large investment companies buying up homes, turning people into renters

video here: BlackRock, other investment firms, buying up homes, forcing rental boom| Latest News Videos | Fox News

The New York City risk and investment management giant BlackRock is among several high-powered firms pushing working families out of the housing market and into rentals, therefore depriving them of capital and the opportunity to build credit and equity.

According to a Wall Street Journal report, BlackRock - led by billionaire Laurence Fink - is purchasing entire neighborhoods and converting single-family homes into rentals; while in cities like Houston, investors like Fink account for one-quarter of the home purchasers.

Journalist Pedro Gonzalez said that the actions of companies like BlackRock's are leading 40% of American renters to believe they will never be able to purchase a home.

"It is killing the dream and giving us a nightmare of dispossession."

The impetus for firms to mass-purchase housing is to underwrite pensions and pad their books by spiking housing prices.

But, Gonzalez warned that these reckless actions will only accelerate the next housing bubble to burst, as it did a decade ago.

"The same institutions also promote progressive [political] policies like environmental policies that also raise the price of housing - and they push for more immigration, like JPMorgan Asset Management," Gonzalez reported.​

BlackRock, other investment firms 'killing the dream' of home ownership, journalist says | Fox News

That sounds a little unfair if they're going into certain cities with prime real estate and buying up a large percentage of the total homes just to push up the home prices and make sure would-be homeowners can't afford to buy. Which will force them to rent, if they want to stay in that city. It seems a little like a monopoly, or trying to corner the market, on a commodity which there is a scarce supply of.
(The economist Henry George would probably have had a few things to say about this too)

BlackRock is an $8.6 trillion global investment management corporation. That gives them the ability to buy up housing in entire cities.

Once the people in those cities are pushed into rentals, the company that owns these homes can squeeze more money out of them.

 

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Heavy investing into real estate [and other real property] also happens when there is mega inflation on the horizon.

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This is the outcome from 35 years of Deregulation, Free Trade agreement, Glass-Stiegel, 2008 banking bailout, 2000 dot come, 1983 Huge tax cuts to the rich, Unemployment benefits not going up with Real Inflation, lack of honest Inflation index using CPI, and much more.
It is a wealth transfer, not exactly engineered in the 1980s. Yet it was then when Art Laffer suggested supply side economics, trickle down would help the American. Everything we have done over these 35 years is the result of the previous 4 year admin.

Reagan cut taxes to stimulate a dead Carter 4 years. This was to be temporary, if it had been and we put the taxes back, things would be much better now. Had we taken an extra 40% from the top 1% for the last 35 years, the debt would be 20% of what it is today. At the same time we told everyone (Americans) it is GOOD FOR YOU that black and decker wants to mfg. in China, thus the products will be cheaper. Yes, for a ONE OFF, this is true. Yet, as an American, with American workers losing jobs to china, at the time you should tariff the difference in the cost of the drill or tool. We did not do that. We let the Globalists run off and take every mfg. job from America and Move it overseas, 90% of that too China. Now, we have the same Americans that supported Reagan, and Bush screaming at the Chinese for doing what we handed them.

Once Clinton came on board he made things worse by doing so little, he didn't put things back to the way they were as he had promised. Bush Jr started wars, and along with Clinton help create the housing bubble. Why ? Once again, to stimulate the economy.

Our politician each time elected promise to make things better, always stealing from the people or pulling forward debt. This has destroyed our NATION and there is no way out. Now we have the FED basically running the country, they decide everything. Politicians only sign off on it and play outside of reality. They are busy playing TV identity politics, muslims, jews, the poor, the rich, the liberal, the neocon. and so on. None address the real problems that still exist today. The dollar is in HUGE trouble and it wont be long until the world looks for a different reserve currency, at that point it is just an end game for Americans. You will become no better off than a Mexican, an Argentinian, a Brazilian, because your DOLLAR will not have the power it once did.

Your grandparents, and some of our parents lived at the only real GOOD time in America. From 1937 - 1987. After that they started to strip away your rights, your ability to EARN and grow EASILY from "JUST A JOB" First it was 2 members Mom and dad working to grow wealth, savings, college for the kids. Up to today where for 50% of the nation 2 working parents can only pay the bills. You cant save, you cant buy another new home, take a vacation.

For those that seen this coming and prepared, kudo's too you. To those that are highly educated, work a white collar job making over 100k a year, congrats, you are in the minority of people who have barely kept up with real inflation. We have a group of 50, maybe 250 Oligarch's that now decide with the FED, their family and friends what happens to this country. Each one of them up to this point has shown nothing but contempt, greed, and self loathing inability to understand the outcome of their greed. I suspect they will pack up and leave here for a better place once everything is striped out of this country. Maybe to Israel, or too another country they can rape. One that has the laws in place we once did.

If you have not prepared, read a book, Robert Reich's "the system" who rigged it and how we fix it. That is a start, for yourself, you had better start saving, and not in cash. Cash is a losing prop. Gold and silver, real estate once and if the prices come back down. You need to hedge inflation. China, Russia, and other country's have prepared for this by buying GOLD. All I do is throw out the truth. We bought rentals back when they were cheap and now collect rent as income. Real Estate agents, and others will tell you it is "too much work, too many headaches" you should be glad to have both. Just know, know for a fact that soon you will not be able to pay your bills with an everyday out of high school job. That is when things will start getting real bad.

You CANNOT, NEVER EVER in thousands of years of Government and financial history been able to PRINT your way out. Making more dollars only decreases the value of the existing dollars.

 

First, there is no law about buying properties and renting them?

Second, the market will usually sort out things.

Third, another scheme taking place is buying properties then reselling them as timeshares; buy a property for $5 million then sell 8 shares for $750K each. 8 timeshares can have 45 days each a year in residence for their $750K. The company grosses $6 million or a $1 million profit within a couple of weeks.

There are always schemes! People need to focus on their own lives...

 

I totally agree that is usually the case--almost always the case in fact--but that may not be the case here.

I believe it's disingenuous and unfair for you to try to use that as an analogy. What you are describing is very different. If the customer falls prey to that scheme it is entirely due to their own poor financial choices.

Simply categorizing this as just "a scheme" will result in you falling prey to an equivocation fallacy.
The reasoning you are trying to use here is not logical thinking.

 

The market always decides! Someone can buy properties all day and place them for rent but if the rent price is not acceptable to the market, they will be vacant until rent prices are lowered.

If whatever corporate entity can buy up homes...so can individual buyers. If the corporate entity is paying a premium price, this means the rent prices will need to be higher for ROI, and again the market won't go for it if the rent prices are too high.

Didn't mean to make you cry with my comments? Both your scheme and the one I suggested have a root cause of less housing units.

Both are legal and both will be sorted out in the marketplace...

 

I believe this is an issue of capital quashing consumers.
Those with the wealth buy up limited available living space around cities where the best opportunities are.

This almost borders on being similar to a monopoly. When just one or two companies can buy up 25 to 40 percent of the homes in a surrounding city area where demand already very much outstrips supply, they can easily cause an increase in home prices.
This could happen in a way beyond which just numerous smaller individual buyers could achieve.
Part of the reason these very large companies could be buying up these homes is because they know the effect of them buying up so many homes is going to be able to increase the price in that city.

A question: What exactly do you mean by that?

Depending on the meaning of those statements, they may or may not be relevant to this argument.

I don't like dealing with statements with ambiguous meanings. If I assume you mean something, and then start putting up an argument against it, you may later deny that is what you meant. On the other hand, it is also very possible that the meaning that you are trying to express with those statements is completely irrelevant to any point you are trying to make.

 

Yes, it is the corporate takeover of the American Dream where they inflate the prices so high you will eventually only be able to rent a shoebox. You can thank the wealthy for yet again screwing over the common workers, after you are through kissing their ass Welcome to Company Town, USA.....

 

If you notice they don't make company towns out of Detroit, Michigan.

 

Okay, but supposing that is true, the next question would be what exactly is the logical response to try to address that problem?

See, the first step is being able to recognize there is an issue with something that is wrong. The second step is knowing exactly what should be done about it.

And I think you really have to really understand the intricacies of the original issue well to be able to know how to truly properly address it.

 

Right now there is not much anyone can do about it, they are doing the same thing in the rural areas also and with farmland. When the US is stagnant and people start losing hope because the rich boys own everything you will see riots and revolts along with rebellion and guerilla warfare over living conditions, much like you see them occurring now, only they will become larger and worse.. Wealthy people have done it in every nation, every empire and the end result is always the same.

 

What was being described in the opening post is an issue that I think goes beyond just the normal "wealthy versus poor" issue.
It also touches on an issue that may be similar to monopoly issues.
There might be some government policy way to address that.

We are talking about one company being able to push prices up in a specific area, to their benefit.

Even for people who believe free markets are the way to go, they may still be able to see something wrong with this.

 

If a corporation can buy a property so can an individual buyer. Why are there properties available for a corporation to buy...why are individuals not buying these properties? All of these properties are available on the open market.

These corporations cannot sell properties or rent properties for more than the market is willing to pay. What city has a corporation owning 40% of the homes?

What do I mean?? Buying homes is not illegal!

 

In Detroit someone is buying and selling properties and redeveloping areas...

 

A gigantic corporation like this can come in and buy in an organized fashion.
They could buy up a large number of homes in one area and only raise the rent prices after they are done buying.
This is something that individual small separate buyers, not acting in an organized fashion, can't really do.

 

You have to qualify exactly what you mean by "willing to pay".
There is what the market is willing to pay at a given supply point, and then there is what the market is willing to pay as an absolute.

This strategy involves intentionally creating (or more like exacerbating) a shortage to be able to increase price.


A separate component: some of this simply involves large amounts of outside capital moving into areas, to exploit the people who have less capital.
The one with more money gets to buy the house, and then can make the other one have to rent and pay more money.

 

So? Build houses and sell them to anybody by them. You can make money too.

 

That's just not true. (or partly not true)
I think you are using overly simplistic thinking here.

There's two components to this. One is availability of space to build housing (near where those people want to live).
The other thing is that building new housing costs more money. If you have to build more housing, it will end up raising prices for homebuyers.

I've already discussed this repeatedly in other threads in the Economics section.

Unfortunately it won't work so simply as you imagine.

 

If they are paying 25% over market price, build 5 houses, sell them 4 and get your 5th house for nearly free.

 

The point is, they are able to change the market price.

That's what you're not getting.

 

What you are not getting is this is a 2-sided coin. Things can be good for sellers or they can be good for buyers but never both. We are in a Seller's market. Great for them. 10-12 years ago it was a buyer's market and great for them too. Just because somebody wants to own a home does not entitle them to anything, let alone a house they want at the price they want at the location they want in the city they want 24/7/365. Your complaint is these people are shorting supply. Even at face value, so what? That just creates more demand for people to build or renovate.

 

The year plus eviction moratoriums have also made the situation far worse. They have shorted the natural supply of rental units which has driven up prices. I suspect that when they all end, a lot of these property owners are going to say to hell with it, flood the market with their properties, and moderate sales prices and push up rental prices.

 

They CANNOT increase the rent prices beyond what people are willing to pay! Again, if homes are for sale then why aren't individuals buying them?

 

Willing to pay means willing to pay! Duh...

Everyone has a choice where to live and how much to pay for their shelter...no one holds a gun to anyone's head! If rent is increased beyond what someone is willing to pay then move!

If a property is for sale, it can be purchased by YOUR corporation with all their money or by any individual. What is preventing individuals from buying these properties?

 

Anyone who rents is at the mercy of the local economy and the direction the landlord might wish to take. There can be some protections for the renter like proper notices for rent increases and other changes. But the property owner has a right to burn down the rental units if they wish as long as they provide proper notice.