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Lack of new construction and corporate landlords contributing to skyrocketing rent - YouTube
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every american is feeling the bite of聽
inflation groceries cost more gas costs more聽聽
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everything seems to cost more this past week聽
the federal reserve raised interest rates聽聽
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in an effort to tame the highest inflation in 40聽
years the cost of rent is really through the roof聽聽
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residential rents across the country went聽
up an average of 15 percent last year聽聽
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nearly twice the overall inflation rate that's聽
particularly painful for tenants because according聽聽
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to census bureau data they now often have to聽
spend as much as half their total income on聽聽
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rent why are rents rising so much well it turns聽
out that big wall street firms are playing a聽聽
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role but we found the fundamental problem was聽
years in the making and will take years to fix
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the story will continue in a moment
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how much did your rent go up they attempted to聽
raise it 400 a month that would have been a 40聽聽
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jump for justin blocky and brittany house she's a聽
nursing student and he's an occupational therapist聽聽
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in jacksonville florida when they first rented聽
their apartment a year and a half ago they were聽聽
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paying just over a thousand dollars a month i聽
eventually came to terms with them for a thirty聽聽
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percent increase which was three hundred dollars聽
still thirty percent i've never heard of anything聽聽
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like that do you know why your rent jumped聽
that much they told me the market justified it聽聽
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and they were right because i looked at 30聽
other apartments and they were all way too聽聽
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too much for us to afford so when your rent goes聽
up 30 what's the impact are you having to give聽聽
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things up yeah our fridge is uh does not look聽
the same as last year before our lease really聽聽
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cutting back on groceries yeah it's pretty much聽
universally true rents are going up all around the聽聽
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country but it's even more severe in migration聽
destinations like the sun belt of the country聽聽
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austin phoenix florida a lot of people are moving聽
there and there's just more demand for rents聽聽
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daryl fairweather is the chief economist at聽
redfin a nationwide real estate brokerage firm聽聽
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that pulls together real-time statistics聽
on both the sales and rental markets for聽聽
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example their numbers show that rents increased聽
31 in jacksonville last year 40 in austin texas聽聽
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what's causing this we are not building enough聽
housing for everybody who needs a place to live聽聽
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we built fewer homes in the 2010s than聽
in any decade going back to the 1960s聽聽
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and at the same time millennials are the biggest聽
generation and they're entering into home buying聽聽
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age millennials aren't living in their parents聽
basement anymore or shacking up with roommates聽聽
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they want a place of their own and we didn't build聽
any housing for them in the last decade because聽聽
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we are still so traumatized by the last housing聽
crisis we didn't put any investment into housing聽聽
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in the economic crisis of 2008 and 9 construction聽
of new housing came to a grinding halt聽聽
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but even when the economy recovered home聽
construction didn't so how big is the rental聽聽
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shortage in the united states the government聽
has estimated that we are short about four聽聽
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million homes in this country and that number聽
is likely growing especially since the pandemic聽聽
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four million shy yes that's the whole that聽
we're in that we need to build ourselves out of聽聽
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that number four million is that mainly聽
in the south and southwest or does that聽聽
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include new york city and san francisco that's聽
the entire country with something as essential聽聽
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as housing in such short supply you'd have to聽
figure that wall street would see an opportunity聽聽
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buying modest single-family houses the kind you'd聽
see on any middle-class suburban street and then聽聽
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renting them out in places like jacksonville聽
atlanta charlotte investors are buying almost 30聽聽
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of the homes that are available for regular聽
home buyers this is a home we bought this is聽聽
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3518 shiner drive right in jacksonville this聽
home is 1700 square feet how many bedrooms聽聽
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three bedrooms two baths it was built about three聽
years ago gary berman is ceo of tricon residential聽聽
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a toronto-based company that has quietly become聽
one of the largest owners of single-family homes聽聽
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in the united states so today we own about 30聽
000 single-family rental homes across the u.s聽聽
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largely in the sun belt and we've got probably聽
about 75 000 people living in our homes you are聽聽
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a multi-billion dollar company you're publicly聽
traded on the new york stock exchange correct聽聽
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and the toronto stock exchange toronto聽
stock exchange i even read in one of聽聽
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your own documents that your revenue went聽
up last year by 67 percent is that correct聽聽
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yeah we're expanding i mean when you think聽
about it we have an incredible amount of demand聽聽
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for what we do so leslie in any given week we聽
might have two or three hundred homes available聽聽
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for renting for renting and we get聽
about 10 000 leasing inquiries a week
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tricon is trying to buy 800 houses a month and聽
there are companies even bigger invitation homes聽聽
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owns more than 80 000 rental houses american聽
homes for rent close to sixty thousand聽聽
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some of the all-stars of finance goldman sachs jp聽
morgan blackstone have put hundreds of millions聽聽
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of dollars into these companies they all聽
offer rental homes online and all focus on聽聽
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the sun belt our largest portfolio would be in聽
atlanta in charlotte in phoenix in tampa and聽聽
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those are the cities that young millennials are聽
flocking to this is where americans want to be聽聽
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we're finding that americans are moving from the聽
northeast from the midwest to move to the sun belt聽聽
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because taxes are lower it's a friendlier business聽
environment it's better weather and so there's a聽聽
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movement taking place and the pandemic unleashed聽
powerful nesting trends and work from home trends聽聽
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nesting trends powerful messengers when we survey聽
our residents why did they move uh to be with us聽聽
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the number one reason is they want more space big聽
investment companies like yours are being blamed聽聽
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for this huge increase in rents across the country聽
and you can set the rent any way you want really聽聽
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given the demand you're talking about first i mean聽
corporate landlords represent two percent of all聽聽
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single-family rental housing so there's a lot more聽
going on than just corporate landlords bidding聽聽
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up homes it's a very competitive and difficult聽
environment it's true that big investors don't聽聽
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own nearly as many houses as mom and pop landlords聽
people who might have just a few properties but聽聽
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big firms like tricon do play a larger and growing聽
role in the sunbelt cities where they're active聽聽
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rent increases are all over the map 35 percent聽
in new york but just 9 in chicago 29 in portland聽聽
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only 10 in la and in only one big city were聽
rents actually down last year kansas city聽聽
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gary berman says tricon strictly caps how聽
much it will raise rent on existing tenants聽聽
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when they renew their leases but let's say i聽
come in as a new renter here with the rent here聽聽
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be 30 more than it was about a year ago it聽
could be because it when we come in and buy聽聽
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a home we have to pay a market price for the聽
home and then we have to set a market rent聽聽
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right here are two examples of homes tricon聽
recently bought in jacksonville this one聽聽
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they're charging 40 percent higher rent than the聽
previous owner asked this one 30 percent higher聽聽
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these before and after pictures taken by tricon聽
show how they fix up many of the houses they buy聽聽
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they also have a fleet of trucks and technicians聽
to service them this is a standard tricon home聽聽
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and you put in the kitchen these you put in the聽
appliances this home was built three years ago聽聽
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we put in about fifteen thousand dollars most of聽
our homes are a little bit older we probably put聽聽
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in about twenty or twenty five thousand dollars聽
this is very typical of what our product looks聽聽
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like when you move into it it's in move-in-ready聽
condition it's broom swept and if things go wrong聽聽
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if there's a leak if things go wrong if we have a聽
leaky faucet or the you know oven or microwave's聽聽
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not working you will call us you'll call and our聽
maintenance tax will come and service the home聽聽
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the houses tricon and other investors聽
are buying in places like jacksonville聽聽
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are what might be called starter homes usually聽
selling for about three hundred thousand dollars聽聽
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when one of those comes on the market聽
investors are ready with all cash offers聽聽
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i would say probably a third of the listings聽
that i'm putting up are getting investor offers聽聽
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heather crouay is a redfin real estate agent聽
in jacksonville she represents both buyers聽聽
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and sellers you are seeing a lot of these wall聽
street investors that are coming in you know you聽聽
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put a house on the market and within an hour i'm聽
getting offers full price cash and so these the聽聽
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sellers are seeing that and oh okay cash we can聽
close in 15 days it's very enticing to people聽聽
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when they see that offer come across so when you聽
sell are you having to stage the house paint it聽聽
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put furniture in make it look really nice not聽
now it's not necessary now in this this way the聽聽
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way the market's going now you really don't need聽
to do anything to your house to sell it typically聽聽
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the investors never look at the home never they聽
don't even look at that they never look at it聽聽
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that plus the fact that investors often waive聽
inspections puts would-be first-time home buyers聽聽
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at a serious disadvantage before they can even see聽
a starter house it's gone most people our age are聽聽
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not going to be able to have 350 000 in liquid聽
cash justin and brittany the young jacksonville聽聽
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couple facing steep rent increases are starting聽
to lose hope they'll ever be able to buy a home聽聽
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even tricon's own presentation to investors聽
says quote home ownership is increasingly聽聽
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out of reach in our portfolio the majority cannot聽
buy home cannot afford to buy home or don't have聽聽
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the credit to buy the home so for example they may聽
have student debt or they may have medical debt聽聽
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and therefore they can't qualify to get a mortgage聽
and if they want access to a single-family home聽聽
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which we think is incredibly important this is聽
the best way for them to obtain it i think if you聽聽
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asked a lot of millennials and that tends to be聽
our primary resident they would probably tell you聽聽
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they don't necessarily desire to own a home or to聽
own a car they've grown up in the sharing economy聽聽
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and for what's important to them is lifestyle聽
right and so if they can move into this聽聽
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what we call a turnkey or hotel ready home聽
and have a low maintenance lifestyle that's聽聽
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very compelling for them very compelling we were聽
told by the head of one of these big companies聽聽
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that people your age want to rent that you're not聽
as interested in buying a house no i mean i think聽聽
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the american dream is owning your own property聽
and having your own dirt that you own that's聽聽
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specifically why we moved here was to own a house聽
i realized my first house is probably going to be聽聽
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a starter home it may not be that dream house but聽
it's a house it's a home now the our dream is now聽聽
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unattainable it's it's very it's disturbing most聽
people desire that single family home with the聽聽
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picket fence and if they can't buy it because they聽
can't afford it their only option is to rent it聽聽
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yeah but the investors buying it yeah聽
and they're getting that wealth that聽聽
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normally or in previous years would have gone to聽
the person living there so what's happened to the聽聽
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american dream when we used to say that it meant聽
owning a house what's the american dream now well聽聽
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if we think the american dream is is embodied in a聽
suburban home with a yard and a white picket fence聽聽
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then i think we're making the american聽
dream much more accessible rent your聽聽
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american dream you can rent the american聽
dream that is if you can afford the rent
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