Yves here. It is very hard to know where to begin with this article, since it repeats many tropes about the US housing market that are simply false. The big problem in the US is housing affordability. There is no housing shortage:
The total is just short of 148 million. About 35% is rental property, which has a typical vacancy rate of 7%, so one could argue for reducing the total stock by 3.6 million. FRED shows the active listings for owned residences at under 1.1 million; Zillow has the for-sale inventory as of end of June at 1.3 million. Generously (for the purpose of this analysis) using the Zillow figure and assuming all homes listed for sale are not occupied, we get 143.1 million, so say 143 million.
The Census put the number of households (admittedly as of 2023) at 127.8 million.
So there is no housing shortage on a macro level, as many claim.
Now real estate is always and ever local, so there are shortages in certainly chronically underhoused metro areas like New York City, and no doubt in certain other spots.
The not-sufficiently-discussed issues are the mismatch in housing stock composition versus needs (particularly the dearth of affordable housing) and the way policy schemes to increase housing affordability, just like the canard of health care “access”, have increased prices and enriched providers.
Let’s go through some underlying issues:
1. The breakdown of the traditional model of housing as a forced savings vehicle for retirement. Matt Stoller wrote about this in a law review article: The Housing Crash and the End of AmericanCitizenship. Back in the days when blue collar workers could buy a house, pay for a car in cash, and have a stay-at-home wife, jobs were stable. My father, who changed employers a few times, got raised eyebrows for tenures of less than 10 years. And even if not, labor demand was generally strong enough that a worker had good odds of landing other work in the same community for the same or even better pay.
So the 30 year mortgage was a good match for a typical career duration. A worker or professional would buy a home and pay off the mortgage and then live in it at lower cost when he retired.
Much shorter employment tenures are the norm. The average US employee has been with their current company only 3.9 years. Changing employers might entail moving, when transaction costs compared to the equity in a house are high. Divorce and disability also lead to home sales rather than staying put until you pay off the mortgage.
2. The US response to lack of housing affordability: to make housing less affordable. Dean Baker wrote about this after the global financial crisis (with worked examples) and was ignored. First buyer subsidies, allowing for more leverage, using government guarantees to lower interest rates allow for greater borrowing when buying homes which over time has helped drive up prices.
3. Zoning and shelter porn have contributed to too much building of too many big houses and not enough “starter homes” of the sort constructed after World War II and more modestly-sized condos and townhouses.
This table, although with dated data, presents per capita as opposed to per house data, and gives an even clearer picture of how extravagantly housed (on average) Americans are:
Many communities also resist building denser, as in less expensive housing, aka apartments and townhouses.
Another zoning contributor has been the end of single room occupancy hotels and boarding houses, where tenants would rent a room and share a bathroom. Some boarding houses offered meals for an additional charge. I had assumed that gentrification was the big driver for the loss of this sort of dwelling. However (and the passage of these laws and regulations may have been part of this gentrification process), in California, and I assume nearly all places, it is illegal to have a housing unit with no bathroom. The argument is that it was a health risk to have a shared bathroom.
4. As Elizabeth Warren outlined in The Two Income Trap, not mentioning how rising income inequality and the loss of inexpensive college education at often very good state schools (government subsidies fell markedly in the 1980s) has led to much greater competition to get into “good” colleges, led in turn to the phenomenon she flagged, of the big premium for housing in “good” and “pretty good” school districts.
The article also incorrectly states that “home prices have surged nationwide.” Admittedly this Zillow chart goes back only to 2017.
Although “surge” is arguably accurate, the text gives the impression that this is a long-term phenomenon when over the last decade, the frenzied buying during the Covid work from home phenomenon was the big perp. The Zillow chart does show a faster rate of increase, but the table below makes the pattern clearer:
The US has not seen anything approaching the 2021 nominal increase of 19% and real increase of 12% in decades.
However, it is true that with stagnant real wages, the increase in housing prices can and likely does exceed the increase in average real wages. And that is a huge issue. But that was not the claim made.
In addition, the headline claim is incorrect as far as single family homes are concerned. Yes, private equity firms bought foreclosed homes from Fannie and Freddie after the crisis (and not in bulk sales, there was so much interest that the GSE did only “mini-bulks”). We warned at the time that single family homes were not well suited to corporate ownership and property management. They are too diverse in type and construction and too spread out to be managed efficiently. There are no scale factors save at most in rent collection. Consider the corporate owner’s economics versus that of the classic small landlord. He might be an electrician, plumber or carpenter and have someone regular who could perform the tasks beyond his expertise. The houses he owned would be nearby. And he would know their quirks.
By contrast, the driving distances alone and the difficulty of managing maintenance staff efficiently works against the owner of dispersed single family homes.
According to John Burns Research & Consulting, only 0.4 percent of single-family homes in the United States are owned by institutional investors with over 1,000 homes in their portfolio. This share rises to 3.8 percent of single-family homes for institutional investors owning over 100 homes, and up to 10 percent in certain metro areas such as Atlanta. Housing researcher Paul Fiorilla, quoted in the Washington Post, stated that it is unlikely that large institutional investors have a significant impact on prices, except for select areas where their concentrations are unusually high: “‘Any segment that owns such a small percentage of the market cannot have that much of an impact on prices,’ with the possible exception of a handful of communities with a significant concentration of big investors.” Some housing advocates have argued that public attention to large institutional investors distracts from structural causes of the housing affordability crisis, such as the housing shortage and its roots in exclusionary zoning and other laws that empower NIMBY obstruction of housing.
Indeed.
Now to the main event.
By John P. Ruehl, an Australian-American journalist living in Washington, D.C., and a world affairs correspondent for the Independent Media Institute. He is a contributor to several foreign affairs publications, and his book, Budget Superpower: How Russia Challenges the West With an Economy Smaller Than Texas’, was published in December 2022. Produced by Economy for All, a project of the Independent Media Institute
The 2025 U.S. housing market presents a paradox. Home sales are down, and there are far more sellersthan buyers, yet prices continue to hit record highs. Over the past decade, home values have surged nationwide, including in once-affordable Sunbelt cities.
Policymakers appear ill-equipped to respond to the situation. In a July 2025 interview with the New York Times, 16 U.S. mayors listed housing as one of their top concerns. During her 2024 presidential campaign, former Vice President Kamala Harris proposed tax credits for first-time buyers to alleviate the crisis, while President Donald Trump has renewed calls for interest rate cuts to help lower mortgage rates.
Homeownership remains central to the American dream, and U.S. homeownership rates have typically hovered around 65 percent “from 1965 until 2025,” according to Trading Economics. But the high-water mark came in 2004 when it reached 69 percent, and despite a temporary COVID-19-era spike, the rate has continued to inch downward. Worryingly, even among those who own homes, equity is shrinking. Many homeowners own less than half of their property’s value today, with the balance tied up in debt.
Many of the pressures are structural. Construction costs have soared, labor is in short supply, and tariffs have raised the price of materials. Zoning laws, tax regimes, and anti-density regulations have stifled urban growth, while sprawling development is hitting geographic and environmental limits. Mortgage rates remain high, and the national housing shortfall, now estimated to be more than 4.5 million, continues to worsen.
But the crisis has opened the door for new kinds of investors. A growing cast of corporate actors is moving into residential real estate, lured by the prospect of stable returns in a tightening market. Though they still own a minority of U.S. housing, these firms are often concentrated in key regions and markets. Increasingly capable of setting the terms of access to housing, their rising influence threatens to reverse the post-World War II surge in widespread homeownership.
Buildup
Large-scale corporate ownership of homes and influence over rent prices is a relatively recent development. Before 2008, most institutional investors stuck to apartment buildings and urban areas, as single-family homes were seen as too dispersed and costly to manage. That changed after the housing crash, when a wave of foreclosures flooded the market, leading to the availability of deeply discounted homes in the suburbs.
“In the decade since the global financial crisis of 2007-2009, major institutional financial actors have invested heavily in U.S. single-family housing, acquiring anywhere up to three hundred thousand houses, and then letting them out,” stated a 2021 article in Sage Journals.
In 2012, government-backed mortgage giant Fannie Mae began selling thousands of foreclosed homes in bulk to investors, showing single-family housing could be bought, held, and profited from at scale. At the same time, both Fannie Mae and Freddie Mac expanded support for institutional buyers through favorable financing terms and lower rates. Homebuilding, meanwhile, had collapsed, and a supply shortage began to take hold.
“The crash badly hurt a variety of sectors, but it simply devastated the home construction industry, given that the crisis was directly centered there. … with a glut of foreclosures on the market and prices falling fast, America simply stopped building homes. New private home starts plummeted by almost 80 percent to the lowest level since 1959,” according to a 2024 article in the American Prospect.
Investor interest surged as home prices recovered in the early 2010s. This era brought record-low interest rates and trillions in financial stimulus from the Federal Reserve and government, which helped stabilize the economy and flooded capital markets. With cheap borrowing and rising prices, housing became an attractive asset.
The COVID-19 pandemic accelerated this trend. Remote work drove people from cities to suburbs, while eviction moratoriums pushed many small landlords to sell, opening the door for larger buyers. Digital platforms made it easier to browse, purchase, and manage properties remotely. Alongside traditional banks, a wide range of financial firms and platforms have been profiting from rising demand and tightening supply.
Wall Street Landlords
Blackstone, one of the world’s largest private equity firms, became a pioneer in large-scale housing acquisitions after 2008. In 2012, it helped launch Invitation Homes, now the largest owner of single-family rentals in the U.S. Though Blackstone sold its stake in 2019, it reentered the market by acquiring Canadian real estate firm Tricon Residential in 2024, and sold 3,000 homes that year to UK’s largest pension fund for approximately $550 million, showcasing its global influence in housing.
Other major firms have followed suit. Progress Residential, backed by Pretium Partners, has come under fire for evictions, maintenance failures, and excessive fees. Amherst Holdings was profiled in Fortune in 2019 for using early predictive algorithms to identify and acquire homes, and advances in AI have only made this process more efficient.
Real Estate Investment Trusts (REITS), originally designed in the 1960s to give everyday investors access to real estate profits, are now largely dominated by major institutional firms like BlackRock, Vanguard, and private equity funds. Invitation Homes agreed to pay $48 million to the Federal Trade Commission in 2024 for junk fees, unfairly holding security deposits, failing to inspect homes, and using improper eviction tactics. Professor Desiree Fields, in testimony before the Senate Banking Committee in 2021, meanwhile, singled out Invitation Homes and American Homes 4 Rent as “particularly vocal about the use of extraneous fees to increase total revenue,” stated a 2022 article in the Charlotte Observer.
Corporate homebuying continues to climb. Institutional investors bought 15 percent of U.S. homes for sale in the first quarter of 2021, which climbed to nearly 27 percent by early 2025. In some markets, the footprint is even larger: during the third quarter of 2024, investors accounted for 44 percent of all home flips.
Some firms, like Rise48 Equity, focus on acquiring and renovating large multifamily buildings to raise rental income and property value. Others, like Amherst Holdings, are beginning to enter the rent-flipping space as part of a larger expansion policy. Unlike smaller flippers who tend to cash out quickly, these companies renovate and hold properties long term. A growing number of companies are focusing on build-to-rent subdivisions, with entire neighborhoods constructed specifically for rentals.
No single company dominates nationally, but corporate influence is unmistakable in certain cities. In Atlanta, private equity owns more than 30 percent of single-family rental properties, with corporate ownership disproportionately affecting Black neighborhoods, intensifying housing insecurity and displacement.
Large firms enjoy several structural advantages. They access cheaper institutional financing, often pay in cash, and benefit from early access to listings and local policy influence. Firms can use creative financing tools, like combining many homes into a single investment package and using the expected rent payments as collateral to borrow more money.
Bulk purchases allow them to cut costs on repairs, insurance, and maintenance, while builders are more inclined to sell homes in large blocks at a discount rather than wait for individual buyers, helping firms to avoid bidding wars. Unlike individual homeowners who often sell for financial reasons, institutional landlords can hold assets for years and sell only when market conditions are favorable.
Tax policies further tilt the scales. While individual sellers pay capital gains taxes on home sales, corporate buyers can use the 1031 exchange to defer taxes by reinvesting profits into like-kind properties, pushing tax burdens into the future. Rental property owners also get tax depreciation benefits, which allow them to deduct part of the building’s value each year, reducing their taxes, which compound over time.
Tech
Big Tech, with similar vast financial resources, has also become essential to the expansion of corporate housing. It enables investors to scale up, manage properties remotely, and influence markets and consumers to their advantage.
One of the most influential tools is YieldStar, a rent pricing software developed by RealPage, purchased by private equity firm Thoma Bravo in 2021. RealPage gathers extensive rental data from participating landlords and uses algorithms to recommend optimal prices. Landlords who don’t use the technology are often left at a disadvantage. Many property managers adopt these recommendationsautomatically, often under performance monitoring that discourages underpricing or offering tenant concessions.
In cities like Seattle, where a handful of property managers control large shares of the market, RealPage’s pricing influence can be especially powerful. A ProPublica investigation found that in one neighborhood, 70 percent of apartments were handled by 10 firms, all using RealPage software. Recommendations by the software included accepting lower occupancy rates if it leads to higher overall rent revenue. Critics argue that RealPage enables coordinated “rent-setting,” effectively encouraging landlords to behave like a cartel. The U.S. Justice Department opened a lawsuit against the company in 2024 for causing harm to American renters by using its “algorithmic pricing software.” The investigation remains ongoing.
At the same time, short-term rental platforms like Airbnb have also reshaped housing. With vast reach and deep legal resources, Airbnb has helped normalize rental conversions and contributed to higher rents in many cities. In 2025, the New York Post reported that the company funded $1 million to alleged grassroots groups, such as Communities for Homeowner Choice, to oppose a New York City law requiring hosts to be present during guest stays. It has also backed tax battles and filed lawsuits across the U.S., challenging occupancy taxes and other local regulations, costing cities millions in legal fees.
In both long- and short-term markets, tech platforms have made large-scale rental operations possible. Through pricing tools, political lobbying, and data leverage, housing is emerging as a more managed commodity. As corporate consolidation deepens and larger landlords become more integrated with tech platforms, these companies, and increasingly the property owners themselves, will exert even greater control over rent markets with less transparency or oversight.
Addressing the Issue
Organization for Economic Co-operation and Development countries, including the U.S., now have some of the lowest home ownership rates in the world, and the rise of institutional landlords will drive those numbers lower. The core problem remains supply, with Wall Street firms targeting homes precisely because there’s a shortage—something they openly acknowledge and tout to investors as a profit opportunity.
The city of Austin is a rare success story. After peaking at $550,000 in May 2022, median home prices fell to $409,000 by January 2025, and indicators point to a continual downward trend. The key difference has been that Austin has built more affordable housing, providing incentives to ease zoning laws.
Homeownership remains most common in rural areas, while urban centers have been hardest hit by rising investor activity and housing scarcity. Public involvement is critical to reducing the problem. Landlord interests, represented by groups like the National Multifamily Housing Council, carry enormous influence, while tenants rely on thinner support networks like the National Low Income Housing Coalition. Federal agencies like the Department of Housing and Urban Development and the Federal Housing Finance Agency play a role, but lag behind corporate influence. In comparison, Blackstone has faced greater resistance in European countries with stronger tenant protections and better-organized renters’ movements.
Policies like taxing the unimproved value of land could encourage development and discourage speculation on vacant or underused properties. Without effective measures, the concentration of land in private hands will only grow, whether through corporate landlords, billionaires like Bill Gates (who owns 250,000 acres spread out over 17 states), or creeping attempts to privatize public land. At stake is not just affordability but also whether the public retains any real claim to land and housing or surrenders it entirely to private capital.
Is the “housing theory of everything” legit, or some neolib scam? I haven’t looked into it much. I do remember somebody’s-law saying that increasing wages in any region just resulted in the money going to landlords. I’ve made some effort to re-find the article explaining it, without success.
I believe this thesis is the essence of Henry George’s Progress and Poverty
Mathematically, simplified you have a Markov chain where a house can be in one of two states- 1) owned by noninvestor (e.g. family) 2) owned by investor. the family may sell the house to anyone every few years. the institutional investor does not generally sell and when they do they exchange to another investor in a SFH portfolio. State 2 is an absorbing state-eventually investors will own most properties. Consider this Markov matrix which represents families retaining house/selling to other family 85% and selling home to investor 15% (e.g annually). the investor only sells to a family 2% of the time and keeps/exchanges house to investor 98% of the time. in time, most houses will belong to state 2.
0.85 0.02
0.15 0.98
Theoretically an equilibrium can be maintained if the level of transition is lower than that of the growing number of families buying new construction, but new construction of affordable properties is not high. So it doesn’t happen.
That intro by Yves is so cathartic to read but unearths the embittered feelings from my failed ventures.
Watching a neighborhood largely get torn down and replaced with mcmansions but not a peep from the city. Meanwhile trying to build a few townhouses kicks off a local war.
I’ll admit to feelings of weariness and hatred for the new home buyers.
Cities, or their elected officials, are not immune to the benefits of big new houses.
They expect more donations and higher tax bases, so the corruption supply and demand stay roughly in balance.
Alternatively, there is the new California approach, Pacific Palisades edition.
Fire burns down a desirable neighborhood?
Use red tape to delay permits and construction.
Then use new State funds to buy up targeted lots to build the right kind of new housing. Due process becomes do process to some, doo-doo process to others.
Will potential voter increase effect outweigh the impact of the decline in donations.
California Assembly is pausing the Palisades land grab bill after citizen input.
Everyone, keep contacting your politicians at all levels to let them know what you think about issues and legislation. That provides more hope and voices that can’t be so easily ignored.
When home building does happen now, its increasingly swaths of straight to rent subdivisions as the article mentions. Rather than trivial “homestead exemptions”, we need local “non-occupancy taxes”. If the home is not lived in by the owner- a hefty tax ensues.
We already have that in most jurisdictions, or as in the case of California, Prop 13 which has somewhat the same effect. (And doing a 1031 exchange won’t prevent a Prop 13 valuation reset AFAIK). Here in Honolulu we have an increased property tax rate on non-owner occupied real property over $1 million, which means pretty much all 4 BR single family detached.
I’ve seen articles claiming Gen Z prefers to rent, but it isn’t clear if that’s due to affordability.
From a new build perspective, the costs associated with getting government authority to develop seem designed to push for the highest possible price for finished product.
We’re mom-and-pop landlords of single family housing. They’re debt-free and if there were mortgages there wouldn’t be much if any cash flow. And for depreciation expense, you’re limited in the amount of net loss you can take for income tax; any excess has to be carried forward until you dispose of the property.
Interesting. Thanks!
There are a number of reasons not to buy. Instability is one of them – my millionaire brother always rented because he valued the ability to move. It was only once he got married that he bought a house.
I suspect that any discovered preference for renting among youth would be driven by unchosen instability – when there is no loyalty from employers, and you could be in a different job at the drop of a hat, houses become more of a problem than a benefit.
The Zillow price chart to 2017 shows a price increase from 225k to 375k over 8 years. That’s an effective compound average of about 7% a year, is that not higher than CPI?
Further, we cannot assume that the median home sold today is the same as that sold 8 years ago. What I’m seeing locally is a lot of homes on the market with issues of mould, termites, structural damage, rodents, etc that sellers don’t want to pay for.
I suggest you use the official CPI calculator from the BLS which allows you to select a start and end month. It confirms my statement. You take the start level and month and ask what the future value (as of June 2025 would be. It is higher than the average house price shown by ~5%.
https://www.bls.gov/data/inflation_calculator.htm
Yves, can you share your inputs? I’ve run that same calculator for June 2017 to June 2025 and I clearly get a lower much rate than you’re getting…
Oof, I need new glasses. I ran it TWICE last night and misread the end #. Will correct the post.
I discounted the look of the chart due to scaling and figured the much discussed Covid surge had been offsite by price stagnation/falls in places people were exiting.
A table in this post gives a much clearer picture of what happened. The “surge” is very much due to the Covid WFH buying spike, as in a two year buying frenzy that has stuck (as in most of those who bought at those prices are anchored and won’t sell for less if they do sell):
https://bilello.blog/2025/the-ultimate-guide-to-home-price-appreciation
Will add it into the main post.
The other thing that happened during the covid period is that the price per sqft to build went from approx $200/sqft to $400/sqft.
I’ve built and rebuilt (actual banging nails) several houses over the years. Pre covid a Doug Fir 2×4 was about $2. they went as high as $8. Asphalt roofing almost tripled per square (10×10) to install.
Price per sqft is still in the upper $300’s…
My pet peeve is realtors price older houses (in FL ) the same per sqft as new or late model (Miami/Dade specs).. AND PEOPLE PAY IT !!!! In that cast they’re buying a Yugo for the same price as a Mercedes….. Drives me nuts !!!
Well, I count ~3.5% CAGR in inflation from June 30 2017 to June 30 2025, and I also get a little over 6.5% for 225K to 375K…
Also, if you look at the Zillow chart closely, it clearly shows a much higher price growth level from mid-2020 to mid-2022, which is the surge people are talking about. It was a 50% surge as far as I can tell eyeballing the graph. And noting that this aggregate hides a distribution, there are surely markets where home prices increased 75-100%. Sure, if you take that surge over a long period and compare to CPI, may or maybe not better.
It’s also very likely that references to a surge in “home prices” are imprecise references to home purchase affordability, where a high price has been compounded by higher mortgage rates and higher home insurance premiums even after the technical price surge stopped in mid-2022. If you start with a $225,000 home financed at 80% LTV at 5% in 2017 with $1500 home insurance and 1% property tax, the monthly PITI would be about $1278. If you increase the home value to $375,000, set the interest rate at 7%, and grow the home insurance to $2500, that’s monthly PITI of $2516–just almost double in 8 years.
What is not considered here is the attitude of Generation Z members (born after 2000) who now at the age of 25 should be at the age of considering the purchase of first time homes. Unlike generations before them, home ownership is no longer as important as it was. It appears that this generation is keener on spending money on life experience more than previous generations. Hence the rise in tourism, travel and doing cool stuff amongst them. Could it not be that some big business has seen this gap and is catering for it?
Complete speculation on my part, but I would argue it’s a chicken/egg issue –
Housing is way more expensive, jobs are way shitter, much more precarious (what good is a 30 year mortgage if I’m not even sure I’ll live that long, let alone have a job that long, plus any necessary savings to weather several likely job changes and still cover mortgage), and pay way less. Yet I’m supposed to save up for a 20% down payment to incur a long term liability for an asset that I may not be able to hold on to?
Eff that. I may as well spend what little money I have on something I will enjoy and will make existence slightly less shitty.
It’s not that Gen Z or Millennials don’t want their own place – the drive to own a house in the US is strong and deep – no cultural history of multi generational family living together, unlike say Italy. Given the opportunity, who wouldn’t want their own place to make your own / live in / get laid in without having to deal with parents? It’s just that prices are obscene, and it’s not realistic, given the difficulty of obtaining stable, high paid work, to even consider purchasing.
So you either rent and try to live your life, or live with Mom and Dad if that’s an option, and take it day to day. Ownership, one of the few ways to guard against getting screwed over, is still just as important…just not attainable.
Maybe I’m reading it wrong. Apologies if so.
I think this is a fairly accurate assessment. You can see this reflected in young people’s voting patterns being towards candidates that promise to improve affordability of homes. Trump was vocal about this with interest rate policy, and in the recent Canadian election many young people believed Pierre Poillevre would make homes more affordable. The drive to own a home is still there, but most younger people have jobs that aren’t paying enough to achieve that. There’s a huge divide in young people’s affordability depending on career paths out of highschool. Those who went into trades, specialized medical fields, or engineering fields are doing well. Those who went into other fields are struggling to find well paying jobs. I do think there’s an aspect of financial illiteracy as well, but I’ve seen the above in kids from wealthier parents who you would think would pass it on.
I agree with you, but wanted to add a little bit of shading regarding one point. “Financial Literacy” in this context has multiple layers, none of which bode well for the younger set.
1. Financial literacy generally is not taught in schools, and especially not primary school. Math certainly is (quality notwithstanding), but its application to the real world is incredibly limited. That this is beneficial to multiple companies and entities that subsist on predatory behavior and ill-advised financial decisions may or may not have direct bearing but they certainly benefit.
2. Even if kids get some literacy, it takes time and experience to develop any kind of savvy, if they ever do. Couple this with the fact that financial products GENERALLY are far more complex than they were 70 years ago, and contain much more in the way of weasel behavior and awful traps (as neoliberal norms have allowed them to flourish – decent social behavior from a corporation is largely a financial liability), you basically have to get screwed a couple times to realize where the pitfalls are. Only as you age do you recognize these old wolves in new sheep skins.
3. Even being well-to-do is no guarantee. Providing a good financial education, as a parent, to a child, is incredibly difficult. It took me years to educate myself financially, and I’m still only halfway there, not to mention any terrible habits and stupid behavior that I’m still struggling with. I wouldn’t know where to start with a young child. Better than nothing, sure, but not ace, either.
4. Becoming financially literate, or at least practicing at financial literacy, requires…you know…finances. Excess finances. Buying in bulk, for example, or even being able to say no and walk away from something obviously bad necessitates having some amount of leverage. In many cases that leverage is money, or some equivalent. Many studies have shown that poor people, when given direct cash payments, are remarkably rational and spend money in the ways that are most beneficial in the longer term. When you have no excess cash, though, the most rational decision is usually the one that keeps your kids fed, or the lights on, or a roof over your head. After all that, if I only have $20 left, I may as well buy some smokes because it won’t do shit for future planning.
Having no excess cash is basically like running your life using lean principles and JIT inventory. The mildest setback is usually a complete disaster.
Congress can disallow corporate landlord income tax write-offs for interest and depreciation on SFH and multi-units less than 13.. Problem solved.
Could you explain how that would work for REITs?
I agree that this post which Yves vivisected falls far short of making its argument after she discredited some of its claims:
“According to John Burns Research & Consulting, only 0.4 percent of single-family homes in the United States are owned by institutional investors with over 1,000 homes in their portfolio. This share rises to 3.8 percent of single-family homes for institutional investors owning over 100 homes…”
That alone crumbles the key stone holding up the post’s headline and themes.
However, I believe corporations and private equity do create a significant effect on the cost of housing through their investments in apartments and their activities colluding to drive up rents. My only warrant in making this claim is my own feelings of powerlessness as a renter. Moving is an ordeal. Landlords often have tenants at their mercy as they raise rents as I have experienced renting an apartment from a corporation and as a private equity firm bought a little duplex where I lived some years later. I have always wanted to own my own home but my work and life situation made home ownership too costly. I have often had to move across the country to follow jobs. The squeeze on rents, availability of rentals in many urban areas, and orders to move following the sale of the apartments where I lived only added to my desire to own my own home. In comparing rents to monthly mortgage payments, the increasing cost of rents, persistent rent increases, and threat of being moved out to accommodate gentrification added to my demand to own my own home and my willingness to increase how much I might pay for that home.
I believe corporate land speculation added with the land speculation by the 10% who have captured the share of earnings growth that might have accrued to the lower 90% helped drive up land prices. The upper 10% have more directly added to the price of homes through their purchases of second homes in otherwise relatively affordable areas. In the small city where I have been looking for a home, I drive by many homes on large, often elegant properties that appear unoccupied most of the year. I believe corporate employment practices helped grow the income spread between the upper 10% and the lower 90%. The COVID work-from-home policies added to this pressure and housing outside urban centers. I doubt the apartments previously occupied by the 10% came down in rent enough to help many in the lower 90%.
The cost of land leads to the tendency for developers to build relatively expensive McMansions on postage stamp lots. Builders must build more expensive homes, which usually means bigger, grander homes, on smaller lots to get the most return. Apartments with affordable rents, even when allowed, do not yield sufficient returns, especially as the cost of getting loans to finance the purchase of more expensive land, labor, and materials to build housing.
“The US has not seen anything approaching the 2021 nominal increase of 19% and real increase of 12% in decades.”
I tend to view this as indication that housing prices have reached a point where home buyers are nearing the maximum amount of their income that they can afford to spend on housing. The changes in interest rates and the current tendency for loan agents to look askance at less than 20% down and buyers who would be paying more than a third of their income to pay for housing.
I believe this post is too anxious to find a single cause for the high cost of housing in America.
Nixon stopped the feds from building affordable housing, and Reagan cut HUD’s affordable housing budget by 75%. Homelessness surged to levels not seen since before the New Deal. Surprise!
I fight a constant uphill battle in the public discourse (here in near proximity to Toronto) trying to get people to understand that the abdication by governments (at all levels) of the responsibility for building low income housing almost 40 years ago is directly related to the homelessness and housing affordability crises. “The market” never has, and never will, build sufficient low income housing — there’s no money in it!
But neoliberalism has eaten almost everyone’s brains, so I am making little to no progress … 😒
Yep. And remember, Nixon’s act followed LBJ’s civil rights legislation that would have given people of color access to those affordable homes.