Pushing back on private equity’s push into housing
The United States is short 4 million housing units, with a particular shortage of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings, says The Atlantic.
More Americans are renting, and about half of those households are spending more than a third of their income on shelter, The Atlantic says.
The causes of the shortage include high interest rates, which has stifled construction and increased the cost of mortgages; restrictive zoning codes; arcane permitting processes; excessive community input; declining construction productivity; expensive labor; and expensive lumber, The Atlantic says.
And private equity, which started buying up significant numbers of homes after the Great Recession and especially after the pandemic, according to The Atlantic.
Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own 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.
In Baltimore’s majority-Black McElderry Park and Ellwood Park/Monument neighborhoods, owner-occupants made 13 percent of purchases in 2022. In a majority-white neighborhood not far away, owner-occupants bought more than 80 percent of homes that year, and out-of-state corporations owned less than 1 percent of residential parcels.
“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,” The Atlantic says.
And while not all corporate landlords are bad landlords, some are bad landlords, more likely to evict their tenants and prone to skimping on maintenance and upkeep, The Atlantic says.
So policymakers have been pushing back.
New York Democratic Gov. Kathy Hochul has proposed legislation prohibiting firms from bidding on single-family or two-family homes for the first 75 days they’re on the market. Washington State is considering a cap on the number of units that corporations can own. Other lawmakers have suggested revoking tax benefits from large-scale owners.
Here is a rundown on state and local actions to rein in private equity investments in housing, from the Private Equity Stakeholder Project.
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