The “Humans over Private Equity for Homeownership Act” is a bill sponsored by Senator Jeff Merkley (D-Oregon) and co-sponsored by Angus King (I-Maine), Chris VanHollen (D-Maryland), Ruben Gallego (D-Arizona), Bernie Sanders (I-Vermont), and Mark Kelly (D-Arizona).
Sadly, both of my senators are on this shameful list.
“What this bill explicitly calls for is the eviction of 700,000 families.”
“The Other”
Much of politics is motivated by prejudice, and one of the deep problems of prejudice is it blinds us to the symbiosis among coordinating strangers that creates developed civilization. Nothing good can come from “the other”. Only bad. So prejudice leads us to believe we suffer no cost to ourselves from abusing them.
This is clear now with Trump’s immigration police rounding up day laborers at Home Depot (NYSE:) and chasing down workers picking vegetables in the fields. If they are “the other”, then no cruelty is too much and none of it will reflect back against us because no benefit can come from “the other”.
Some people seem to be able to retain that blindness even when the victims are caught while in the act of serving us.
Among the progressive left, the blindness can be acute because progressive prejudice is in the service of an egalitarian ethic. It is punching up. Punching up means never having to say you’re sorry. So, this blindness, along with the cruelties and inevitable self-harm that come from it, are frequently laid out plainly for anyone with non-prejudiced eyes to see.
“Humans over Private Equity for Homeownership Act” is a shameful example of this.
The act calls for firms that own more than 50 single-family rental properties to divest their properties. Merkley claims that this would affect about 700,000 homes today and 40% of all single-family rentals by 2030. (That would be about 5 million homes.)
Now, there is the explicit direct cruelty here that comes from prejudiced blindness. The investors who own those companies will have to give up their business plans. The employees that rent, maintain, and manage those properties will lose their jobs. But that’s only a small part of it.
The bill summary states, “The purchasing of single-family homes by hedge funds, especially in the current housing market, serves only to make profits for the investors and provides no value to the communities where these homes are located.”
“The other” can only harm. If you or I grew lettuce or bought a house to rent out, we would be providing sustenance to our community. “The other” are just invaders or profiteers, because, by prejudiced definition, nothing good can come from them. (I’m probably losing subscribers right now as they read this and assure themselves that “the others” are taking jobs or homes from real Americans.) Merkley’s summary itself assures us that, “Taxing hedge fund activity in the single-family housing market will help give more families the opportunity to purchase a home and combat the growing large investor landlord model.”
When a family owns a house, the community has a home. When a corporation owns a house, we have nothing. It’s math. One is greater than zero. We can’t add what we are blind to.
Elsewhere, the summary states, “American families should not have to compete with multi-billion-dollar corporations when looking for a home to buy or rent. Now, hedge funds are trying to take that slice of the American economy off the plates of working families and put it on their own balance sheets.”
You really couldn’t express this blindness more explicitly. That first sentence is a doozy. “Motivated reasoning” doesn’t even capture what this is. How could more landlords make it harder for families looking for rental homes?
We Need These Landlords
Of course, EHT readers know that the only reason we have a large-scale landlord market today is because this prejudiced logic has already been applied to mortgage lending. When American families received mortgage financing from “the other”, it didn’t help them to become homeowners. It was predatory.
It just lined bankers’ pockets. So we already banned that, which is why suddenly more than 10 million additional American families are seeking to live in rental properties and need home buyers with deep pockets.
The main reason for the historically unprecedented shift of large investors into these markets was that small-scale investors couldn’t possibly fill the gap left by the mortgage crackdown.
In Merkely’s summary, he states, “In 2011, no single entity owned over 1,000 single-family rental units.”
I share charts like this a lot. Atlanta has among the most active large-scale investor markets because Atlanta was hit the hardest by the mortgage crackdown.
Figure 1 shows the relative home prices over time in two ZIP codes in Atlanta – a rich one and a poor one. Note what home prices were in the poor neighborhood (30228) in 2011.
Figure 1
Of course, widespread ignorance about what really happened in 2008 (A massive crackdown on mortgage access dropped home prices in countless neighborhoods across the country well below any historical precedent.) means that most people benchmark to 2012. They literally, explicitly make a point to benchmark at the bottom-most point in the disruption.
It’s kind of crazy when you think about it. Like, if we were just ignorant and randomly picked a spot to benchmark, it would be a problem. But conventional wisdom about 2008 isn’t random. It’s explicitly wrong. It is a point of view. And that point of view leads to universally picking literally the single worst place to benchmark.
2012 is when Wall Street money finally was able to stop the bleeding in home purchase markets, so everyone benchmarks to the bottom and then concludes that Wall Street inflated home prices in poor parts of Atlanta by 100% or more. And, they appear to have facts!
This is why dart-throwing monkeys can outperform us in capital markets. We can be worse than random. We can be worse than ignorant. Passionate in our wrongness. Precisely targeted in it. Optimized for worstness.
This is a good rule of thumb. Anytime you see housing analysis that benchmarks to 2012, realize that the analysis isn’t just poor. The analyst literally has an intuition to be maximally wrong.
Shameless
Anyway, killing off a source of housing that we desperately need is not the worst problem with this bill.
Among the problems Merkley associates with large landlords are deceptive practices, poor management, inadequate property maintenance, and higher eviction rates. The summary states: “Predatory hedge funds disproportionately target Black families and vulnerable single parents, as revealed in a recent House Financial Services Committee report.
The report found these investors focus on neighborhoods with larger Black populations and approximately 30% more single mothers than the national average.”
If you or I focused on developing rental homes for black families and single mothers, we would be performing a community service. “The other” can only “target” them.
I have written about how important this market is. Under current conditions, large-scale single-family rental home investors are the only potential source of additional new homes in a country that desperately needs them. This bill wouldn’t just end that. The point of the bill is to force divestment.
Over a period of years, these firms would have to sell, essentially, everything. And, just to make sure there is no mistake about what the bill intends, the summary adds:
Hedge funds must sell homes to families who don’t own any other residential property, not to other hedge funds or corporations.
The landlords must sell to homeowners.
In truth, that would largely be the case, even if the bill didn’t require it. Homeowners have been net buyers in single-family housing markets for a decade now. Homeowners with mortgages outbid Wall Street for single-family homes just like they always did before 2008. There was a decade-long shock from immediately removing that possibility from millions of families.
But, once the shock ended, the marginal new families who can still get mortgages drive the single-family home market like they always did. Large-scale landlords are transitioning into purchasing whole neighborhoods of new homes because mortgaged families are finally driving home prices high enough to make new homes more economical for landlords.
And, of course, if large investors had truly been outbidding families for homes for the past decade, homebuilders would have been more than happy to build new homes for those families too.
Figure 2 shows single-family permits in Atlanta over time. As prices in ZIP codes like 30228 have recovered, new single-family construction has also recovered. But, it is still less than half what it was before 2008. The same prejudiced leftists that support this bill will tell you that this is collusion. They say that builders are purposefully building less in order boost their profits. There is even a paper published by a real economist with robustness tests and everything!
Figure 2
The claim is ridiculous on its face. But, this is one of many examples where empirical experience and reactions to those experiences give away the truth. Now, out of nowhere, there is a booming build-to-rent market where homebuilders sell whole neighborhoods to large-scale landlords and some institutional landlords have their own in-house builders that are ramping up activity. Permits have been flat in Atlanta while this new market has emerged. In other words, on net, all the growth in single-family home construction has come (and will come) from new homes built for institutional landlords.
Ask yourself questions. Do you really think that big landlords have been pricing families out of homes, and when those families went to the builders, the builders acted in collusion to refuse to build for them? Home prices doubled while institutions were buying them up, and the builders held firm? But, now they will build new homes for the landlords?
I suppose a person could believe that builders now collude to cap single family construction at around 2,000 units annually in Atlanta, and since large landlords are buying some, it actually is crowding out families. As we move past Covid-era supply chain disruptions, that number will rise. Unless bills like this pass.
The explanation for Figures 1 & 2 is that the mortgage crackdown made homes in Atlanta too cheap. As they became less cheap, existing homes slowly returned to price levels that new homes could compete with. Builders could slowly start to build more. By 2019, prices were back near pre-2008 levels, but you can’t sell a single-family home to a family that can’t legally get a mortgage. So, there is a cap on the market. Wall Street landlords are the only legal avenue for getting more of those homes.
And, also ask yourself, if the collusion story is the story that the Wall Street opponents believe, how will they react to the new build-to-rent market? Do they love it? Will they be happy if the supposed builder cartel starts to build more homes, if they are for large landlords?
Single-family completions have been stuck at about 1 million units annually, since 2020. If a couple years from now, it has risen to 1.3 million units, and 400,000 of them are new rentals, do you think any of these critics will say, “Wow. I was wrong. These new investors are really helping to build much-needed housing.”
They won’t love it, because “the other” can only harm. They’ll say, “Wall Street took 400,000 homes away from families this year.”
Back to this bill.
It wouldn’t just cap single-family housing production in places like Atlanta. What this bill explicitly calls for is the eviction of 700,000 families, and according to the bill’s sponsors, those families are disproportionately black and vulnerable. Do these senators think black families and single mothers shouldn’t live in single-family homes? That they should be kicked to the curb? Is that their intention?
I think it’s worse than that. I think they are just like an injured bear that was taken in and healed and is just waking up from the tranquilizer. They are full of confusion and anger and they couldn’t possibly understand what damage they can cause.
In practice, there are a lot of people who do think that black families and single mothers don’t belong in single-family homes, and so bills like this can get support from all sorts of prejudiced voters. These senators play Baptist to those Bootleggers.
You might think that this was just an oversight. Surely these kindhearted senators would tweak the language of the bill to avoid that.
How? How would they do that? Eviction is the beginning and end of the bill. Getting rid of landlords is the point. It’s the entirety of the thing. This isn’t complicated.
Democrats for mass eviction.
What a freaking time to be an American.
Clowns to the left of us (whose cruelties are, blessedly, procedurally limited by the rule of law), jokers to the right (exacting cruelties at the whim of a dictator), and here we are, stuck in the middle.
I’m bad at politics. I’m probably bad at attracting readers, too. Insulting people isn’t good public relations. But I don’t know what else to call this.
The leftist critics of the Abundance agenda, that like these bills are similar to people who believe in 2025 that lending standards are still too loose. They are too far gone to be reasoned with. You don’t win policy debates by explaining to people that they are prejudiced. So, how do you approach a topic that is entirely driven by prejudice? You have to hope that everyone else can add up to 50.1% of the votes to defeat it. I think that’s where you have to put your efforts. And, I think you have to be very careful trying to find common cause with activists that are drawn to these bills, even if they are otherwise YIMBYs.
That means that these bills will never go away. We just have to hope to stop as many of them as possible for as long as possible. I’m afraid that with the passage of time, that seems like a guaranteed losing proposition. Texas passed many great YIMBY reforms this session. There were 4 bills filed to limit single-family landlords. They all failed to advance. But there were 4 of them.
Surely, the damage would be so clear and obvious, if they did pass that there would be an uproar if it were ever implemented. You would think. On the other hand, was there an uproar when millions were locked out of mortgage access and millions lost their homes and their life savings? There was uproar. But, the uproar was all misplaced and just added to the damage. In fact, you could argue that this bill is the continuing Sturm and Drang of that uproar.
If this bill passed, it would easily cause more harm than the harm that has been reversed by every single YIMBY bill that has already passed. Maybe you think I’ve been too hysterical in my fear about the consequences of these laws? How do 700,000 evictions sound? Can YIMBY wins that could expand other forms of housing accumulate enough to make bills like this moot before they can be passed? There is a lot of momentum. The race is on. Fingers crossed.
Or, possibly, the rise of corporate single-family rental neighborhoods, itself, will bend the cost curve down enough that activists and legislators will stop worrying if Wall Street is driving up the cost of housing.
That economic outcome seems very likely, to be honest. But not that political outcome. This brings us back to the problem of prejudice. “The other” can only harm. It is not an observation that the proponents of these bills are capable of making.
In fact, it would be fascinating to see one of these senators ask, “Why are you sponsoring a bill whose single stated objective is to arbitrarily evict 700,000 families from their homes, many of whom are from vulnerable and historically underserved communities?” That’s the bill. The plain text of it, in its entirety. I’d love to hear that one of these senators might be reasoned out of sponsoring this bill.
I doubt they would even be able to accept the reality of the question. I’m not able to imagine what mental gymnastics they would use to avoid coming to terms with it, but I’m sure the logic would involve a complete denial that living in a home owned by a corporation benefits anyone at all.
No Compromises
I sort of feel like it’s not helpful to even have a conversation about this. Let’s say that someone actually listens to reason, and they change the bill so that it doesn’t force evictions. It just stops investors from buying or building more single-family homes. That would seem like a big compromise, and it might actually draw in more support. But these bills are poison.
As the saying goes, diluted poison is still poison. Passively blocking homes instead of forcing evictions would not be as bad, but it would maintain the less visible symptoms of the problem.
Take Phoenix. Roughly speaking, there are about 200,000 missing homes compared to previous trends. All the missing homes are entry-level single-family homes. Those homes weren’t built because about 200,000 families who would have been homeowners in Phoenix can’t get mortgages anymore.
The end result of all the adjustments that were made in the aftermath of that shock is that families are spending much more on rent in Phoenix, and about 200,000 households that, today, would have to be renters, have not been formed.
In addition to those 200,000 missing homes, Phoenix needs to build about 40,000 new homes each year for new homeowners and about 20,000 new homes for renters. Phoenix has made some commendable progress in apartment approvals, actually hitting the 20,000 mark in recent years. Single-family homes are still not quite up to a level that meets the ongoing demand.
So, if Phoenix is following the trends of the rest of the country, on net, families are probably buying some of the existing stock of single-family homes from investors. To make up for the loss of rental units in the existing stock of homes, apartment construction has risen, and the single-family build-to-rent market has been growing in Phoenix. Some of the new single-family homes are for renters.
Now, it would theoretically be possible for the 200,000 missing homes to come in the form of apartments. That would take a lot more reform. It would require doubling the current rate of apartment construction over the next decade. Likely, a lot of those missing homes will come in the form of single-family rentals because Phoenix area municipalities currently allow those homes to be constructed under current zoning rules.
Figure 3
Senate Bill 1209 would limit the ownership of single-family rentals to 5% of a county’s single-family homes. That would be about 100,000 units in Phoenix, I think. That seems very non-binding. It would also limit corporations to buying 100 homes per year. I can’t tell from the text of the bill if that includes new builds.
“THE TOTAL NUMBER OF SINGLE-FAMILY RESIDENCES LOCATED IN A COUNTY WITH A POPULATION OF FOUR HUNDRED THOUSAND PERSONS OR MORE THAT MAY BE PURCHASED BY A CORPORATION OR A LIMITED LIABILITY COMPANY IS ONE HUNDRED UNITS PER CALENDAR YEAR.”
It doesn’t seem to delineate between buying new versus existing homes. Does this mean an institutional landlord can build 200 of their own new homes through a subsidiary, but they can’t buy 200 homes from D.R. Horton? Or can they buy 200 homes from D.R. Horton, but they can’t buy 200 homes from individuals scattered across the city?
Regardless, what’s the point of this? Would it make sense to limit apartment developers to 100 units a year? Why does that logic change if there is space between the exterior walls?
In order to bring rents back down, Phoenix needs 200,000 units in addition to what is being built now. That is likely going to require some capital from some individual institutions that will need to buy more than 100 units a year.
คำแนะนำการอ่านบทความนี้ : บางบทความในเว็บไซต์ ใช้ระบบแปลภาษาอัตโนมัติ คำศัพท์เฉพาะบางคำอาจจะทำให้ไม่เข้าใจ สามารถเปลี่ยนภาษาเว็บไซต์เป็นภาษาอังกฤษ หรือปรับเปลี่ยนภาษาในการใช้งานเว็บไซต์ได้ตามที่ถนัด บทความของเรารองรับการใช้งานได้หลากหลายภาษา หากใช้ระบบแปลภาษาที่เว็บไซต์ยังไม่เข้าใจ สามารถศึกษาเพิ่มเติมโดยคลิกลิ้งค์ที่มาของบทความนี้ตามลิ้งค์ที่อยู่ด้านล่างนี้
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