CBC
A new documentary argues that housing has become a commodity much like gold, to be bought and sold on the stock market in bulk — and that the practice is driving up rents globally.
Fredrik Gertten, director of Push, says that hedge funds can snap up real estate quickly and forcefully.
"They have more money than a normal landlord, so it's kind of almost like a landlord on speed," he told The Current's Anna Maria Tremonti.
The result is often an owner who lives very far away from the property, he said.
"
You can't knock on his door and talk to him about your problems because your landlord is now a hedge fund ... somewhere [in a] totally different part of the world, maybe."
Leilani Farha, the United Nations' special rapporteur on adequate housing, explained that private equity firms and asset management firms "survey landscapes all around the world looking for what they call undervalued properties."
"When they find them, they buy them up with their liquid capital — backed by banks — and their model is to then refurbish the units and increase the rents, forcing people out," Farha, who is featured in Push, told Tremonti.
She said the business model isn't just gentrification, but a financialization of housing, driven by an "unprecedented amount of wealth."
"This is on a totally different scale. They're buying thousands of units at a time," she said.
10 comments:
Its ashame that our housing market has become so unaffordable due to foreign investors who never even set foot in America. I dont even understand why the government never limited the purchasing power of foreign developers/investors. They Can be slumlords after their buildings are no longer new and get bent out of shape then who would you be able to sue if the owner isn't even here in the USA? The landlord cant be thrown in jail because hes not here. So good luck with this in another 15 to 20 years when their new buildings start decaying.
Wasn't the packaging of mortgages behind the meltdown? Now we're seeing packaging of foreclosures-for-profit? Mind you, right now if you look at City foreclosures they are usuallypicked up by a single bank - many of the new Zombie Property regs put a significant burden on banks for upkeep. Presumably those regs would apply here?
It's true. I worked on a doc review regarding a company that buys foreclosed and delinquent properties in bulk (tranches) from mortgage lending banks,the ones you all know the names of. Then they try to renovate them to become single family rentals. And this company is traded on the stock exchange. The problem is, when you try to scale up to renovating single family houses in these numbers there is no economy of scale. Each house is wrecked in a different way, they each take twice as long and cost twice as much as estimated (like renovations always do), and they're all over the country. But this company is still dealing in BILLIONS of American dollars, moving money around, taking tax breaks I'm sure. They have Indian employees in India and the Philippines and headquarters in the Virgin Islands. Massive scam on the American people.
https://www.cnbc.com/amp/2018/05/24/trump-signs-bank-bill-rolling-back-some-dodd-frank-regulations.html
This is hardly the only reason and overlooks equally important issues.
We have limited land, expensive construction costs, an ever increasing population and we are not building fast enough to keep up with the population.
>>Its ashame that our housing market has become so unaffordable due to foreign investors who never even set foot
There was an interesting interview on WNYC's Brian Leher show last week. The guest pointed out that after the 1997 rent stabilization weakening a loophole was introduced that allowed some units to be removed from regulation by spending some sum on a "renovation" of the unit(s).
Many of these renovations were fraudulent using phony accounting and bills for work not done.
As a byproduct of the loophole, millions of regulated apartments suddenly became attractive to both Wall Street and other investors who used the new laxness to scam the residents of this City via large scale investment.
The stench of the potaki administration lingers-on.
Rob in Manhattan
Sounds like a pretty simple formula. Foreign investors uniting to buy up U.S. property. Could they also be tapping into federal H.U.D. money for renovations? Not much detail in this story.
You're definitely on to something last anon
We need to stop giving tax exemptions for debt and give it to dividends and gain sinstead!
Hedge funders? Well guess who's investing in these hedge funds? Private and public pensions, which need to make a 7.5% to stay solvent. TIAA is one of the biggest investors.
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