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BlackRock blame; Amazon, Can Biden save housing? 🤔

By June 18, 2021 No Comments

BlackRock is not ruining housing for everyone else

Even as the nation rebounds from the coronavirus pandemic, more than 2 million homeowners are behind on their mortgages and risk being forced out of their homes in a matter of weeks,a new Harvard University housing report warns. 

With this news is some misinformation that firms like BlackRock are poised to snap up all these foreclosures before the hardworking families of American can get to them. 

It’s not true.

While Americans don’t agree about much, they seem united in believing that this is a despicable state of affairs. In the past few days, institutional housing investors have drawn criticism from Fox News and Republican politicos as well as left-wing commentators.

But this outrage is misdirected. If we have any chance of fixing the completely messed-up, unaffordable U.S. housing market, we should direct our ire toward real culprits rather than boogeymen.

The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. 

Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, BlackRock—largely through its investment in the real-estate rental company Invitation Homes—owns about 80,000

Megacorps such as BlackRock, then, are not removing a large share of the market from individual ownership. Rental-home companies own less than half of one percent of all housing, even in states such as Texas, where they were actively buying up foreclosed properties after the Great Recession. 

Their recent buying has been small compared with the overall market.

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Amazon releasing $$$ for low-income housing and mortgages

Amazon announced earlier this year that it was committing millions of dollars to build and preserve affordable homes, and offer cheap mortgage lending to tens of thousands of American families and minority businesses. 

Good News! Now the online giant is making good on that housing promise.

Amazon announced it is releasing $300 million (Forbes, metered paywall) from its Housing Equity Fu

nd to create more than 3,000 new affordable homes near public transit for families in the Puget Sound, Washington; Arlington, Virginia; and Nashville regions.

This new commitment is part of the Seattle-based tech giant’s Housing Equity Fund, a more than $2 billion commitment to preserve and create over 20,000 affordable housing units in the cities it calls home.

In Arlington, Amazon is teaming up with Washington Metropolitan Area Transit Authority, which operates the Washington region’s rail, bus and paratransit service, to create 1,000 new affordable housing units on property owned by Metro at their stations throughout the region.

Transit-oriented development is a unique approach to preserving and creating affordable housing options so moderate- to low-income families can afford to live near—and benefit from—quality public transit.

When successful, transit-oriented development has a range of benefits, including greater economic activity, reduced traffic congestion and associated environmental benefits, and a strengthened, more resilient labor force.

Amazon is providing developers with fast access to capital at below-market rates to expedite and create affordable homes.

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The next housing crisis is right around the corner

The United States averted the direst predictions about what the pandemic would do to the housing market. An eviction wave never materialized.After falling steadily for months, the share of people behind on mortgages recently hit its prepandemic level. But is the Biden Administration facing a surge of evictions?

It might sound surprising — with sky-high home prices, lumber shortages, and bidding battles in seemingly every corner of the country — but the U.S. has been on a bit of a homebuilding tear (Bloomberg metered paywall). Single-family home starts topped the million mark last year, the first time that’s happened since 2007, and apartment construction is approaching levels “last seen in the ’80s,” says Christopher Bruen, director of research for the National Multifamily Housing Council (NMHC). 

Despite Covid-19, just over 389,000 apartment units began construction in 2020 — one of the best years since 1990. And at current rates, builders will start 446,000 units before 2021 is over. 

The problem is that this building boomlet hasn’t helped close the nation’s housing shortage, which has swelled to 3.8 million units, according to Freddie Mac, up from 2.5 million units in 2018. 

And the underlying problems were only exacerbated during the pandemic. 

The release this week of “The State of the Nation’s Housing” report by the Harvard Joint Center for Housing Studies, an exhaustive annual compendium of housing data, shows how the pandemic has exposed the rickety foundations of America’s housing, and not merely metaphorically: Aging rental units bear a $45 billion repair backlog, according to a 2019 analysis by the Federal Reserve Bank of Philadelphia and PolicyMap cited in the report. 

“The inequalities amplified by the Covid-19 pandemic remain front and center,” the authors state early in the report’s intro. Those include shortages of housing near jobs, affordable housing and starter homes, as well widening racial inequalities around ownership, access and wealth. The striking rise in home prices — sales of existing homes were up 20% on average from 

September 2020 through February 2021, and new single-family home sales rose 20.4% in 2020 — has brought immense increases in wealth to existing homeowners, who often took advantage of record-low interest rates to contribute to record levels of mortgage refinancing and slash their monthly payments. Meanwhile, desperate buyers saw the cost of a down payment soar. In effect, the Covid housing market comforted the comfortable; an “acute shortage of homes for sale” mirrored an explosion in second-home sales.  

But the key question becomes whether the Biden housing rescue plan can arrive soon enough to prevent evictions, overcrowding in existing dwellings, and a rise in homelessness. Studies show that even before the start of the pandemic, 25% of renters across the nation were paying more than 50% of their income in rent, leaving little for savings. This figure is even higher for Black and brown communities. 

Further, the barriers to expanding access to homeownership — particularly for families of color — will remain an obstacle until or unless housing down-payment assistance becomes more broadly available. According to a new joint proposal by the National Fair Housing Alliance and the Center for Responsible Lending (CRL), targeted down-payment assistance to first-generation home buyers has the potential to increase homeownership for 1.7 million Blacks and 1.32 Latino home buyers.

With a highly partisan Congress unable or unwilling to enact basic voting rights legislation, it’s reasonable to wonder whether housing programs like the American Jobs Plan will attract bipartisan support.

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