New Orleans Following right behind the crisis that tenants are facing with the eviction situation clouded in different courts and interpretations and no stimulus in the offing, mortgage holders are in a similar mess as the pandemic depression lengthens. REITs and private equity operators on Wall Street are raising mountains of cash once again to see if they can exploit the crisis as they did in the 2007-2008 Great Recession by flipping foreclosures from homeowners into rental property.
A common line in the farm crisis of the 1970s, when tens of thousands lost their land, was the problem of being “land rich and dirt poor,” where if your grandfather had paid off the land, you might survive, but if not, you were going under. A headline in the Wall Street Journal on the vultures circling desperate home owners was reminiscent, speaking of the numbers of people who were “home rich and cash poor.” The story noted a disturbing statistic,
Some 3.5 million home loans—a 7.01% share—were in forbearance as of Sept. 6, according to the Mortgage Bankers Association. Many more borrowers are behind on their payments but not in forbearance programs with their lenders.
The disaster profiteers are making single family homes their war zone whether outside of city center cores or in the suburbs, and they are rolling in money. The big winners then are now among the nation’s largest landlords.
So far these companies have reported record occupancy, on-time rent collection on par with historical averages and rising rents. Shares of … Invitation Homes Inc. and American Homes 4 Rent, are up 79% and 59%, respectively, since stocks bottomed….
The vultures may not be as large outside of the suburbs, but they are as ravenous. An article in Shelterforce referencing a recent report on all-cash purchases in New York City made this critical and disturbing observation,
Because COVID-19 has an outsized impact on lower-income Black and Latino families, it will intensify the disadvantage these families have in the face of cash purchasers who use their resources to pick up single-family homes, co-ops, and condos,” reads the report. It could also result in rising prices and fewer affordable homes available for sale overall, a potential increase in the number of distressed neighborhoods anchored by fewer local landlords or homeowners, and a growing concentration of housing in a small number of for-profit hands.
Shelterforce notes that some community developers in some cities are better situated to protect some of this housing as affordable and to modify some of the properties they acquire, but if the impact of this depression is anywhere near that of 2007-2008, it will be a drop in the ocean in most of the country.
Once again, we have to fear that without a huge federal and state response, this isn’t going to end well for millions of families.
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