Wall Street's Newest Victims: Renters, First-Time Home Buyers
Hedge funds, private equity investors and wealthy individuals are buying property in record numbers — usually for cash. And in the process they're elbowing millions of first-time home buyers out of their way.
And millions of renters will be over a barrel. Try getting help with your leaking roof, or complaining about your loud (or worse) neighbors, when the landlord is a hedge fund in a distant city.
“Wall Street absentee slumlords” (quoted from the linked article) — just what we need. Also from the same article:
“The same companies that helped turn homeowners into renters through mass foreclosures are now preparing to make even more money off of the same rental demand they helped create.”
Even worse, when a Wall Street landlord owns most of the rental property in a town, this landlord can use its political clout to push their own agenda. For just one example: in Huber Heights, OH, Magnetar Capital has bought up most of the rental properties. And Magnetar Capital is now pushing for lower property taxes, which would be a threat to schools and other public services. And the more money Magnetar Capital “earns” by demanding lower property taxes, the more properties they can buy up and the more influence they'll have over the local government. And the more influence they have...
Still worse, these firms can turn their hundreds of thousands of rent payments into securities that they can sell to other investors. A new Wall Street casino; a new financial bubble — let's party like it's 2007.
For whatever it's worth, Congress is starting to make a few noises about this. Rep. Mark Takano (D-CA) has called for congressional hearings, saying:
“Proper oversight of new financial innovations is key to ensuring we don’t go down the same road of the unchecked sub-prime mortgage backed security, and create an unsustainable bubble that will wreak havoc when it bursts.”
Nice rhetoric. Let's see if it leads to any action.