Following recent reports about roughly 200 corporations buying tens of thousands of homes — and sometimes entire neighborhoods — a new report claims that this practice is actually a ‘good thing.’
In an article published recently by the Wall Street Journal about the coming age of ‘the rental suburbs,’ the writers claim that millennials and their families prefer to steer away from the idea of a 30-year mortgage, because they want the flexibility of renting and the freedom of being able to leave after a lease.
In the article they argue that millennials like the idea of a yard, basement, and better schools, but would prefer to rent their home from a Wall Street Landlord because they don’t want to deal with the ‘headache’ of ‘mowing their own yard or buying a new motor when the garage door breaks.’
Despite this claim and their reputation for renting, according to polling millennials want to own homes, not rent them.
In fact, not only do millennials, aged 18-34, plan to own a home, they plan to own multiple homes throughout their lifetimes: 68 percent of millennials say their current home is merely a stepping stone towards the home they want to end up in, compared with 36 percent of homeowners across all generations, some surveys found.
Over 40 percent of older millennials say that they’ve already started to plan for a down payment, compared with 35 percent of the general population. Millennials though are not really certain how much they’ll need for a down payment.
Among millennials who already own a home, 79 percent said their homes are having a positive impact on their long-term financial picture, with 86 percent responding that owning a home is more affordable than renting.
And who could blame them?
For example if your rent is $3,000 per month, that is $36,000 per year and $180,000 over 5 years that a renter is throwing in the trash.
Wall Street’s latest mass real estate grab has grown to tens of billions of dollars, representing hundreds of thousands of properties. In some communities, it has fundamentally altered housing ecosystems, fueling a housing boom without a homeowner boom. Private-equity firms have developed new ways to secure credit, enabling them to leverage their equity and acquire a nearly endless amount of homes.
Corporations are banking on a new housing bust as well. Currently, over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent. Homeowners alone are estimated to owe almost $90 billion in missed payments. The last time this many families were behind on their mortgages was during the Great Recession.
Over the past several months, corporations have made up around 25% of home purchases, completely pricing Americans out of the market as they offer, in some cases, 30% over asking price.
“A lot of things that would have been for-sale housing are going to be for-rent housing,” Josh Zegen, Madison’s managing principal told the Wall Street Journal.
