Conor here: And among landlords private equity has been and has been the most eager receiver of software used to exchange prices and information on spaces with software from RealPage, which also happens to be owned by private equity giant Thoma Bravo. It’s a big, blood-sucking club.
RealPage and the big landlords that use price-fixing software were let go with a cost-of-doing-business slap on the wrist last year after they snubbed some Trump-connected stakeholders. And there are loopholes in the Justice Department settlement that could allow them to conspire again in the not-too-distant future.
In a kind of good news department, Matt Stoller has a report today on a bill working in Congress that would prohibit corporate ownership of many existing single-family homes. It is surprising that the effort to suppress this law is supported by the likes of Trump and Senator Elizabeth Warren. Although there is this caveat:
The ban will remain on the existing housing stock, but will not apply if private companies build new houses, called the “Build to Rent” sector. Companies that own and rent out single-family homes will not be forced to sell them, and can build new ones. But the existing stock of owner-occupied single-family homes, about 70 million, cannot be purchased by large businesses.
And as Stoller notes, building rent is where the big money is flowing these days:
Major builders are now working with Wall Street to build single-family homes that never go on the market, but are instead rented from scratch. The “Build to Rent” sector took off, doubling market share from 2021-2024. And now that’s where the institutional money is concentrated. Build to Rent allows Wall Street to expand the asset class, and enables the regulation of housing supply to maintain prices.
By Shireen Akram-Boshar, a social writer, organizer and solidarity activist from the Middle East/North Africa. Originally published at Truthout.
A new report by the Private Equity Stakeholder Project (PESP) shows that private companies now own nearly 3 million homes in the US, which is about one in eight homes, about 13 percent of the apartments in the country. About half of these units have been purchased since 2021, highlighting the opportunity for private equity in the housing market as the US faces a housing crisis.
Private equity firms invest in pension funds and endowments to buy assets for higher returns. In the real estate market, private equity firms look to unregulated rents, with limited property taxes, to maximize their profits. According to the private business model, firms aim to maximize the value of properties before selling them quickly for maximum profit.
The PESP report found that private companies have bought nearly 1.7 million apartments – 57 percent – since 2018, and 1.3 million of them since 2021 alone.
The PESP report found that the rise of private enterprise in the housing market “exacerbated housing affordability problems, displaced local communities through rent hikes and brutal evictions, and reduced the quality of life of tenants.”
Texas has the largest number of privately owned apartments in the country, with nearly 580,000 units – and this is likely due to the state’s lax housing laws, weak tenant protections, and lack of federal income tax. While there is a high rate of private equity ownership of homes in New York, California, and the Washington, DC area, private equity ownership is concentrated in the Sunbelt states as they have weak tenant protections and have seen significant population growth as of 2020.
Blackstone, the world’s largest private equity firm, is also the largest apartment owner in the US, with more than 230,000 apartments. The PESP report found that in some cases, Blackstone has increased the rent on apartments it bought since 2018 by more than 30 percent. The report also noted that tenants in apartments purchased by Blackstone complained of “repair problems, forced evictions, undisclosed additional fees, and large rent increases.” This was not uncommon in homes acquired by private investors.
The increase in private equity comes at the same time as Americans are increasingly struggling to afford rent. Half of US employers spend nearly a third of their income on rent.
“Our country is facing a housing affordability crisis. The last thing we need are private equity billionaires siphoning off wealth from renters with cheap rents and junk fees,” said Jordan Ash, co-author of the report and director of housing research at the Private Equity Stakeholder Project (PESP). “Now more than ever, policymakers must act to protect renters from the American real estate industry’s rampant penetration of the American housing market.”
Although private equity has rapidly entered the housing market in the past five years, the problem started at the beginning. During the 2008 financial crisis, private investors bought hundreds of apartment buildings that held thousands of rent-controlled units, and forced residents to leave so they could raise rents. With the goal of making higher profits, private companies “have sometimes led the market to increase rents and foreclosures.” While millions of Americans were financially devastated after the Great Recession of 2008, private equity firms profited.
A 2022 analysis by ProPublica found that private equity investment in housing was fueled in part by Freddie Mac, the largest US rental finance company. Freddie Mac offered low interest rates and other benefits to investors. ProPublica found that large private equity firms made many of Freddie Mac’s deals to finance apartment purchases, and almost all of these occurred after 2015.
ProPublica also found that another real estate investment firm, Greystar, has helped pave the way for connecting large investors to apartment buildings, by raising money from pension funds, hedge funds, and life insurance companies. Housing acquisitions by Greystar almost doubled between 2016 and 2021 to more than 75,000 apartments.
But grassroots mobilization against private equity is also growing, with activists and communities organizing employer unions and taking lawsuits to protect employers.
