America’s new landlords
Let’s not talk about affordability. Let’s talk about pain.
“We have a housing crisis, as you probably, painfully, know,” writes Annie Lowrey in The Atlantic. “Wouldn’t you like to have someone to blame for it?” I already knew who to name, but her headline was a dead giveaway: Private Equity Is America’s New Landlord.
Rental costs here in the Cesspool of Sin are out of control like most other places. But in fact single family home rentals here are ranked the highest in North Carolina. Apartments are not as high as Chapel Hill, but that’s not saying much. The average rent here is $1,451/month for a 781 sq ft apartment. I mentioned a month ago a 20-yr-old summer intern struggling to save any summer cash on his stipend while paying $1200/mo. for a short-term apartment. (It might have been $1500.)
The housing crisis has many fathers, Lowry explains: “restrictive zoning codes, arcane permitting processes, excessive community input, declining construction productivity, expensive labor, and expensive lumber.” It’s the kind of problem Ezra Klein and Derek Thompson complained about in “Abundance” while ignoring the gobbling of existing housing stock by private equity. They may be bit players in the grand scheme of things but that depends on where you live and work.
Lowrey writes (gift link):
Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties.
I figured that big investors might be picking up vacation rentals in Colorado and expensive apartment buildings in the Bay Area and the Acela Corridor. They are, the report’s authors told me. But these investors are pouring the most money into “buy low, rent high” neighborhoods: communities, many of them in the South and the Rust Belt, where large shares of families can’t afford a mortgage.
Struggling 20- and 30-somethings here feel the pain. So does Cleveland:
In Cleveland, corporations own 17.5 percent of residential real-estate parcels. In the city’s East Side, which contains many predominantly Black neighborhoods, just one in five homebuyers in 2021 took out a mortgage. The rest—many investors, presumably—paid in cash or took out a loan from a non-traditional financier.
Private equity is not why housing is so expensive in traditionally expensive cities, Lowrey explains, but “investor money is distorting the housing market in communities with low wages and decent-enough housing supply, pushing thousands of Black and Latino families off the property ladder.”
https://wpde.com/news/local/demo-day-several-100-year-old-homes-reduced-to-rubble-in-asheville-charlotte-street-baird-street-preservation-society-of-asheville-and-buncombe-county-rcg-killian-family
Owners of lower-priced apartments in historic neighborhoods here are letting maintenance lapse to force out renters and make the properties unaffordable to renovate. This renders them less-habitable and makes them easier to sell off to developers who buy them for the land and raze them to build high-rent condos and town homes in this tourist town. And further reduces affordable housing supply. What America saw Donald Trump do to the East Wing we’ve seen developers do to Victorian homes that once offered affordable apartments for lower-income residents.
Or private equity snaps up existing older single-family homes, does some modest renovation, and rents them out at high-dollar. And that’s in largely white neighborhoods.
Neighborhood activists typically find out about such plans after they are already done deals. By then their protests are to no avail. Out of curiosity, I perused new online property transfer records one Sunday for half an hour. I found that a real estate investment firm out of Boca Raton had snapped up four older homes on one street near downtown. They paid $1,050,000 for all four on 8/17/21. One they renovated was a 1925 2 BR, 1 BA, 1280 sq ft home they rented for $3,000 per month. I rented a similar one (1,000 sq ft) in ~1998 for ~$350/mo.
What activists might do instead is divvy up neighborhoods and assign someone to do what I did for a half hour once a month. If out-of-town investors begin snapping up homes on a street, a nonprofit collective might spot it and purchase key properties to thwart plans to raze the whole block to build town homes or new hotels. Better to intervene early than protest too late. Citizens are having to defend their communities from ICE. Why not from private equity?
Something must be done. Lowrey concludes:
If nothing is done, what’s happening to majority-Black communities in Ohio and Virginia and Georgia and Michigan might start happening in communities around the country. Private equity might not be causing the housing crisis, but corporate owners could end up making it a lot worse for everyone.
What are their names and on what streets do they live?
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Is this a private fight, or can anyone join?
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Indivisible: A Guide to Democracy on the Brink
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