When Will The Housing Market Crash? (Scripts & Sources)

Good morning, bad news: for the last ten years billionaires have been buying every single home they can get their hands on, and creating an unstoppable housing crisis that will make it impossible for you to ever own a home, and even if you don’t own a home, and never plan to, it’s still bad news because the way they’re paying for this land grab is by forcing you to rent for the rest of your life, and raising your rent no matter where you live.

Now you may have noticed that something very strange is happening to the housing market lately - home prices are astronomical, like way higher than they could possibly be worth in parts of the country that aren’t even appealing to live in, and there ARE a few straightforward explanations, so let’s hit those before getting into the crisis.

Obviously, homes are subject to the law of supply and demand, and because there is a foreclosure moratorium in addition to an eviction moratorium, there are almost no houses for sale on the market right now. In fact, at this point, there are more realtors than there are listings. Simultaneously, the demand for homes has never been higher - interest rates on loans are close to an all-time low making it possible for more people to afford mortgages, and because of the seemingly permanent shift to working-from-home, people who can afford high-cost rents in major cities where they no longer have to live to do their jobs, want to redirect that high rent into a mortgage and finally build equity. Now, this basic concept only applies to a small percentage of high-income earners in major cities, and it may seem like this doesn’t apply to you - but it does.

Because in the background a few things are happening.

Now, every major economic crisis involves a massive transfer of wealth from the lower and middle-class to the ultra-wealthy, and the current housing crisis was kicked off by the last housing crisis, which was explicitly caused by the ultra-wealthy, and both of which made the ultra-wealthy, ultra-wealthier. In 2009, hundreds of thousands of families were unable to pay their mortgages, the banks that owned their homes foreclosed on them, and then turned around and sold those homes, not to other families, but to private equity groups and hedge funds.

In fact, in about the last 10 years, less than a million homes were bought by people to live in, while 6.5 million homes were bought to rent out. Simultaneously, the homeownership rate peaked in 2005 at 69%, and dropped to 63% by 2016, and it’s been dropping since. All of that to say, single-family homes used to be built and sold to families, but starting in the aftermath of the last housing crisis, they are now being sold to and built for investors. And most importantly, when the current foreclosure moratorium lifts, as many as 10 million homes that are currently behind on their mortgages will be foreclosed on. And it’s very worth noting that a disproportionate number of those homes are currently owned by Black and Latino homeowners, in yet another manufactured transfer of wealth from communities of color to billionaires. In short, investors buying up single-family homes will permanently kill the American Dream.

The entire single-family housing market is being bought by investors and that is unfathomably bad. Here’s why: creating a housing market that is increasingly owned as an investment rather than as a home, has massive repercussions. The first, and most noticeable, is the price of the investment. The cost of a home now has nothing to do with the value of the home, but rather, with its projected value as a rental property against all the other projected values of all the homes an investor group might own. And in a bubble, which this is, these investments are artificially increased. Even though investors know that the foreclosure moratorium will end sooner than later, and significantly increase the supply of homes, home prices still saw an 11% increase last year, and they project a 12% increase this year, and another 6% increase next year. And a big part of that projection isn’t about supply and demand, it’s about their ability to buy all the available housing and control its price, ESPECIALLY when foreclosures start again.

Because the other part of the equation is the revenue stream that comes from renting property, and factoring that into the price of the property itself. And that stream can be extended MUCH farther than an individual’s ability to afford their mortgage - which is what caused the last housing crisis. If that all seems really complicated, I’ll explain that in simple terms right now.

Billionaire investors are paying way more money than we can afford to buy all the houses, then renting them out maxing out the rent, because a tenant’s only other option is to move to another investor held property, and all of this is generating massive amount of money for hedge funds who are using it to keep buying more homes. And by the way, we’re talking about slumlords, not landlords - companies that own these homes have zero incentive to help their tenants because their goal is short-term profitability, not livability. One company set up all their tenants with video chat software… so they could show them how to fix repairs themselves. They’re no longer painting or cleaning apartments between rentals, but just touching up small areas to save on paint. Flooring and appliances are being bought in bulk, at the lowest possible quality for the lowest possible price for tens of thousands of identical homes. And when something breaks, it can take months before tenants even get a reply. They’re are also being charged exorbitant fees and security deposits aren’t being returned - and because these companies are so massive, and have strong legal departments, renters have a huge uphill battle if they go to court.

What’s worse is that once investor groups buy these homes, they have absolutely no incentive to sell them ever - even if the market bottoms out and home prices collapse, those firms will be bailed out by the government, they’re banking on it. AND the homes will still be permanent revenue streams as long as someone is living in them. And there’s no way to boycott that, everyone needs a place to live, it’s a basic human right.

And when you commodify and monopolize a basic human right, like healthcare, quality drops, prices go up, the rich get richer, the poor get poorer, and it’s one more nail in the coffin for the American Dream.