It’s the nearly daily phone calls, emails, or letters offering to buy my house, often “as is.”
It’s noticing the increasing number of homes in our neighborhood that are rentals.
It’s the story of residents in a nearby municipality fighting the efforts of a company to build a development of homes that all would be for rent only. And this is not affordable housing but homes with rents of $2300 to $2700 a month.
It is the complaint of friends trying to buy homes finding themselves either priced out of a rapidly rising market in neighborhoods they could at one time have bought in, or trying to make offers, often above asking price on homes before they hit the market and coming in second or third in the bidding.
It’s the skyrocketing of home values in our area, evident in the most recent property valuation from our county auditor nearly doubling its value. I’m glad we bought here 33 years ago. I probably couldn’t now.
There are some dynamics that are peculiar to our market. We have a housing shortage in the one part of the state where population is rapidly growing. A number of tech giants are building new plants or data or distribution centers in our community, and this is having a multiplier effect on construction, supporting industries, infrastructure development, and the education sector. It means more jobs, more people, and more needs for housing.
One of the factors contributing to all of this are big investors and corporations buying up homes to rent. Many of these are out of state. American Homes for Rent (AMH) is one such company, one of the major players nationally in this growing trend. They own 2100 homes in our market and 2000 in another major city in our state, They are the company behind the proposed development exclusively consisting of rental homes mentioned above. In our area, home ownership has dropped from 60% in 2005 to 53% in 2019. Our county now has the highest ratio of renters to owners in our state. In 2021, institutional investors bought 33,000 homes in our state, accounting for 21 percent of all sales, double from just the year before. That is how fast this is growing.
All of this is legal, mostly because our laws have not kept up with this trend of institutional home-buying. Legislators are beginning to propose measures to regulate these efforts, remove some tax breaks or even increase taxes on these enterprises. Local municipalities are beginning to resist efforts to create rental only developments. Tonight’s news brought a report that the local community where American Homes for Rent was seeking to build such a development has voted down this development.
Not all that is legal is right. In this case I also believe this is poor public policy.
Neighborhoods with high percentages of home ownership are better maintained and more stable. The transience of rentals leads to less ties among neighborhoods, less looking out for each other.
It has never been demonstrated that absentee landlords care for properties to the same standard as home owners.
Home ownership is one of the most significant factors contributing to intergenerational wealth. We have witnessed a growing disparity between the wealthiest among us and the rest of our country.
Much of the earnings of institutional investors are siphoned away from our communities. At one time, your mortgage lender was a local banker and often a significant part of your payments were cycled back to depositors or lent out to others. Homeowners spent money repairing and improving their homes at local businesses or hired local people to do work on those homes. Homeowners have far more of, and a different stake, in local issues than do institutional investors.
The question we have to face as a society is how much we value home ownership by individuals and families versus big, off-site corporations and financial institutions? There is so much of the “local” that many of our communities have already lost from local restaurants and small businesses. People owning the place in which they live is one of the last redoubts of the local. The more one diminishes the number of people who are stakeholders in a community, the more that community is at the mercy of those with money and power–whether that of impersonal, off-site interests or local gangs and corrupt organizations. The greater the amount of the homes, businesses, and other tangible institutions of a community are controlled by off-site interests, the less there is a fabric of community linking people together.
So what is to be done? I am not an expert in these things but it seems that a starting point is to figure out ways to level the playing field. Big investors often offer to buy homes “as is,” pay cash, pay above market prices, and have greater access about homes coming on the market. That doesn’t sound like a level playing field. I wonder what might be done about that? Might there be ways to assist individual buyers if it is not possible to offset the advantages for institutional investors. Sellers do have the option to not sell to institutional buyers who are not covered as a protected class under Fair Housing Laws. But they might have to accept a lower offer. What if there were offsets, like credits on capital gains taxes, for sellers who make this choice?
One thing is clear. We face a choice about whether we will be a nation of owners or renters.