Corporate ownership of residential homes is complex, multifaceted, and a longstanding issue. Many people consider it the main driver of higher rentals, forcing up prices and driving the massive rise in homelessness.
Let’s look at this obscenity objectively.
In 65 years, the most prosperous, healthiest, best educated nation in human history has turned into the unmitigated train wreck called America 2025.
The housing market has always been the definition of America’s success or failure. It’s now the place where the mindlessly compliant, “neurotypical” Gutless Generation – to coin a phrase – of Americans lives. They never fought this disaster. Nobody pushed back against those rents or anything else.
Nobody said “No!” to the idiocy, greed, criminality, and irresponsibility.
That’s what you’re paying for.
That’s true enough. The nationwide crowds on the sidewalks aren’t there for entertainment. The big rental increases made the rental market a seller’s market very quickly. There was nowhere for renters to go. Everyone else jumped on the bandwagon, and in obsessively deregulated America, there was no comeback. In a few years, rentals raged out of control.
Being corporate turned the rental market into a coffin of corporate norms, even niche markets like student housing. The only thing on anyone’s mind was raising profits. Value wasn’t an issue. Nobody cared what utter crap they were offloading on the market. Nor were maintenance or anything resembling tenancy security even the slightest consideration.
Add to this delightful tapestry other raging cost rises, from health to insurance and food, and the US has become the earthly paradise we see today.
Now the good news.
The US housing market is doing exactly what everybody who can read and write said it would. Slowly, but momentum is visible and increasing. Sellers are skittish. Delistings are common.
As a sort of qualifier amid headlines saying the exact opposite, cut-and-paste articles about the market “roaring” back to life are isolated among the others.
It’s pretty typical housing market fluff, almost totally drowned out by other market info. Lower rates don’t matter at all when the basic cost of living is still way too high, and purchase money either exists or it doesn’t. The delistings tell the story clearly enough.
You just don’t sell if you can’t get the price you want. There’s plenty of ongoing news about that. Much of the housing news now is about prophecies of doom that have come true or are coming true.
This has everything to do with corporate ownership of rental properties.
Those properties are already falling in net real value. Listings reduce prices to sell. The corporate housing portfolios will lose big money. They will have to cut back and trim their losses. It makes no sense to hold properties which are rapidly decreasing in net value.
Bear in mind that debt usually drives corporate purchases. The corporate owners have taken on debt for assets in which both values and income are deteriorating. Costs of rental operation increase over time for lower returns. Costs of debt don’t usually go down for long, if at all.
So, what happens when your big residential rental portfolios turn sour? You have to get out of that market. That also means there will be more houses on the market, driving prices further down.
Ironically, the market will be propped up by healthy demand, or what’s left of it. People who have the money and can afford to buy, and who are careful about what they buy and when. These people can wait out the market, though, and if you’re in the market, you know what that means.
It’s not a guaranteed salvation for renters or home buyers. The US rental market was notorious long before corporate ownership became a thing. Lousy quality, dismal maintenance, and health and safety were all problems back when America had a spine.
The sheer lack of business talent in the housing sector means that prices will be the equivalent of market masturbation for decades to come. Nobody’s cutting throats and locking in good cash flow for portfolios. These clowns can only see one line on a spreadsheet at a time. They even think they work for a living.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
