Berliners voted earlier this week in a referendum to seize rental properties from the city’s largest owner-companies and turn them into social housing. The measure is not binding, and while the United States may not follow Berlin’s lead, concern is growing about the influence of large owner companies in the US real estate market.
Most rental housing in the United States is owned by some sort of corporation. It ranges from individuals with a limited liability company to giant real estate tycoons with hundreds or thousands of units, said Jenny Schuetz of the Brookings Institution.
What worries most people, she said, is the increase in private capital in the housing market from Wall Street companies like BlackRock.
“They are more likely to buy something that is going to appreciate quickly and sell it or something that is going to have higher returns than usual,” she said.
The trend dates back to the Great Recession, when investment firms began to pick up distressed properties for bargain rates, according to Dan Immergluck, professor of urban studies at Georgia State University.
“In some suburban neighborhoods, the share of the largest private equity firms is often 10%, 15%, 20%,” he said.
This has pushed up prices for average buyers. And that poses challenges for tenants, said Jim Baker of the Private Equity Stakeholder Project.
“It comes from being aggressive in raising rents, being aggressive in evicting practices,” Baker said.
Complex corporate ownership structures make it difficult for tenants to respond, he said. “It’s almost mechanical. They just automatically file, you know, in some cases, hundreds of eviction cases.
And he added that the pandemic housing market has left many small homeowners looking to sell at the best price.