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How Private Equity Firms Are Increasing U.S. Rent Prices - YouTube
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rent is on the rise in cities across the
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country tonight skyrocketing wrench
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forcing a growing number of Americans to
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think twice about where home is it's
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been making news for months rent is up
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rental prices increasing more than 30
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percent in major cities across the U.S
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there's a handful of reasons for the
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surge but experts say one in particular
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is key private Equity firms private
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Equity firms raise money from
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institutional and accredited investors
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so not just from any ordinary person
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those funds are then invested in
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different types of assets with the aim
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of getting a return on investment a lot
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of these private Equity backed firms
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really moved into the apartment Market
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the multi-family Market in a big way
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after the last housing crisis they also
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moved into the single family Market what
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they do is they go out and they find
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these buildings they typically make some
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changes quickly to try try to increase
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the profit Vogel a housing reporter with
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propublica says private Equity firms
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increase profit by raising rent and
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cutting other building expenses you know
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maintenance security all those sorts of
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important things that people really rely
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on to live in these buildings
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comfortably tenant Advocates like Sophia
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Lopez say those money-saving measures
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for Equity firms cost tenants the
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tenants have told me stories about
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having to live without working heat in
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the dead of winter in some pretty cold
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places like Minneapolis and one kiss
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attendant told me a story about water
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that was over an electrical outlet and
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needing the power to be turned off and
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the company telling her that she'd have
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to turn it off herself which would have
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required her to Wade through standing
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electrified water Beyond safety concerns
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there's the issue of affordability for
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renters and home buyers the median home
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price in the U.S hitting a high of 416
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thousand dollars in June with Rising
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mortgage rates and expensive house costs
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slowing home sales and pushing many to
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rent Nationwide the average rent for a
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one bedroom one thousand seven hundred
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and one dollars while a two bedroom is
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two thousand and forty eight dollars
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that's a more than twenty five percent
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increase since last year as rents
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drastically increase experts like Vogel
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say private Equity firms are a main
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reason why in February 2022 Vogel found
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that private Equity firms play a major
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role in the rental market Vogel
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reporting how mortgage finance companies
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like Freddie Mac are fueling the rise in
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housing costs since 2015 Freddie Mac
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gave billions to these firms including
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real estate company Greystar most of us
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in Industry are getting very aggressive
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in driving expenses down here's Greystar
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CEO discussing his firm's ability to cut
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costs back in 2010. we can drive from
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dramatic savings out of the expense side
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of the equation but residents worry
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private Equity Firm savings will come at
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a cost pricing them out of previously
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affordable homes a lot of the tenant
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Advocates that we've talked to also feel
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that this financing that property is
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providing is coming with very few
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strings attached for the businesses that
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are taking the money mortgage Finance
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Company Freddie Mac shared in a
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statement in part that they're quote
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focused on addressing the affordable
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rental housing crisis more than 95
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percent of the rental units we support
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through loan purchases are affordable to
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low very low and middle-income
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households end quote private Equity Firm
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Greystar declined our request for
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comment today according to Americans for
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financial reform 1.6 million families
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rented from Real Estate owned by private
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Equity firms that includes over 1
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million apartment units over 275
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000 home lots and nearly nearly 240
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000 single-family rental homes private
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Equity becoming one of the largest
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landlords in urban America it's a change
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that hasn't gone unnoticed after an
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extensive investigation into this
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practice we have found that private
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Equity companies have bought up hundreds
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of thousands of single-family homes and
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place them on the rental market the
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house committee on Financial Services
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surveying the nation's top five
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single-family rental companies in June
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their findings is predatory purchasing
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contributes to our nation's shortage of
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affordable housing and exacerbates the
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racial wealth Gap now Advocates say to
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combat this national issue local
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organizing and state level changes
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needed whether that's the rent
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stabilization or rent controller that
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could also include protections from
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fines and fees a right to council if you
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go through an eviction or have some
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other kind of issue knowing that you'll
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have a lawyer in your corner makes all
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the different friends or organizations
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all across the country who do tend an
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organizing to make sure that people are
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actually living in these homes have safe
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secure homes that are truly affordable
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to them where they can live with dignity
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where they can raise their children
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where they can go to work know that they
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can come home at night and rest easily
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