>The provision in question would all-but prohibit new institutional investment in single-family homes, including “build-to-rent” properties that would not exist in the absence of such investment.
>Corporations do not buy houses to burn them down, but rather, to rent them out. Thus, whenever institutional investment subtracts a home from the buyers’ market, it generally adds one to the rental market. Partly for this reason, corporate investment in single-family homes tends to reduce rents.
>In this way, institutional investment in existing homes presents a trade-off: It makes rental housing marginally more affordable, while pushing home prices marginally higher. If one’s primary concern is minimizing the number of Americans who cannot afford housing, this is a decent swap: Americans who can’t qualify for a mortgage are more likely to be cost-burdened than prospective homebuyers.
>From a progressive vantage point, corporations buying up houses has one other positive side effect: It reduces socioeconomic segregation. Many of America’s middle-class suburbs are zoned exclusively for single-family homes. In the past, this has effectively barred working-class households with poor credit or modest incomes from living in such places.
>As Wall Street began buying and renting out houses, however, affluent suburbs became more accessible to less-privileged families. A recent paper from Federal Reserve economist Konhee Chang found that institutional investment in suburbs in the South reduced segregation by allowing lower-income renters to move to neighborhoods where they couldn’t afford to buy.
>But the Senate bill doesn’t just bar large investors from buying existing properties — it also all but bans them from financing the construction of new rental houses.
>Under the bill, if institutional investors bankroll a “build-to-rent” single-family housing development, they must sell all of its homes to individual buyers within seven years of construction. This will make almost all such developments financially nonviable: If investors can only collect rents on a housing project for seven years — and must then immediately sell, even if the market is bad — then they would probably be better off putting their capital into something else.
>If the Senate bill becomes law, some build-to-rent projects may still pencil out. Yet in those instances, the implications of Warren’s policy are arguably even more regressive: After seven years, her law would effectively require large landlords to oust all of their development’s tenants, so that wealthier families can purchase their homes.
Unusual-State1827 on
Submission statement:
This Vox article critiques Elizabeth Warren’s proposal to restrict corporate landlords, arguing that such policies may backfire by reducing housing supply, increasing rents, and limiting access to high-opportunity suburbs.
It’s relevant to r/neoliberal because it reflects the sub’s focus on supply-side housing policy, skepticism of populist anti-corporate measures, and emphasis on unintended consequences in housing markets.
2 Comments
[Article archive link](https://archive.is/dl27v)
Some important points from the article:
>The provision in question would all-but prohibit new institutional investment in single-family homes, including “build-to-rent” properties that would not exist in the absence of such investment.
>Corporations do not buy houses to burn them down, but rather, to rent them out. Thus, whenever institutional investment subtracts a home from the buyers’ market, it generally adds one to the rental market. Partly for this reason, corporate investment in single-family homes tends to reduce rents.
>In this way, institutional investment in existing homes presents a trade-off: It makes rental housing marginally more affordable, while pushing home prices marginally higher. If one’s primary concern is minimizing the number of Americans who cannot afford housing, this is a decent swap: Americans who can’t qualify for a mortgage are more likely to be cost-burdened than prospective homebuyers.
>From a progressive vantage point, corporations buying up houses has one other positive side effect: It reduces socioeconomic segregation. Many of America’s middle-class suburbs are zoned exclusively for single-family homes. In the past, this has effectively barred working-class households with poor credit or modest incomes from living in such places.
>As Wall Street began buying and renting out houses, however, affluent suburbs became more accessible to less-privileged families. A recent paper from Federal Reserve economist Konhee Chang found that institutional investment in suburbs in the South reduced segregation by allowing lower-income renters to move to neighborhoods where they couldn’t afford to buy.
>But the Senate bill doesn’t just bar large investors from buying existing properties — it also all but bans them from financing the construction of new rental houses.
>Under the bill, if institutional investors bankroll a “build-to-rent” single-family housing development, they must sell all of its homes to individual buyers within seven years of construction. This will make almost all such developments financially nonviable: If investors can only collect rents on a housing project for seven years — and must then immediately sell, even if the market is bad — then they would probably be better off putting their capital into something else.
>If the Senate bill becomes law, some build-to-rent projects may still pencil out. Yet in those instances, the implications of Warren’s policy are arguably even more regressive: After seven years, her law would effectively require large landlords to oust all of their development’s tenants, so that wealthier families can purchase their homes.
Submission statement:
This Vox article critiques Elizabeth Warren’s proposal to restrict corporate landlords, arguing that such policies may backfire by reducing housing supply, increasing rents, and limiting access to high-opportunity suburbs.
It’s relevant to r/neoliberal because it reflects the sub’s focus on supply-side housing policy, skepticism of populist anti-corporate measures, and emphasis on unintended consequences in housing markets.