind this rise in housing prices. First-time homeowners are facing more challenges than ever before in finding affordable homes to purchase as their own.
Big-budget investors and Wall Street banks have been buying up homes and properties around the United States for years. Ever since the 2010 foreclosure crisis, the widespread epidemic of improper foreclosures initiated by large banks and investors, these powerful corporations have been purchasing homes en masse. According to The Atlantic, some of the largest private-equity groups in the world “spent a combined $36 billion on more than 200,000 homes in ailing markets across the country,” between 2011 and 2017.
Furthermore, in one area of Atlanta, Georgia, “they bought almost 90% of the 7,500 homes sold between January 2011 and June 2012.” These big investors have claimed that they want to save the housing market since this housing foreclosure, but their motives don’t seem to be as innocent as they say.
These investors are spending hundreds of millions of dollars on these homes and properties, and refusing to sell them back. These homes are being turned from independent ownership to rental properties, which presents a problem for young families trying to purchase their first home. Most people want to own their house, not rent it out to some random bank on Wall Street. Planetizen, an independent online platform for planning and news, reported that in September of 2020, the Wall Street Journal “described big investors getting in a ‘permanent suburban rental class.’”
These investors might claim good intentions, but the same article featured a quote from a Wall Street Journalist, which stated that “‘they are competing for houses with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.” These large banks and corporations do not want to save these houses and use them to help citizens; they want to turn home ownership into a home rental and trap people into paying unfairly high rent to collect more money.
In addition, purchasing this many homes all at once begs how these investors manage the upkeep of these properties and the satisfaction of their tenants. Though Wall Street banks and hedge fund investors might claim to be capable of the maintenance, it is not plausible that one corporation could effectively maintain the number of properties that they are buying.
CNN stated that investors claim that this will “improve standards in the rental sector and offer more choice in desirable neighborhoods.” Still, in reality, “some tenants… dispute this, alleging substandard services and excessive rent increases.”
They are investing in a market they most likely do not know anything about and using their ownership to rack up rent prices for their tenants without providing adequate care to the homes. They aren’t concerned with the happiness of their tenants; all they care about is the money going straight into their pockets.
Wall Street banks and other large investors alike are buying up homes and properties around America at a rate too quick to not raise suspicions. They are turning these homes into rental properties and racking up housing costs for anyone hoping to purchase their own home one day. Adequate maintenance and upkeep of these homes is not a priority, as tenants continue to complain about slow service and inadequate care. Though these big investors claim to be helping the housing market since the 2010 housing foreclosure crisis, they are really destroying one of the critical facets of the American dream: home ownership.
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