Residents of the US are being screwed by Wall Street once again
Residents of the US are once again being screwed by Wall Street. Whether one is a renter or homeowner, everyday citizens are struggling with the costs of both obtaining and maintaining some type of housing. The reason appears to be middle-man economics where Wall Street engages in a sort of finder’s fee on steroids market system, especially with recent recessions hitting the US economy; though, it could all just be fixed capitalism. The market appears to be directly responsible for the loss and unaffordable costs of housing through the method of controlling inventory and monopolizing of industry.
According to Ryan Dezember of The Wall Street Journal, “[R]ental companies formed a decade ago to gobble up foreclosed homes by the thousands.” Remember the Obama days? Supposedly, these rental companies have been preparing, even prior to the pandemic, for an expanding “suburban rental class.” Dezember reported such companies anticipate a large number of mortgage defaults to take place at the beginning of next year after a forbearance period of up to one year and provided by the federal government is complete.
Dezember continues to state that the Mortgage Bankers Association has reported approximately 3.5 millions homes are in the dire circumstances mentioned above, while others may be behind but not yet in a forbearance period. This has put rental companies in an advantage to swoop up inventory and even inflate the rate of rents while monopolizing on real estate and housing.
The Wall Street Journal further elaborates:
Investors have bought nearly $900 million of new shares sold by the two largest rental companies since the pandemic began. Other home-rental operations have also sold nearly $6 billion of rent-backed bonds, including three deals presently in the market, according to Akshay Maheshwari of Kroll Bond Rating Agency.
While many American residents struggle with the economic effects of COVID-2019, the disease caused by SARS-CoV-2, many also fear and face eviction or a default on their rent or mortgage payment. This has caused some to deal with extreme anxiety, particularly during a significant election year in which the direction of both the economy and the lives of many will be affected by which president and administration is voted-in come November.
The question is, which president will help homeowners and renters facing eviction? Which one will stand up to profiteers who not only look to control inventory but also buy up the competition in a bid to control rent and housing prices? After all, a home is not a temporary state— it is the everyday shelter and comfort of families, a place to house memories, and a source of warmth and familiarity. Wall Street cannot screw American residents again!
In the same article, Dezember mentions how “the two largest landlords,” which are American Homes 4 Rent and Invitation Homes Inc. have shares which have gone up 59% and 79%, respectively, since March. Dezember further details:
American Homes 4 Rent, which owns about 53,000 houses, in May more than doubled the size of a home-building pact with J.P. Morgan Asset Management to $625 million and last month raised more than $400 million in a stock offering.
Furthermore, American Homes 4 Rent is still buying inventory while also investing in new development to provide as rentals. It is no wonder why investment firms, such as Koch Industries Inc., Blackstone Group Inc. and Brookfield Asset Management Inc. are also making nine-figure investments in various single-family rental companies. It is so that once homeowners lose their homes (again) and resort to renting, they must still pay an absurd corporate, Wall St. price for various types of rental properties.
One must wonder why American residents are not furious at the unfairness in Wall St.’s ability to not only consolidate the purchasing power of a so-called limited housing stock, but also manipulate rental and housing prices according to the inventory and investments made in these markets. Basically, Wall St. investors are waiting for families to get kicked out onto the streets due to higher costs and mortgage defaults, as well as the economic effect of COVID-2019, so that they can buy up the inventory and turn it around as a rental which will list at nearly the same monthly amount as it would be to own it. In fact, according to Dezember, Invitation Homes plans on using a program called a “sale-leaseback” transaction in which an investor buys the property and allows the seller to stay in it while also leasing it. If this is not greed on Wall St., then truly, what defines greed?
With Trump and Republicans currently in charge of the White House and Senate, it does not appear any measures will soon take place to protect homeowners and renters, despite a stimulus bill being passed around Congress. Many have called for the government to cancel rent and evictions, but it is difficult to state the likeliness of such an occurrence happening at least until after the November elections. Until then, many Americans will have to wonder whether Wall Street will screw residents out of their homes again, or at least use their “sale-leaseback” program to save a few from having to move.
Source:
Wall Street Journal — Millions Are House-Rich but Cash-Poor. Wall Street Landlords Are Ready.
