Republicans casting Wall Street as villain

Washington

CONSERVATIVES looking for a fresh populist message to carry into 2022 are taking on Wall Street firms for buying up single family homes as rentals, attacking the growing practice as hurting the middle class.

Blackstone Group Inc, KKR & Co and other private-equity firms are increasingly making new investments in single-family homes to rent out, betting that the hot housing market will generate solid returns as the US emerges from the coronavirus pandemic.

But the trend, which comes as a shortage of homes for sale is driving up prices, is making the firms attractive targets for politicians who want to appeal to the blue-collar voters former President Donald Trump energised.

"The message is, Washington and big banks and big government and big corporations, they're all corrupt and you work hard and play by the rules and you're not getting ahead and this is the reason for it," said GOP strategist Rick Tyler, who worked on Senator Ted Cruz's 2016 presidential campaign. "That's been a very powerful message for both parties."

Fox News host Tucker Carlson highlighted the trend on his programme last month. Conservative firebrand Representative Marjorie Taylor Greene incorrectly called it an example of creeping "socialism". And venture capitalist JD Vance, a Republican candidate for the US Senate in Ohio and author of Hillbilly Elegy, singled it out in his July 1 speech announcing his candidacy as a factor that's pricing first-time home buyers out of the market.

The single-family rental industry argues that institutions owning only a fraction of the US housing stock isn't enough to have a significant effect, and that the real reason prices are rising is a lack of supply. The industry says it's bringing fresh capital to the market while filling a need for more rentals.

There were almost 610,000 single-family homes in Ohio in 2019 that were rented, or 17.3 per cent of all homes in the state, a percentage that is in line with the US number, according to the Harvard Joint Center for Housing Studies.

At the same time, low inventory has sent housing prices soaring in many markets, making it increasingly difficult for buyers to find a home they can afford.

Vanessa Simmons, a branch manager for Coldwell Banker Realty in suburban Columbus, Ohio, estimated that small investors and real estate investment trusts such as American Homes 4 Rent are buying between 15 per cent and 20 per cent of single-family homes in the Columbus market, sometimes offering as much as US$25,000 above the list price.

The moves can block first-time home buyers - especially those using financing from the Federal Housing Administration and Department of Veterans Affairs, she said.

"It's definitely affecting the market for first-time home buyers because they can't compete," Ms Simmons said. "It's making an already challenging market more challenging."

Liberals who have been critical of Wall Street's role in the 2008 financial collapse are also wary of private equity's role in rental housing. Massachusetts Senator Elizabeth Warren called it "another massive private-equity real estate grab that wreaks havoc on families and communities - especially families of colour still recovering from losing their homes in the last financial crash".

Senator Sherrod Brown, an Ohio Democrat and the chairman of the Senate Banking Committee, has asked Pretium Partners, one of the biggest owners of single-family rental properties in the US, to respond to reports it has sought to evict tenants despite a US moratorium imposed during the pandemic.

Pretium said in a statement it has always complied with the moratorium and that no resident has been evicted for non-payment of rent. BLOOMBERG