National Association of Realtors Chief Economist Lawrence Yun has lamented how easy it will be for banks and Wall Street investors to dominate the housing market based on the shortage of houses in the U.S.
Anyone else getting feudalism flashbacks? https://t.co/laLJmTQc8b
— Daily Caller (@DailyCaller) February 27, 2023
Banks and Wall Street’s Major financial players represent a large chunk of institutional investors. Actors in this category are projected to own more than a third of all houses in the U.S. at the end of the decade.
One would typically expect the U.S. housing shortage to weaken the sector’s institutional hold. Instead, the Wall Street firms are bolstering their position as they look to acquire more single-family homes.
Yep some corporation has bought a few hundred houses in my neighborhood to rent.
— Walter Murray (@m38517313) February 26, 2023
Yun has raised concerns over this trend, calling for the need to build more single-family homes to stay the hand of institutional investors. This is necessary to ensure that they doesn’t monopolize the single-family home market.
The U.S. government in 2012 kickstarted the program that allowed financial institutions to acquire hundreds of thousands of foreclosed homes. Ten years later, institutional investors now possess 5% of the entire single-family homes in the U.S., totaling 700,000.
High mortgage rates and a hike in home prices have been the major factor attracting Wall Street investors to the U.S. housing sector. Amongst the type of homes available on the market, single-family homes have appealed more to these institutions. This is due to how fast these properties appreciate and their continuous increase in rental.
Locations like Los Angeles, San Francisco, Washington and New York are top locations in the U.S. Amid the influx of interest to settle in these states, they have yet to build new homes to cater to the increasing numbers of people.
The housing shortage in the U.S., once seen as a coastal issue, has increasingly become a national problem.
“It’s like the cancer was limited to certain parts of our economic body,” one economist said. “And now it’s spreading.”
— The New York Times (@nytimes) August 24, 2022
According to New York Times report, the housing shortage has transcended a coastal problem, making it a situation the entire nation must pay attention to. The housing crisis has begun to adversely affect American families’ life quality, health, the economy and the safety of all.