Wall Street's Corporate Landlords

Is Wall Street Taking Over the Housing Market?

May 17, 2023 Posted by Mark Danforth Lomas Santa Barbara Real Estate

People have been making money on real estate for a long time. Corporate ownership of real estate is not new, especially when it comes to apartment buildings. But certain trends are noteworthy in recent years.

It’s fair to say that Wall Street ownership of single-family homes is a new trend with its roots in the wave of foreclosures that followed the 2006–2008 subprime mortgage crisis. This wave, and the subsequent rise in rental demand from displaced former homeowners, created a tantalizing opportunity for large-scale investors, and they seized it.

Wall Street’s large-scale investors are a potent and potentially destructive force in the housing market.

Is Wall Street the reason you can’t find a home? It might depend on where you live. Buyers fear that Wall Street may be buying huge swaths of homes and driving up prices. In some areas this is true.

Prospective tenants are worried that Wall Streets’ bottom-line mentality and lust for profits may not be the best profile for a landlord you may be thinking of renting from. Will the corporate landlords cut operating and maintenance costs where they can, and increase rents whenever they can? Monetizing your investment is the old normal especially if you have to answer to your stockholders.

If you’re old enough to remember the 2008 financial meltdown was caused by an overextension of mortgages to weak borrowers, repackaged and sold to willing lenders attracted by faulty risk ratings for supposedly safe residential mortgage-backed securities. As the story played out Wall Street’s risky behavior led to huge losses for institutional investors.