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Unmasking the Truth: Who Really Dominates America's Housing Market?

• David (Viacheslav) Davidenko • Season 4

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Discover the hidden truths of America's housing market as we challenge the narrative of corporate dominance. With nearly 146 million housing units, it's surprising to learn that mom-and-pop landlords own 80% of the 14 million single-family rentals. Yet, the shadow of institutional giants like Blackstone looms large, reshaping the market landscape with bold moves, particularly in the multifamily sector. We unravel how these changes affect everything from ownership dynamics to investment strategies, offering listeners a fresh perspective on what lies ahead for housing.

As we navigate the complexities of this intricate ecosystem, we emphasize the ripple effect that even minor changes can have across the market. The conversation doesn't stop at ownership; we delve into the importance of being informed and advocating for policies that foster equity and sustainability. For aspiring real estate investors, we provide resources to help you make informed decisions. Engage with us in these crucial discussions and equip yourself with the knowledge to contribute to a more equitable housing market for all.

📰 Read more about this topic in our latest article: https://sunrisecapitalgroup.com/who-owns-americas-housing-market-a-look-at-single-family-and-multifamily-landlords/

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Disclaimer: The content provided on this channel is intended for educational and informational purposes only and does not constitute investment, financial, or tax advice. We strongly recommend that you consult with qualified professionals before making any financial decisions. Past performance of investments is not indicative of future results. The information presented here is not a solicitation or offer to buy or sell any securities or investments. Our firm m...

Speaker 1:

Hey everyone and welcome to another Deep Dive.

Speaker 2:

Great to be here.

Speaker 1:

Today we're tackling a topic that's been generating a lot of buzz.

Speaker 2:

Oh yeah.

Speaker 1:

Who really owns America's housing market?

Speaker 2:

Yeah, that's the question, isn't it?

Speaker 1:

We'll be looking at both single-family rentals and multifamily apartments to get the full picture.

Speaker 2:

The whole picture.

Speaker 1:

And if you're interested in learning more about real estate investing yourself, be sure to check out www.2060.us. They've got a ton of great resources over there. Yeah, they do so it's easy to get caught up in those narratives.

Speaker 2:

Oh, absolutely.

Speaker 1:

Especially when you hear those stories about big corporations gobbling up houses left and right.

Speaker 2:

Yeah, you see the headlines.

Speaker 1:

But we're going to dig into the data.

Speaker 2:

Okay.

Speaker 1:

See what's really going on.

Speaker 2:

Yeah, love that data-driven approach. So, for starters, when we look at the overall housing market, it's important to remember that out of the 146 million housing units in the US, only 14 million are single-family rentals.

Speaker 1:

Okay, so that already puts things into perspective a bit Right. We're not talking about the majority of the housing market here.

Speaker 2:

Exactly.

Speaker 1:

Right.

Speaker 2:

And when we look at who owns those single family rentals, it gets even more interesting.

Speaker 1:

Lay it on me.

Speaker 2:

A whopping 80 percent 80 percent 80 percent.

Speaker 1:

Wow.

Speaker 2:

Are owned by what we call mom and pop landlords OK, individuals or families with less than 10 properties.

Speaker 1:

So the image of faceless corporations controlling the housing market might be a bit overblown.

Speaker 2:

It's definitely not the whole story. Now, that doesn't mean big players aren't involved. Well, of course there are companies like Progress, residential Invitation Homes, american Homes for Rent and First Key.

Speaker 1:

Homes that own tens of thousands of homes, so they're not insignificant?

Speaker 2:

No, they're not.

Speaker 1:

What are their strategies like?

Speaker 2:

Are they all just?

Speaker 1:

buying up whatever they can get their hands on.

Speaker 2:

Actually, each of these companies seems to have a pretty specific approach. Okay, interesting For instance, Progress Residential is known for targeting high growth areas.

Speaker 1:

Makes sense.

Speaker 2:

Invitation Homes, on the other hand, is really leaning into technology for property management.

Speaker 1:

Invitation Homes. Yeah, that name rings a bell.

Speaker 2:

They were actually founded by Blackstone.

Speaker 1:

Oh right.

Speaker 2:

Which is a name we'll be hearing more about as we dig deeper.

Speaker 1:

Okay, Blackstone.

Speaker 2:

Yeah.

Speaker 1:

So even with these large companies, are they really dominating the market?

Speaker 2:

It's important to look at the numbers.

Speaker 1:

Okay, let's work at the numbers.

Speaker 2:

Even with all those houses combined, these big players still only make up 2.4% of the single-family rental market.

Speaker 1:

Wow, that's less than I would have guessed.

Speaker 2:

Yeah, it's surprising, isn't it?

Speaker 1:

But you mentioned Blackstone.

Speaker 2:

Right.

Speaker 1:

Are they becoming a bigger force in the market?

Speaker 2:

Blackstone has definitely been making moves.

Speaker 1:

Okay.

Speaker 2:

Recently they acquired both Home Partners of America and Tricon Residential.

Speaker 1:

Wow.

Speaker 2:

Adding tens of thousands more homes to their portfolio.

Speaker 1:

So they're getting bigger.

Speaker 2:

It signals a growing interest from these institutional investors.

Speaker 1:

Hold on Institutional investors.

Speaker 2:

Yeah.

Speaker 1:

For those of us who aren't real estate experts, can you break down what that term means? Absolutely.

Speaker 2:

Institutional investors are essentially large organizations like pension funds, insurance companies or private equity firms that invest huge sums of money.

Speaker 1:

Okay, so big money players.

Speaker 2:

They're looking for long-term stable returns and real estate is often seen as a safe bet.

Speaker 1:

Right Real estate's always a good investment.

Speaker 2:

Historically yeah.

Speaker 1:

So Blackstone snapping up all these houses? Does that mean we're seeing a shift towards more institutional ownership in the single-family rental market?

Speaker 2:

It's certainly a trend to watch.

Speaker 1:

Okay.

Speaker 2:

And it raises some important questions about the future of the housing market. Yeah, I bet, but before we jump into those, let's switch gears and look at the multifamily apartment sector.

Speaker 1:

Okay.

Speaker 2:

Is it the same story there?

Speaker 1:

That's what I'm curious about.

Speaker 2:

Yeah.

Speaker 1:

Are we seeing the same level of corporate ownership in apartments as we are in single-family rentals?

Speaker 2:

Well, things are a bit different when it comes to multifamily.

Speaker 1:

Okay, how so?

Speaker 2:

Ownership tends to be more consolidated because of the complexities of managing large apartment buildings.

Speaker 1:

So we're talking about even bigger players in this space.

Speaker 2:

Yes, we're talking about companies like MAA, Freystar, Morgan Properties, Avalon Bay and Equity Residential.

Speaker 1:

So big names.

Speaker 2:

These are the giants of the multifamily world. Ok, yeah.

Speaker 1:

So it sounds like the fear of corporate landlords might be more justified in the apartment market.

Speaker 2:

It's not quite that simple. Ok, even in multifamily, no single company holds a majority share.

Speaker 1:

Interesting.

Speaker 2:

And even when you look at the top 50 companies combined.

Speaker 1:

Yeah.

Speaker 2:

They only manage about 7.1% of all rental apartments in the US.

Speaker 1:

Hmm. So even with those big names, there's still a lot of competition in the apartment market.

Speaker 2:

There's a lot of players.

Speaker 1:

But where does Blackstone fit into all of this?

Speaker 2:

Blackstone is making waves in the multifamily space as well. Oh, really they made a massive $10 billion purchase of AR communities $10 billion purchase of AR communities $10 billion Wow.

Speaker 1:

Adding a whopping 22,000 units to their portfolio. Wow, that's a huge deal it is. It definitely seems like Blackstone is a key player to keep an eye on in both single family and multifamily markets.

Speaker 2:

Absolutely.

Speaker 1:

Right Blackstone.

Speaker 2:

And their actions raise some really important questions about what this increasing institutional investment means for the future of housing.

Speaker 1:

OK, so we've got this mix of mom and pop landlords, smaller companies, yeah, and these institutional giants like Blackstone making big moves.

Speaker 2:

Yeah, it's a mixed bag. What?

Speaker 1:

does it all mean Right? Why should we care who owns all these houses and apartments? That's the crucial question. Yeah, it's a mixed bag. What does it all mean, right? Why should we care who owns all these houses and apartments?

Speaker 2:

That's the crucial question.

Speaker 1:

Yeah, it is.

Speaker 2:

And it's one we'll unpack after a quick break.

Speaker 1:

See you with us.

Speaker 2:

We'll be right back. We've seen that both the single family and multifamily rental markets are more diverse than some headlines might suggest.

Speaker 1:

Right, it's not just giant corporations taking over everything.

Speaker 2:

But as institutional investors like Blackstone increase their footprint, it does raise some important questions.

Speaker 1:

Yeah, for sure.

Speaker 2:

About the potential impact on renters and communities.

Speaker 1:

Right, Because ultimately this isn't just about numbers on a spreadsheet.

Speaker 2:

It's about people's homes and lives.

Speaker 1:

And when we talk about impact, we have to consider both the potential benefits and drawbacks.

Speaker 2:

Both sides of the coin.

Speaker 1:

For instance, some argue that large companies like Blackstone can bring more efficiency and standardization to the rental market.

Speaker 2:

OK, interesting.

Speaker 1:

They might invest in technology to streamline the application and payment processes or implement consistent property maintenance standards.

Speaker 2:

So there's a potential upside for renters, yeah, in terms of convenience and predictability. Potentially, yes, okay.

Speaker 1:

However, there are valid concerns as well Of course. One of the biggest worries is about the impact on affordability.

Speaker 2:

Yeah, that's a big one.

Speaker 1:

Critics argue that as these companies acquire more properties, they have more leverage to raise rents.

Speaker 2:

Right.

Speaker 1:

Potentially squeezing out lower income residents.

Speaker 2:

Yeah, that's a concern. I've heard a lot. It's a valid concern. People worry that these companies are just focused on maximizing profits and that tenants will be treated more like numbers than individuals. That's a valid concern. Yeah, and it's something that policymakers and housing advocates are keeping a close eye on.

Speaker 1:

Good.

Speaker 2:

Another area of concern is the impact on neighborhoods.

Speaker 1:

Okay, how so?

Speaker 2:

Some argue that large companies buying up properties can change the character of a community.

Speaker 1:

Can you give an example?

Speaker 2:

Sure. Imagine a company buys up a significant number of homes in a historically diverse neighborhood.

Speaker 1:

Yeah.

Speaker 2:

If they then raise rents to attract a higher income demographic, it could lead to displacement of longtime residents Right and a shift in the community's social fabric.

Speaker 1:

So it's not just about affordability.

Speaker 2:

Right.

Speaker 1:

It's about the potential disruption of existing communities.

Speaker 2:

Exactly, and there are concerns about these companies potentially neglecting property maintenance or being less responsive to tenant concerns.

Speaker 1:

So kind of like an absentee landlord situation.

Speaker 2:

In a way, yes, there's a fear that they'll prioritize profit over people.

Speaker 1:

Yeah, that makes sense.

Speaker 2:

It sounds like there's a lot of potential downsides to consider. Are there any arguments in favor of increased institutional ownership?

Speaker 1:

That's a good question. I mean, is there another sign to this?

Speaker 2:

Well, proponents argue that these companies can bring much needed investment to areas that have been historically underserved by traditional lenders.

Speaker 1:

OK, so they could actually be a positive force in some cases.

Speaker 2:

Potentially yes.

Speaker 1:

Interesting.

Speaker 2:

They might be more willing to invest in renovations and upgrades which could improve the quality of available housing.

Speaker 1:

So it's possible that these companies could actually help revitalize certain areas.

Speaker 2:

It's possible, but of course it's important to make sure that any revitalization efforts benefit existing residents and don't lead to displacement.

Speaker 1:

Right. It needs to be done responsibly.

Speaker 2:

The delicate balance.

Speaker 1:

It definitely sounds like there's no easy answer here.

Speaker 2:

It's a complex issue.

Speaker 1:

Are there any solutions or approaches that could help mitigate some of these risks?

Speaker 2:

There are a number of policy options that are being explored.

Speaker 1:

Okay, like what.

Speaker 2:

Some cities are experimenting with inclusionary zoning, which requires developers to include a certain percentage of affordable units in new construction.

Speaker 1:

That sounds like a good way to ensure that new development benefits a wider range of incomes.

Speaker 2:

Right, and there are also discussions about strengthening tenant protections such as rent control or just cause eviction policies to prevent displacement.

Speaker 1:

So it's about finding ways to protect renters while also allowing for responsible investment in the housing market.

Speaker 2:

Exactly. The key is to create a system that works for everyone, not just those with the deepest pockets.

Speaker 1:

Yeah, well said. It's a complex issue with a lot of moving parts.

Speaker 2:

It is.

Speaker 1:

And it sounds like we need more data and research to really understand the long-term effects of these trends.

Speaker 2:

Absolutely, and that's why it's so important to stay informed and engaged in these conversations. Right Keep learning. The future of housing affects all of us, and it's crucial to have thoughtful discussions about the balance between private investment and public good.

Speaker 1:

OK, so let's zoom out and recap what we've learned today.

Speaker 2:

Right.

Speaker 1:

We started with the question who really owns America's housing market? Yep, and Started with the question who really owns America's housing market, and what we've seen is that it's not as simple as evil corporations versus the little guy Right. It's much more nuanced than that. We discovered that the market is more diverse than many people realize, with mom and pop landlords still playing a significant role, especially in the single family rental market.

Speaker 1:

There's still a big part of the picture, especially in the single-family rental market, there's still a big part of the picture, and while large companies are increasing their presence in both single-family and multifamily sectors, we learned that their impact is a complex issue, with both potential upsides and downsides.

Speaker 2:

It's not black and white.

Speaker 1:

Exactly.

Speaker 2:

It's not a black and white situation and, as these trends continue, it's crucial to stay informed and engage in conversations about how to create a more equitable and sustainable housing market for everyone.

Speaker 1:

You've given us a lot to think about today.

Speaker 2:

It's a big topic.

Speaker 1:

It's clear that this issue is going to continue to evolve, and it's important for us to stay informed about the potential consequences of these trends.

Speaker 2:

I agree. The choices we make today will shape the housing market for years to come.

Speaker 1:

So, as these trends continue, what's the big question? We should all be pondering. What's the takeaway you want to leave our listeners with?

Speaker 2:

That's a great question. I think the real challenge and this wasn't explicitly covered in our sources, but it's something to consider is how to ensure a healthy balance in the housing market.

Speaker 1:

Balance okay.

Speaker 2:

Yeah, we need a system that works for both individual homeowners and renters, while also allowing for responsible investment and development.

Speaker 1:

That's a fantastic point. It's not about demonizing one side or the other Right. It's about finding solutions that benefit everyone.

Speaker 2:

Exactly. We need to think about things like zoning regulations, tax policies and tenant protections. All these factors play a role in shaping the housing landscape.

Speaker 1:

Right, it's a complex ecosystem, for sure, and, as we've seen, even seemingly small changes can have big ripple effects.

Speaker 2:

Absolutely, and that's why it's so crucial to stay informed and engage in these conversations and advocate for policies that create a more equitable and sustainable housing market.

Speaker 1:

Well said. It's on all of us to be part of the solution. And for our listeners who are interested in exploring the real estate market from an investment perspective, don't forget to check out www.2060.us.

Speaker 2:

There you'll find a wealth of information to help you make informed decisions.

Speaker 1:

Great reminder. And that wraps up our deep dive into the world of housing ownership. We hope you found this exploration insightful and, as always, we encourage you to keep learning, keep questioning and keep the conversation going, keep learning. Thanks for listening.

Speaker 2:

Thanks everyone.

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David (Viacheslav) Davidenko

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