By Joseph Williams
With Black homeownership the lowest in decades, investment firms are gobbling up inventory, pushing prices out of reach.
No question about it — the rent, and the mortgage for that matter, is too damn high. Spend just five minutes on TikTok, and you’ll come across videos like these, racking up tens of thousands of likes and shares:
The situation is even worse if you’re Black. Studies show that roughly half of all Black households spend at least 30% of their monthly income on rent, and nearly a third spend 50% or more. The situation isn’t much better for prospective Black homeowners, where data show average home prices are drifting out of reach of median household income.
While persistent problems, like inflation, wealth inequality, and the Black-white pay gap are partly to blame, researchers and policymakers studying the housing affordability crisis have identified a powerful new villain: Wall Street.
Experts say giant investment firms with billions of dollars at their disposal are sweeping through the nation’s housing market, buying up single-family homes and housing units with cash. Having outbid individual buyers, the firms turn the properties into market-rate rental homes — driving up overall housing costs and shoving first-time homeowners to the sidelines.
If the problem is left unchecked, they say, institutional investors could control as much as 40% of the single-family rental home market by 2030. And Black households, which make up a disproportionate percentage of first-time homebuyers, could be shut out of the market.
The problem has gotten so bad Congress has taken notice.
“What we’re saying is don’t have private equity buying up single-family homes,” Rep. Ro Khanna, a California Democrat, told CNBC. Khanna, the lead author of the Stop Wall Street Landlords Act of 2022, was infuriated by the fact that investment firms are using financial incentives the federal government implemented to resurrect the housing market following the 2008 financial crash.
“What’s outrageous is your tax dollars are helping Wall Street buy up single-family homes,” he said.
Investment firms like Blackstone Inc., which is valued at more than $90 billion, say they are active in just a tiny sliver of the homebuying market, and reports of their control are wildly overstated.
“We own less than 1% of rental housing in the US” and other global markets, according to a statement on Blackstone’s web page. “Given our ownership levels, we have virtually no ability to impact market rent trends. Rents are going up because there is significantly less supply of housing across the globe than demand for it.”
Still, Blackstone is reportedly the largest corporate landlord in the US, and it recently acquired Tricon, one of its chief competitors, in a $3.5 billion deal that will add some 38,000 homes to its portfolio.
Data tells part of the story. Since the onset of the pandemic in 2020, the median housing price in the U.S. soared from $330,000 to nearly $470,000 in 2022, according to CNBC — a price many first-time buyers can’t afford. But the market for rental homes, the network reported, also shot up by nearly 25% during that same time frame.
“After the pandemic, people saw the opportunity to go into these lower-income neighborhoods, working-class neighborhoods, and buy up these houses, and in communities that the working class can afford,” Khannna said. “They’re holding these houses, often for years, taking them off the market and making it even harder for young people and working class people to own a house.”
That puts more pressure on Black households in general, which data shows are struggling to keep a roof overhead. But it bodes particularly ill for young Black people, whose homeownership dreams may be out of sight.
Several studies show housing insecurity is a problem for Black households, with nearly 20% behind one month or more on rent. Even Black renters who want to buy homes are facing higher rent than before the pandemic, increases that make it difficult to scrape together enough money for a downpayment on a single-family home.
In 2022, “the Black homeownership rate stood at 45 percent, only modestly higher than the level at the passage of the 1968 Fair Housing Act,” according to the State of Housing in Black America, a study by the National Housing Conference.
“This disparity in homeownership rates between Blacks and Whites has expanded over the past half-century, reaching 23.8 percentage points in 1970 and nearly 30 percentage points in 2022,” according to the study. The current Black homeownership rate, the study says, “remains well below its 2004 peak of nearly 50 percent, highlighting persistent challenges in achieving equitable homeownership outcomes.”
While homeownership is the fastest way for families to build wealth, it’s become a steeper challenge for Black households overall. Studies show prospective Black homeowners are hamstrung by a lack of cash for down payment and high mortgage interest rates, and are denied mortgages at roughly twice the of whites, 20% to 11%.
Ultimately, experts and even Blackstone agree that the solution to the housing crisis is to build more affordable housing—a proposal that could take decades to satisfy demand. Even so, the barriers facing Black people who want to own their slice of the American dream are likely to persist for the foreseeable future.
This article was originally published in Word In Black .
