Senator Elizabeth Warren (D.Massachusetts), is calling for answers from housing corporations that have backing from private equity. She claims they are involved in inflating housing costs for buyers and renters.
Warren sent letters to CEOs of Progress Residential, American Homes 4 Rent and Invitation Homes to condemn rent hikes and rising house prices that she says are a result of corporations’ growing influence on the housing market. Her goal is to determine if these businesses are taking advantage of the housing market. current housing shortages.
“Our country faces an unprecedented affordable housing supply shortage,” she wrote. “Decades of underinvestment, coupled with restrictive zoning and other practices that undermine construction, have allowed the demand for housing to far outpace the availability of homes, resulting in a shortfall of nearly four million homes and rapidly increasing costs for renters and first-time homebuyers.”
Warren pointed out in her letters that these three companies have been rapidly acquiring houses and increasing rents. American Homes 4 Rent is “keeping affordable housing out of reach for American families,” she wroteRents can be increased by over 10% for single-family rentals
“Considering the history of complaints made against you by your tenants for cutting corners on maintenance requests and excessive fees, I fear that these poor business practices have also contributed to your increased revenue,” she said, noting the company’s nearly 66 percent net income growth from single family rentals over the past year.
The lawmaker noted that Progress Residential and Invitation Home are buying homes at a rapid rate. Invitation Homes has increased its pace of buying homes. spending over $700 million In the third quarter 2021, approximately 1,700 homes will be purchased.
Progress Residential has been automating its house acquisitions and now buys up 2,000 homes per month. The company can now assess a house within 15 minutes of its appearance in the Multiple Listing Service database. Warren pointed outYou can make an offer within 2 hours of your listing. Further, the company focuses on buying homes valued at between $70,000 and $190,000 – homes that are within the price range for low-income families or first-time buyers.
Warren stated that Progress Residential residents reported an average of 30 percent rent increases over the past five-years. The company is also reportedly charging excessive fees, despite not performing maintenance. The company also charges tenants a $200 “eviction administration” fee if it files to evict the tenant.
Warren stated that the greatest increase in housing prices over the past year has been due to private equity and investment companies’ business practices. Indeed, the Bureau of Labor Statistics has shown that shelter costs rose by 0.4 percent in December – the largest contributorTo the all-items index increase of 7 percent last Month.
Partly due to global and Wall Street investorsAmericans are finding it increasingly difficult to afford entry-level homes. The huge rise in house prices last year was a sign of great gains. home prices in October rose by 18.4 percent over last yearAccording to December’s research. Experts believe that the market is currently may be among the worst everFor first-time homebuyers, the average home price at September’s end last year was up by a staggering 30% compared to the same time in 2019.
This has led first-time homebuyer purchases to decrease to 26 percent in November – down from 33 percent in 2020. It’s also forcing people to take incredible risky leaps in home buying, as regular home buyers in some areas are having to send in bids for a house within hours and even waive inspectionIn order to purchase a house. Many houses are available for investors because they have access to listings before regular people. being bought before they’re even publicly listed online.
“Investors have been outcompeting first-time homebuyers because of their ability to make cash offers, which comprised over three-quarters of investor offers,” Warren noted. “These cash offers provide the additional benefit for investors of allowing them to pay 10% less on average than individual buyers.”
