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Why is there a housing shortage? Many Americans are quick to blame investment banks, large corporations, and institutional housing investors for the shortage of housing. One example of this misdirected blame is the criticism recently directed towards Blackrock, a giant investment bank. This housing institution buys family homes and turns them into rentals. It has been reported that the company regularly raises rent aggressively and is more likely to evict tenants more quickly, compared to smaller mom-and-pop type landlords. Although it might not be the best landlord, this doesn’t mean it’s to blame for the lack of housing available. Blackrock has become an easy target for people looking for someone to blame for the housing shortage.
However, when housing and rental data across the country is studied, Blackrock, through its investment in real estate company Invitation Homes, only owns 80,000 rental homes out of 15 million rental homes across the country. It doesn’t own most rental homes available in the market, as some people mistakenly believe. Although they buy homes to turn them into rentals, it is only a tiny percentage of homes available. Blackrock, and other similar real estate institutions, are not taking away homes from ordinary people looking to buy homes.
Many people, especially those in their 30’s, are ready to buy homes but can’t find desirable homes to buy. If Blackrock is not to blame, what is causing the housing shortage? One reason is that the construction of single-family homes is at its lowest levels since the 1960’s. In short, the supply of homes is just not enough to meet the demand.
Second, state and city governments and NIMBY (Not In My Backyard) residents have blocked many new construction projects in the past few decades. Because of law and tradition, the U.S. has encouraged people to see their homes as investments. This has caused people to block any new construction or re-developments near their homes. Current residents and homeowners are quick to block any new developments nearby.
One way to solve the housing shortage is to encourage more single-family rentals. Tenants celebrate nearby construction because it means a good housing supply means that their rent stays the same. On the other hand, homeowners don’t like new construction because more housing might mean their property’s value decreases. If more rentals are available, the housing shortage might improve because people won’t be so quick to block new construction.
Even if it’s hard to believe, big banks and major corporations are not the main culprits in the housing shortage problem. The more likely reason is the local governments, local laws, and residents who automatically block even just the idea of new developments and construction near their homes. To overcome the housing shortage, people need to change their paradigm and welcome new developments and houses, not fight them. If you are a landlord and looking for professional management services in the greater Portland, Oregon, we can help you. Visit our website at Illume Property Partners to learn more.
Source:The Atlantic