Wall Street Landlords Turn American Dream Into a Nightmare

By: Maya Abood

Wall Street is transforming the single-family home into a globalized commodity traded amongst a small group of wealthy investors seeking ever high returns. The further financialization of housing and the extractive capital it attracts is hurting our families and communities.  But rather than preserve housing as a local asset and rather than protect tenants from housing insecurity, the government is helping an emerging oligarchy of Wall Street company expand their speculative enterprises.

In our new report, Alliance of Californians for Community Empowerment (ACCE), Americans for Financial Reform(AFR), and Public Advocates outline exactly how Wall Street landlords are fundamentally changing homeownership across the United States through massive purchases of single-family dwellings.  They are squeezing tenants and prospective homeowners, particularly in communities of color.

The report, “Wall Street Landlords Turns American Dream Into a Nightmare: Wall Street’s big bet on the home rental market, and the bad surprises in store for tenants, communities, and the dream of homeownership, documents in detail Wall Street’s growing influence in the single family rental (SFR) industry. 

The report highlights the federal government’s explicit role in propping up the industry and the industries’ leaders’ direct connections to the Trump administration. It documents in detail the terrible impact on tenants and communities including: denied opportunities for homeownership, dramatic rent increases, rising rates of eviction, fee-gouging akin to those for payday loans, and living conditions that some tenants describe as “life-threatening.” The report also highlights the growing movement to counter the Wall Street landlord’s influence with local and state initiatives that expand rent control and tenant protections to cover families living in single family homes.  

Allowing hedge funds and private equity firms to speculate on housing with no public oversight or regulation puts families at greater risk of unfair rent increases and evictions, limits the availability of affordable homes for low and moderate-income buyers, and threatens the right to housing itself. The federal government and state lawmakers need to step in before these abuses become systemic.

n the past 10 years alone, nine big Wall Street firms have fundamentally altered the rental landscape – particularly in their targeted geographic “strike zones”  In some neighborhoods the largest SFR companies own a the majority of  single family rentals homes. For instance, in Sacramento County, Invitation Homes is the single largest private landowner in the county, and the second largest landowner in the county itself. In 2017, the two largest SFR companies merged – making them the largest landlord in the nation and are continuing to grow.

But the numbers only tell a part of the story.  When you listen to the real life experience of tenants, the reality hits home. “The stress is killing us. We were hit again recently with another $400 per month rent increase and we just can’t afford it. It’s impossible to find any comparable housing that is affordable around here – leaving us facing the possibility of becoming homeless this year.” – Cecilia Reyna, Los Angeles Invitation Homes tenant and member of ACCE.

Cecelia & Carlos Reyna

Offered in the report are a series of local, state and federal policy recommendations to mitigate harms of the industry’s impact on tenants and communities. To address growing abuses, local, state and federal lawmakers are recommended to:

  1. Pass rent control and just cause eviction protections for tenants of single family homes
  1. Advance homeownership and community control of housing by establishing a “right of first refusal” policy giving tenants first chance to purchase the home when it is being sold.  
  2. Monitor the industry extensively – tracking their growth and their performance as landlords, and any potential fair housing violations

Offered in the report are a series of local, state and federal policy recommendations to mitigate harms of the industry’s impact on tenants and communities. To address growing abuses, local, state and federal lawmakers are recommended to:

  1. Pass rent control and just cause eviction protections for tenants of single family homes
  1. Advance homeownership and community control of housing by establishing a “right of first refusal” policy giving tenants first chance to purchase the home when it is being sold.  
  2. Monitor the industry extensively – tracking their growth and their performance as landlords, and any potential fair housing violations

We need policy makers to pay attention to the data and listen to tenants like ACCE member Markia Reagan of Oakland who said,  “With rents this high, for me to work 12-14 hour days and barely have enough to pay increasing rents to a billion dollar Wall Street giant, it’s like sharecropping all over again.”  It’s an unsustainable system that is doing real damage to people’s lives and undermining the health of our neighborhoods.