On Tuesday, Rep. Alexandria Ocasio-Cortez (D-New York) called out real estate companies, some backed by huge private equity firms, for “gobbling up” homes across the country, especially in non-white and low-income neighborhoods.
Inflation hearing in the House Financial Services Committee Ocasio-Cortez named real estate companies Like Invitation HomesBlackRock is backing a major share of single-family homes in the U.S. She stated that these corporations are only looking to make a profit at families and individuals who are looking for a place to call their home.
“We have these major, often private equity-backed companies, that are gobbling up homes in our housing market, which is already creating excess scarcity on top of the housing scarcity that already exists,” Ocasio-Cortez said.
“And then, by constricting that supply, we’re also seeing a lot of these major, huge multi-million dollar companies then either flip those properties and resell them at a higher rate due to that artificially inflated price, or they hold on and hoard this housing stock and rent out at exorbitant prices,” she continued.
Mark Zandi, chief economist for Moody’s Analytics, said that individual investors and institutional investors made up a quarter of home sales at the end of 2021. In fact, investors have been buying houses. in record numbers.
Redfin reports that low- and mid-priced homesLow-priced homes make up the largest portion of investments. In the fourth quarter of 2021, single-family homes made up three-quarters of investors’ purchases.
These purchases are quickly increasing. BlackRock will be the owner of Invitation Homes in 2021 spentNearly $2 billion was spent on 4,802 homes. Their revenue increased by 9.5 per cent over the past year to almost $2 billion.
Large corporations are able to offer a significant advantage in the marketplace because they have the resources to do so. Buy homes before they’re even listed for public view, to use algorithms to determine what homes would be a good investment, and to buy homes with cash. Real estate companies also get lower interest ratesRather than regular homebuyers.
The housing market is exploding, leaving regular families and individuals who are looking to buy a house in disarray. In the late 2010, housing prices wereHowever, after a plateauing period, the average home price increased by $453,000. In 2021, it was $453,000.
“[Regular people are] competing against the largest private equity firm in the world to purchase a home,” Ocasio-Cortez said. “In fact, companies like Blackstone, Zillow and Bedrock are buying up to 15 percent of available homes – but what I find interesting here is that they’re purchasing them in minority and low-income neighborhoods specifically.”
Invitation Homes is one example of a company that is buying up a large shareAffordable homes and Black neighborhoods. In 2021 30% of all home sales in majority Black neighborhoods went directly to investors. That compares to 12 percent in other areas. accordingTo The Washington Post.
People who have no other choice than to rent face landlords who try to squeeze tenants for more money. New York City landlords are increasing rents by example. up to 70 percentTenants are forced out of their homes to find cheaper housing.
“This is the market that we have created for housing in America. Right now, 6 million renter households are currently behind on rent,” which is twice the amount of people who were behind rent pre-pandemicDemond Drummer (Managing Director at PolicyLink), stated in the hearing. Drummer pointed out that most people who are behind in rent are people of colour.
“In 2021 alone, rents increased by 10 percent in 149 metropolitan areas. What we’re seeing around the country is a failure of policy and law to address the acute shortage of housing,” Drummer said. “My view is that our current housing prices constitute a serious, significant series of market failures that require a robust policy response.”