For years, the problem was Chinese investors with gobs of fiat buying up all the property. Now, it is cash-saturated pension funds that are buying up entire city blocks, depriving American families of access to shelter.
In a new north Houston subdivision, as one recent example, a pension fund called Fundrise LLC gobbled up the entire development for a cool $32 million. Fundrise, in case you are unfamiliar, manages more than $1 billion on behalf of roughly 150,000 people.
Had D.R. Horton, the subdivision’s developer, sold these homes the traditional way – you know, to actual families wanting to buy places to live – that collective price tag would have been about $16 million, or roughly half.
What Fundrise will now do instead is trade all those homes like stocks, and perhaps rent out a few at an exorbitant rate. The rich get richer, in other words, and the poor get poorer. Welcome to America.
“From individuals with smartphones and a few thousand dollars to pensions and private-equity firms with billions, yield-chasing investors are snapping up single-family houses to rent out or flip,” reported The Wall Street Journal about this disturbing new trend.
“They are competing for houses with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.”
America: Land of the Greed
John Burns, the head of an eponymous real estate consulting firm, says that what we now have is “permanent capital,” meaning wealthy hedge funds and investing groups, “competing with a young couple trying to buy a house.”
“That’s going to make U.S. housing permanently more expensive,” Burns further warns.
Back in 2013, Pennsylvania legislators attempted to fight for the little guy by proposing legislation to eliminate the state’s property tax scheme. This would certainly help the situation, but it is unlikely to cure it.
Until America can relinquish the pervasive greed, selfishness, and evil that now rules everyday life in the “land of the free,” the problem will only intensify. Honest, hard-working Americans will end up on the street while corrupt fat-cat billionaires enrich themselves even more.
According to Burns’ consulting firm, pension funds and other wealthy investment groups now account for nearly one quarter of all home purchases in the Houston area. Most of these purchases are not for mansions, either, but rather for properties priced below $300,000 and in decent school districts.
“Limited housing supply, low rates, a global reach for yield, and what we’re calling the institutionalization of real-estate investors has set the stage for another speculative investor-driven home price bubble,” his firm says.
While certainly a bubble, the current housing market will more than likely continue to grow for some time before bursting. Home prices are expected to rise another 12 percent this year, which is on top of last year’s 11 percent rise.
What is happening now is similar to what happened in 2004 and 2005, though this time things are even worse. There is now so much competition from unusual sources to buy up housing as if it was GameStop stock or Bitcoin that ordinary people are largely unable to even participate.
Even smaller investment groups are unable to compete because the larger ones are snapping up properties at a premium with easy cash from both the Trump and Biden regimes’ never-ending bailouts for the rich. Meanwhile, everyday Americans are increasingly ending up homeless as a result of all this greed.
More related news about America in 2021 can be found at Collapse.news.
Sources for this article include: