History and impact of institutional investment in housing in the United States: Difference between revisions

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During the [[Global Financial Crisis]] and subsequent [[Great Recession]], housing prices in the United States declined.<ref name=theatlantic_2019>{{cite news |last1=Semuels |first1=Alana |title=When Wall Street Is Your Landlord |url=https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/ |access-date=21 July 2022 |work=The Atlantic |date=13 February 2019 |language=en}}</ref> Despite the decline in prices, many traditional purchases of single-family homes—individual families—remained priced out of the market, leading to concerns that a lack of demand would cause home prices to collapse, exacerbating the recession.<ref name=theatlantic_2019/> In 2012, in an effort to create demand, [[Fannie Mae]] placed several thousand foreclosed-upon homes for sale in a single transaction.<ref>{{cite news |last1=Gross |first1=Daniel |title=Renting Prosperity |url=https://www.wsj.com/articles/SB10001424052702304746604577382321021920372 |access-date=21 July 2022 |work=Wall Street Journal |date=4 May 2012}}</ref> This sale helped establish single-family property portfolios as a potential investment for large [[institutional investor|institutional investors]],<ref name=theatlantic_2019/> as opposed to one chiefly appealing to individual families and small-time investors.<ref name=nyt_4march2020>{{cite news |last1=Mari |first1=Francesca |title=A $60 Billion Housing Grab by Wall Street |url=https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html |access-date=21 July 2022 |work=The New York Times |date=4 March 2020}}</ref>
During the [[Global Financial Crisis]] and subsequent [[Great Recession]], housing prices in the United States declined.<ref name=theatlantic_2019>{{cite news |last1=Semuels |first1=Alana |title=When Wall Street Is Your Landlord |url=https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/ |access-date=21 July 2022 |work=The Atlantic |date=13 February 2019 |language=en}}</ref> Despite the decline in prices, many traditional purchases of single-family homes—individual families—remained priced out of the market, leading to concerns that a lack of demand would cause home prices to collapse, exacerbating the recession.<ref name=theatlantic_2019/> In 2012, in an effort to create demand, [[Fannie Mae]] placed several thousand foreclosed-upon homes for sale in a single transaction.<ref>{{cite news |last1=Gross |first1=Daniel |title=Renting Prosperity |url=https://www.wsj.com/articles/SB10001424052702304746604577382321021920372 |access-date=21 July 2022 |work=Wall Street Journal |date=4 May 2012}}</ref> This sale helped establish single-family property portfolios as a potential investment for large [[institutional investor|institutional investors]],<ref name=theatlantic_2019/> as opposed to one chiefly appealing to individual families and small-time investors.<ref name=nyt_4march2020>{{cite news |last1=Mari |first1=Francesca |title=A $60 Billion Housing Grab by Wall Street |url=https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html |access-date=21 July 2022 |work=The New York Times |date=4 March 2020}}</ref>


Before the broad declines in housing prices caused by the financial crisis and recession, relatively high property costs and the decentralized geography<ref name=atlantic_2013>{{cite news |last1=Cohan |first1=William D. |title=Why Wall Street Loves Houses Again |url=https://www.theatlantic.com/magazine/archive/2013/10/why-wall-street-loves-houses-again/309454/ |access-date=21 July 2022 |work=The Atlantic |date=19 September 2013 |language=en}}</ref> of individual homes made them unappealing as an asset class for direct investment.<ref name=theatlantic_2019/> Broadly, financial professionals and real estate investors, such as [[Sam Zell]], were skeptical that they could function as portfolios, even as some firms began to purchase homes en-masse.<ref name=theatlantic_2019/> This push was "led"<ref>{{cite news |last1=Gopal |first1=Prashant |title=Private Equity's Real-Estate Empire |url=https://www.bloomberg.com/quicktake/rent-wall-street-is-my-landlord?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg.com |date=3 January 2017 |language=en}}</ref> by [[private equity]] and [[alternative investment]] firm [[Blackstone Inc.|Blackstone]], which founded [[Invitation Homes]] to purchase individual homes in depressed markets around the United States. These markets were concentrated in the [[Sun Belt]] cities, which include [[Atlanta]], [[Phoenix (city)|Phoenix]], and [[Orlando]].<ref name=atlantic_2013/> As of 2022, major single-family home owners include Invitation Homes,<ref name=atlantic_2013/> [[Pretium]],<ref>{{cite news |last1=Clark |first1=Patricia |title=Wall Street Is Buying Starter Homes to Quietly Become America’s Landlord |url=https://www.bloomberg.com/news/features/2022-02-18/wall-street-banker-profits-off-phoenix-housing-inflation-and-soaring-rent-prices?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg.com |date=18 February 2022 |language=en}}</ref> and [[American Homes 4 Rent]].<ref>{{cite news |last1=Clark |first1=Patrick |title=Rental-Home Investors Slow Purchases as Doubts Cloud US Prices |url=https://www.bloomberg.com/news/articles/2022-07-18/investors-slow-purchases-as-uncertainty-looms-over-home-prices?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=18 July 2022}}</ref>
Before the broad declines in housing prices caused by the financial crisis and recession, relatively high property costs and the decentralized geography<ref name=atlantic_2013>{{cite news |last1=Cohan |first1=William D. |title=Why Wall Street Loves Houses Again |url=https://www.theatlantic.com/magazine/archive/2013/10/why-wall-street-loves-houses-again/309454/ |access-date=21 July 2022 |work=The Atlantic |date=19 September 2013 |language=en}}</ref> of individual homes made them unappealing as an asset class for direct investment.<ref name=theatlantic_2019/> Broadly, financial professionals and real estate investors, such as [[Sam Zell]], were skeptical that they could function as portfolios, even as some firms began to purchase homes en-masse.<ref name=theatlantic_2019/> This push was "led"<ref>{{cite journal |last1=Christophers |first1=Brett |title=How and Why U.S. Single-Family Housing Became an Investor Asset Class |journal=Journal of Urban History |date=8 July 2021 |doi=10.1177/00961442211029601 |url=https://journals.sagepub.com/doi/pdf/10.1177/00961442211029601 |language=en |issn=0096-1442}}</ref><ref>{{cite news |last1=Gopal |first1=Prashant |title=Private Equity's Real-Estate Empire |url=https://www.bloomberg.com/quicktake/rent-wall-street-is-my-landlord?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg.com |date=3 January 2017 |language=en}}</ref> by [[private equity]] and [[alternative investment]] firm [[Blackstone Inc.|Blackstone]], which founded [[Invitation Homes]] to purchase individual homes in depressed markets around the United States. These markets were concentrated in the [[Sun Belt]] cities, which include [[Atlanta]], [[Phoenix (city)|Phoenix]], and [[Orlando]].<ref name=atlantic_2013/> As of 2022, major single-family home owners include Invitation Homes,<ref name=atlantic_2013/> [[Pretium]],<ref>{{cite news |last1=Clark |first1=Patricia |title=Wall Street Is Buying Starter Homes to Quietly Become America’s Landlord |url=https://www.bloomberg.com/news/features/2022-02-18/wall-street-banker-profits-off-phoenix-housing-inflation-and-soaring-rent-prices?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg.com |date=18 February 2022 |language=en}}</ref> and [[American Homes 4 Rent]].<ref>{{cite news |last1=Clark |first1=Patrick |title=Rental-Home Investors Slow Purchases as Doubts Cloud US Prices |url=https://www.bloomberg.com/news/articles/2022-07-18/investors-slow-purchases-as-uncertainty-looms-over-home-prices?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=18 July 2022}}</ref>


Large, single-family home investors and operators have received criticism from tenants for high rents, poor conditions, and poor treatment<ref name=nyt_4march2020/><ref>{{cite news |last1=Gopal |first1=Prashant |title=Wall Street, America’s New Landlord, Kicks Tenants to the Curb |url=https://www.bloomberg.com/news/articles/2017-01-03/wall-street-america-s-new-landlord-kicks-tenants-to-the-curb?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=3 January 2017}}</ref> and from politicians and the broader public for constraining the housing supply and worsening the ongoing housing shortage in the United States.<ref>{{cite news |last1=Gardner |first1=Akayla |title=Private Equity Firms Are Making America’s Housing Shortage Worse, Democrats Say |url=https://www.bloomberg.com/news/articles/2021-10-21/private-equity-exacerbating-housing-shortages-key-democrats-say?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=21 October 2021}}</ref><ref>{{cite news |last1=Gardner |first1=Akayla |title=Warren Renews Criticism of Private Equity’s Role in Housing |url=https://www.bloomberg.com/news/articles/2022-01-13/warren-again-rebukes-private-equity-s-role-in-housing-market?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=13 January 2022}}</ref>
Large, single-family home investors and operators have received criticism from tenants for high rents, poor conditions, and poor treatment<ref name=nyt_4march2020/><ref>{{cite news |last1=Gopal |first1=Prashant |title=Wall Street, America’s New Landlord, Kicks Tenants to the Curb |url=https://www.bloomberg.com/news/articles/2017-01-03/wall-street-america-s-new-landlord-kicks-tenants-to-the-curb?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=3 January 2017}}</ref> and from politicians and the broader public for constraining the housing supply and worsening the ongoing housing shortage in the United States.<ref>{{cite news |last1=Gardner |first1=Akayla |title=Private Equity Firms Are Making America’s Housing Shortage Worse, Democrats Say |url=https://www.bloomberg.com/news/articles/2021-10-21/private-equity-exacerbating-housing-shortages-key-democrats-say?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=21 October 2021}}</ref><ref>{{cite news |last1=Gardner |first1=Akayla |title=Warren Renews Criticism of Private Equity’s Role in Housing |url=https://www.bloomberg.com/news/articles/2022-01-13/warren-again-rebukes-private-equity-s-role-in-housing-market?sref=CIpmV6x8 |access-date=21 July 2022 |work=Bloomberg |date=13 January 2022}}</ref>

Revision as of 16:18, 4 September 2022

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During the Global Financial Crisis and subsequent Great Recession, housing prices in the United States declined.[1] Despite the decline in prices, many traditional purchases of single-family homes—individual families—remained priced out of the market, leading to concerns that a lack of demand would cause home prices to collapse, exacerbating the recession.[1] In 2012, in an effort to create demand, Fannie Mae placed several thousand foreclosed-upon homes for sale in a single transaction.[2] This sale helped establish single-family property portfolios as a potential investment for large institutional investors,[1] as opposed to one chiefly appealing to individual families and small-time investors.[3]

Before the broad declines in housing prices caused by the financial crisis and recession, relatively high property costs and the decentralized geography[4] of individual homes made them unappealing as an asset class for direct investment.[1] Broadly, financial professionals and real estate investors, such as Sam Zell, were skeptical that they could function as portfolios, even as some firms began to purchase homes en-masse.[1] This push was "led"[5][6] by private equity and alternative investment firm Blackstone, which founded Invitation Homes to purchase individual homes in depressed markets around the United States. These markets were concentrated in the Sun Belt cities, which include Atlanta, Phoenix, and Orlando.[4] As of 2022, major single-family home owners include Invitation Homes,[4] Pretium,[7] and American Homes 4 Rent.[8]

Large, single-family home investors and operators have received criticism from tenants for high rents, poor conditions, and poor treatment[3][9] and from politicians and the broader public for constraining the housing supply and worsening the ongoing housing shortage in the United States.[10][11]

References

  1. ^ a b c d e Semuels, Alana (13 February 2019). "When Wall Street Is Your Landlord". The Atlantic. Retrieved 21 July 2022.
  2. ^ Gross, Daniel (4 May 2012). "Renting Prosperity". Wall Street Journal. Retrieved 21 July 2022.
  3. ^ a b Mari, Francesca (4 March 2020). "A $60 Billion Housing Grab by Wall Street". The New York Times. Retrieved 21 July 2022.
  4. ^ a b c Cohan, William D. (19 September 2013). "Why Wall Street Loves Houses Again". The Atlantic. Retrieved 21 July 2022.
  5. ^ Christophers, Brett (8 July 2021). "How and Why U.S. Single-Family Housing Became an Investor Asset Class". Journal of Urban History. doi:10.1177/00961442211029601. ISSN 0096-1442.
  6. ^ Gopal, Prashant (3 January 2017). "Private Equity's Real-Estate Empire". Bloomberg.com. Retrieved 21 July 2022.
  7. ^ Clark, Patricia (18 February 2022). "Wall Street Is Buying Starter Homes to Quietly Become America's Landlord". Bloomberg.com. Retrieved 21 July 2022.
  8. ^ Clark, Patrick (18 July 2022). "Rental-Home Investors Slow Purchases as Doubts Cloud US Prices". Bloomberg. Retrieved 21 July 2022.
  9. ^ Gopal, Prashant (3 January 2017). "Wall Street, America's New Landlord, Kicks Tenants to the Curb". Bloomberg. Retrieved 21 July 2022.
  10. ^ Gardner, Akayla (21 October 2021). "Private Equity Firms Are Making America's Housing Shortage Worse, Democrats Say". Bloomberg. Retrieved 21 July 2022.
  11. ^ Gardner, Akayla (13 January 2022). "Warren Renews Criticism of Private Equity's Role in Housing". Bloomberg. Retrieved 21 July 2022.
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