Originally posted on Quora March 9, 2023
Aside from the slew of subsidies afforded through New Deal holdovers like Fannie Mae and Freddie Mac, the FHA and the highway trust fund all of which have the inevitable effect of encouraging speculation in fixed and immovable assets called realty at the expense of renters and would be homebuyers, the fallout of the 2008 foreclosure crisis provided a unique window of opportunity for institutional investors to buy up houses on the cheap at low rates (or with cash) and turn them into sources of perpetual cash flow. It appears the lockdowns and eviction moratoria may have precipitated an even larger consolidation of realty wealth by wall street turning starter homes into rentals. As of 2022, private equity groups such as Blackstone only control 5% of the single-family house rental market but are projected to control upwards of 40% of it by 2030. In spite of the Feds attempt to correct course from its previous cheap credit glut, absentee homeownership has surged across the country increasing in 228 out of 307 zip codes across 9 major metros.
The share of homes sold to absentee owners — people in the market for properties that won’t be their primary residence — has increased since 2020 in 228 out of 307 ZIP codes across nine major metropolitan areas from Seattle to Charlotte, North Carolina, an NBC News analysis of data from real estate data provider ATTOM found.
Most of them are purchasing with cash, turning the homes into rentals, and driving up surrounding home values precipitously. Before the lockdowns and eviction moratoria a little over half of homes in the south were priced under 300K. At the end of 2022 about one-eighth were.
In 2019, 52% of new homes sold in the South were priced under $300,000, Census Bureau data shows. By 2022, that figure was 13%.
Would be first time homebuyers trapped in the rental market by higher mortgage interest and higher home prices are still getting crushed by rent hikes. Since 2020, rents for single family houses have soared 24% across the nation and as high as 35-44% in places like Tampa, Phoenix and Atlanta. Apartment dwellers are not immune. Even white-collar professionals like Raymond, who is an architect by trade, are being priced out of their cities.
As the Financial Times relates, Raymond and his family have been forced to move 3.5 hours away to Orlando to find a comparable apartment for $2300 a month. In the last 3 months of 2022 mean rents in Miami were 52% higher than they were during the same period of 2019.
Of course, these residential rent hikes aren’t limited to Miami or Florida metros in general. As I noted in previous posts, rent hikes nationwide have outpaced the annual income increase of renters over the past two decades and even median household income for the past decade. The lockdowns and eviction moratoria fueled an already growing affordability crisis.