Tennessee Lookout is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. For every family that rents from a REIT, $226,200 of family wealth is shifted to investors away from families. Ken Chilton of Tennessee State University has studied the impact of Real Estate Investment Trusts on the housing market and how they are likely to rob families of the generational wealth created by home ownership. Home ownership and the “American Dream” are crushed by Real Estate Investment TrustsĪugHome ownership and the “American Dream” are crushed by Real Estate Investment Trustsīy Rob Mitchell, Tennessee Lookout August 22, 2022ĭr. Homeownership leads to prosperity and creates the generational wealth necessary for future generations to realize the American dream. Regardless of their words and how much they lament the situations we must judge our elected leaders by their deeds or lack thereof to address this growing issue.
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Many politicians may view this as an opportunity to continue to remain in power. We are witnessing a type of “social engineering”. The lack of inventory causes a scarcity which drives up prices making it problematic to enter the home buying market. The drive to maximize profits also contributes to a lack of inventory for families who may wish to own their home rather than rent. This demonstrates how the market strategies and profit motivation of REITs contribute to high rent burdens in low-income neighborhoods. Landlords operating in those neighborhoods also enjoy higher profits, owing to significantly lower mortgage and tax burdens but not significantly lower rents. Because the acquisition of property by REITs in low-income neighborhoods is relatively affordable, the renters in those neighborhoods easily become “exploited consumers.” However, their impact on the housing market is very real. Tenant exploitation (overcharging renters relative to the market value of their home) and landlord profit margins vary. In Rutherford County, nearly 10% of all residential units are owned by REITs.ĭr.
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Conspicuously absent from most accounts of neighborhood dynamics or inequality are landlords and increasingly corporate interests via REITs, who play a vitally important role in the lives of low-income families. But sociologists have yet to identify the basic sources of the affordable housing crisis or to fully articulate the inner workings of rental markets. Increasing rent burden among low-income families directly contributes to their economic hardship and is a source of residential insecurity and homelessness. Many poor families who are renting today receive no housing assistance and reside in the private rental market, where over half spend at least 50% of their income on housing costs and a quarter spend over 70% on them.
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This creates a permanent underclass of poor who can become dependent upon the state to help them survive.Īcross the United States, the decline of affordable housing has transformed the lives of the poor. A big economic division between renters and homeowners is apparent when looking at net worth: For homeowners, the median net worth of $231,400 is about 44 times the median net worth of renters, which is $5,200.ĭr.