I’ve been trying to warn anybody who would listen to me about REITs for something like eight years now. ‘REIT’ is an acronym for Real Estate Investment Trust. It’s basically rich people pooling their money and buying up all the single-family housing. I need to be clear, here. REITs used to serve a valuable purpose. They bought and maintained apartments and strip malls around the country. There’s a place for that. It provided housing, not eliminated it. Buying up the single-family homes is a fairly new phenomenon. They didn’t even really START until about 2014. Before that, investors weren’t sure it was a good plan. They’re all on-board, now, though. The thing is, NOBODY in or around the industry is going to make any effort to stop the problem. EVERYONE thinks they’re making money and, well, what could be wrong with that? The seller gets (usually) more than their house is worth and in some case, an offer in seven minutes. The agent gets a FAT commission. The REITs get the property. Sure, society gets torn apart, one house at a time, but, profits, right?
One company, Invitations Homes, Inc., owns enough single family homes in the United States to house every person living in Iceland. They own 82,758 single family homes. Figuring an average of 4.5 people per home, they could easily house the entire population of Iceland, currently around 344,979 people. Most of the homes they’ve taken off the market are in the west and in the sunbelt states where, as the article reads: “the barriers to homeownership are highest and rent demand is strong.”
“…barriers to homeownership are highest” in those areas because the REITs keep buying up the housing at whatever they need to pay to get the property. Joe Six-pack can’t compete with all-cash, no inspection, short escrow, sale in minutes REITs. “…rent demand is strong” because fewer and fewer people can afford to BUY the houses. The rents compete with a house payment, these days, because once the REIT owns all the available housing in a given area, they can charge whatever they want to charge. People will pay it or they won’t. If they don’t, there’s a nice bridge they can move in under – at least until the police drive you away.
Sadly, our society has been conditioned by the corporate media to just knee-jerk a reaction. “Oh, the homeless? Must be addicted to drugs. Must be an alcoholic. Maybe they’re insane.” Stay with me, here. Maybe…just maybe…many people CAN NOT pay $3,000 for a one bedroom place and don’t have the resources to leave. No money, no place to go, no options in our brutal, so-called “free market?” Tough! You bought that latte, that one time, you remember? YOUR fault!
Since the industry WILL NOT police itself, it’s up to politicians to step in. They could pass a law forbidding REITs from buying single family homes AND require them to divest in a fairly short time. This would return inventory to the market and bring the values back to where they should be. Of course, EVERY single person associated with real estate transactions would WAIL like someone just cut something off their body without anesthetic. The REITs themselves? Rich people, remember. Our politicians work for the rich people. Quick review, left or right, which politician might YOU expect to stand up and do the right thing for the average American? Okay, likely Bernie but he wouldn’t be able to do it alone, so…instead we get politician talk and stupid, useless ideas. “Hey, let’s just build more inventory.” Quick question, how does building more inventory help if the rich people keep buying up everything as it comes on the market? Someone builds 1,000 houses, the rich buy up the 1,000 houses. Still no inventory.
I mention it because I’m currently trying to find MY way through being victimized by the process. I’ve lived in a small but well-maintained little house for several years now and because the owner wasn’t greedy, I’ve been fortunate to be paying far below market rates. The landlord COULD have chased the money but he chose not to. Then, he died. His children inherited the property and pretty quickly decided to sell. A fat wad of cash instead of a steady, dependable income is often too enticing for people to pass up. But it’s put my whole life into upheaval. Will I be able to stay in the city I grew up in? Maybe, maybe not. CAN I pay usury rent? If I stay, I’ll have to.
To be clear, I’m not protesting REITs because they’ve landed on me. I protest them because sociologists have long understood that home ownership is one of the best predictors of a stable society and REITs are undermining that with amazing, frightening speed. I suspect that, sooner or later, this horrifying land grab will be one of the main drivers of the revolution…