The United States is facing worsening conditions in the housing market due to a shortage of affordable housing. However, a new study blamed billionaire investors for playing a key role in driving up the cost of renting and homeownership and increasing homelessness in the country.
A report published Monday by the Institute for Policy Studies suggested that real estate investors---including individual investors to billion-dollar hedge funds---have driven up home prices after buying up properties and turning them into short-term rentals or keeping them vacant until the value appreciates. This, in turn, reduces the number of available homes for hopeful buyers.
The shortage of affordable homes in the market has also pushed buyers to consider properties that cost more than they should.
"Increased corporate control over our housing market - by billionaire investors and their for-profit entities - are driving these trends and placing significant barriers to the preservation and creation of permanently affordable housing," the report read.
How Investors Impact the US Housing Market
The study noted that investors are now treating real estate properties as luxury assets they could use to park their wealth. The report cited investment management company Blackstone Inc. as one example, noting that the firm currently owns 300,000 residential units in the country. Of those, 149,000 are multi-family apartments, and 95,000 are subsidized housing.
It also cited a 2022 story from The Washington Post which claimed that investor purchases in at least 40 housing markets in the US more than doubled since 2015. That same report also noted that neighborhoods with a large majority of Black residents were disproportionately affected.
Furthermore, the report cited a ProPublica report that claimed corporate landlords were inflating rental prices using an algorithm that calculated the highest possible rent on a property. Lawmakers are currently working to ban the practice.
How Are Investors Driving Homelessness
In addition to raising housing costs, the report claimed investors are driving homelessness in cities and communities in the US. It was noted that there are 16 million vacant homes across the country. For every homeless person, there were 28 vacant homes.
Moreover, it pointed to a 2016 report from the Federal Reserve Bank of Atlanta that found corporate landlords were 8% more likely to file eviction notices.
To resolve the housing crisis, the paper recommends expanding the "community housing sector," which covers homes not controlled by the government or community organizations. It also recommends increasing taxes on real estate transactions and using that extra funding on housing first programs.
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