How Financialization Pushes Up Home Prices

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 26 June 2019

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

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Summary

How the demand by corporations and individuals to turn single-family homes into rental units is pushing up home prices, making it more difficult for first-time homebuyers to purchase a house.

In this episode you'll learn:

Why the United Nations is accusing certain countries and corporations of treating housing as a tradable financial commodity rather than a human right.
Why Blackstone believes it is helping to solve the housing crisis by buying and renting single family homes and that the United Nations is wrong in its accusations.
How the drive by corporations and individuals to own rental housing is pushing up home prices, but not necessarily rents.
Why the U.S. has a chronic affordable housing shortage and what can be done about it.

Thanks to Vistaprint and WIX for sponsoring the episode.

For show notes and more information on this episode click here.

[0:17] The concern of the U.N. with houses being treated as a commodity vs. a right.
[2:27] The rise of rent-backed securities and the debated role of Blackstone.
[8:20] The impact of single institutions on the national rent average.
[9:59] House flipping vs. renting.
[11:34] Buying a home to rent through a company.
[12:56] David’s personal experience with being outbid on a house.
[14:25] Why financialization is driving up home prices—not rent.
[19:48] The housing crisis for those with low income.
[22:53] Possible solutions for the rental housing crisis.

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Transcript

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0:00.0	Welcome to Money for the rest of us. This is a personal finance show on money. How it works, how to invest it, how to live without worrying about it.
0:09.0	I'm your host David Stein, today's episode 258. It's titled, Financialization is
0:15.0	pushing up home prices. What is Financialization? The United Nation describes
0:22.3	the financialization of housing, and this is their quote,
0:27.0	it's a phenomenon that occurs when housing is treated as a commodity, a vehicle for wealth and investment rather than a social good.
0:37.0	The social good is something that benefits all of societies such as clean air, clean water.
0:41.4	Someone to argue health care is a social good and adequate housing
0:46.1	can be considered a social good. The United Nations produced a report under the
0:52.2	direction of Lelani Farha. She's a UN special rapporteur on the right to adequate housing.
0:58.0	She and Suria Deva, the chairperson of the Working Group on Business and Human Rights,
1:05.9	sent a letter in March 2019 to a number of countries and to Blackstone Group, one of the largest investors in residential real estate.
1:16.0	When you think about writing a country, who do you send it to?
1:19.0	But they did, they just sent a letter to the Czech Republic.
1:22.0	Denmark, Ireland, Spain, Sweden, the US and Blackstone.
1:28.1	Their concern was this financialization of housing.
1:32.4	In the case of Blackstone they were specifically concerned
1:35.6	quote about the egregious business practices of giant private equity and
1:40.6	investment firms which are scooping up low income and affordable homes around the world,
1:45.7	upgrading them and substantially raising rents forcing tenants out of their own homes.
1:52.1	In the case of the country such as Sweden, they write, we are expressing
1:56.7	our concern with respect to your government's practice of adopting laws and policies which
2:01.8	treat housing as a commodity and undermine the enjoyment
	...

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