tv Hearing on Housing Availability and Affordability CSPAN July 22, 2022 6:09pm-7:49pm EDT
affordability and availability in the u.s.. witnesses testified on the practice of large corporate investors outbidding low and middle income americans for houses, and then renting out the houses to tenants. from house financial services subcommittee, this is an hour and 35 minutes. this hearing is entitled where have all the house is gone. family rentals, and americas neighborhoods. i now recognize myself for three minutes to give an opening statement today's hearing will examine troubling issues regarding the mass predatory purchasing of single family homes by private equity firms. including the adverse impact predatory purchasing has had on first time home buyers, the working class, and people of color. after an extensive investigation into this practice, we have found that
private equity companies have bought hundreds of thousands of single family homes and placed them on the rental market. this removes from the housing market homes that might otherwise have been purchased by individual homeowners. these corporate buyers have tended to target lower priced starter homes requiring a limited renovation. these homes would likely have been bought by first-time buyers, middle income home buyers, or both. these homes tend to be located in communities with significantly more families of color than the national average. they tend to be located in neighborhoods with more working people and single mothers than average. these private equity firms have the advantage of being able to purchase these homes with cash. therefore they easily outcompete individual buyers who may require loans. this all
has the troubling effect of displacing residents of color and leading to gentrification of these communities. further, private equity firms have demonstrated themselves to be very poor landlords. evidence shows that these companies implement significant increases in rent and fees of these homes. evidence indicates that they evict tenants at a higher rate and account for a higher percentage of evictions in areas where this practice is concentrated. statistics show that evictions by corporate landlords proceeded throughout the covid-19 pandemic. this was despite federal, state and local protections against such evictions. and these evictions were disproportionately of renters of color. this is simply shameful. corporate landlords are also more difficult to contact. therefore, their attendance find
themselves unable to amicably resolve issues involving rent or residents. our investigation also shows that once these homes have been purchased by private entity firms, they tend to be sold in bulk to other such entities. this can permanently remove these homes from the market for individual home buyers. this predatory purchasing contributes to our nation's shortage of affordable housing and exacerbates the racial wealth gap. because predatory lending contributed to a housing bubble, we must concern ourselves with predatory purchasing. i look forward to hearing from our witnesses on this deeply concerning matter. i now recognize my friend, the ranking member of the subcommittee, for five minutes for an opening statement. mr.
amr, you may be on mute. >> i was, now i am off mute. thank you mr. chairman, can you hear me now? >> thank you, sir and thank you to our witnesses for appearing today. i look forward to your testimony. today americans are being punched in the face with the 8. 6% inflation. when constituents go to the grocery store, the gas pump, or when they look for housing, the stark failure of congress's spend your way to prosperity policy starts to sink in. while many americans cannot afford a full tank of gas or buy meat, our subcommittee is focusing on institutional home ownership in the home rental market. in today's hearing, my democrat colleagues may claim that private equity firms have strongarmed a majority of the single family home rental market. but, make no mistake, these entities capture only 2%
of the nations single family home rental markets. it is clear that today's hearing is nothing more than a majority attempt to infuse institutional investors as a scapegoat for poor housing policies, that they are responsible for, and as an excuse to avoid the real problem at hand, inflation. generally speaking, there are three types of individuals who choose to rent. those saving for a future down payment on a home, those wishing to retain flexibility to move, and those who cannot own a home for any number of reasons, including affordability issues. single family rental homes offer americans an attractive alternative to other housing options they might consider. as prices across the board increase, especially for housing, and wages decrease, home ownership is a dream farther out of reach than ever before for many americans. americans are facing the largest cost differential in 20 years to own, versus to rent, a home. 67% of renters say they will rent their next home because they cannot afford to own. the cost of all home construction materials have increased more than 10%. the
average homeowner sinks $6300 into home maintenance a year. institutional homeowners invest an average of $30,000 in every home purchased before it is ever even rented, giving tenants quality shelter. those as we examine the role of institutional investors and the single family home market, we must not forget the sig goal family homeowners fill a gap for a large population of our country. they either prefer or need to rent. it offers parents an affordable way to give their kids a yard to play in, access to a good school, or a safe community to 11. we cannot demonize institutions for facilitating the supply of quality housing that otherwise would be out of the realm of possibility. this is for many americans due to the economic consequences of inflation. while it may seem like institutional home rentals are pervasive and problematic because we are dedicating an entire hearing to this topic, of the 5 million homes
purchased in 2021, 71% went to an individual owner. 28% went to an individual investor, and just 1% went to an institutional owner. let's contrast that with a very pervasive and problematic economic reality that americans are dealing with today. 8. 6% inflation. the energy index rose 34. 6%. the food index increased 10. 1%. shelter increased 5. 5%, the highest since 1991. for far too long the white house and the fed maintained that inflation was transitory. all americans know that is nonsense. by the time they acknowledge this inflation, and that it's not going anywhere, and in fact, it will only get worse, they had to russ to raise interest rates which deeply impacts mortgage rates. it makes hone ownership even less accessible.. this
hearing is misdirected. our work committee must wake up and focus on solutions the programs americans have today. no american should have to cut back on essential expenses like groceries or gas to make ends meet. i yield back. >> the gentleman yields back. i now recognize the chairman of the full committee, my friend from california, miss waters. >> thank you so very much for holding this most important meeting today, mr. green. and while the republicans rail about inflation, they do not have any answers. they simply try and say that it is inflation, and everyone knows that that does not make good sense. nobody wants inflation. this president is working hard to do everything that he possibly can to ensure that we tackle some of the problems that caused inflation. we know that there is a supply chain problem that has been going on ever since this pandemic started. and so, thank you for focusing on housing. thank you for focusing on the fact that we have the institutional investors were as it has been called, who, simply, go into these communities and they buy
up large numbers of homes, that if the financial institutions absolutely get them the loans, that were needed to purchase some of these homes, they would be home owners, also. and so, thank you for what you are doing today, mr. green, you are on the right track. i yield back the balance of my time. >> the gentlelady yields, maxine waters. we now recognize the vice chair of the subcommittee, miss williams. >> thank you mister chairman. in today's hearing we will hear about rising corporate ownership in the housing market. as in any market, changes, new challenges arise, and protecting those most marginalized as important. to illustrate this in the rental
housing market, let's start today by taking an imaginary journey to forest cove. it is a housing complex in atlanta that is home to hundreds of people. imagine you are walking the grounds. straight ahead you see a building that is burned down and boarded up. there is trash everywhere. you walk inside into one of the units. be careful where you step. part of the floor is collapsing. over to the right, you can still tell that bugs and rodents live there. you wonder how hundreds of problems that you see, right before your very eyes, went unsolved for years. they turned it to millions of dollars in damages. the residents of forest cove, under large landlords, were the neglected. things got so bad that residents had to be moved out of their homes. across the country, we must hold large landlords accountable. and tell the tenants that they serve that they are protected. thank you mister chairman, i yield back the balance of my time. >> the gentlelady yields. members and friends, today we welcome the testimony of our distinguished witnesses. first we have jim baker. he is the
executive director at private equity shareholder project. next we have shad bogany, a real estate agent with better home and garden real estate. thereafter, we will have sofia lopez, who is a researcher with the action center on race and economy. thereafter we have dr. elora lee raymond, she is an assistant professor at the school of city and regional planning. and finally, we have jenny schuetz. she is a senior fellow at the brookings institute. witnesses are reminded that the oral testimony will be limited to five minutes. you should be able to see a timer that will indicate how much time you have left. when you have encroached upon more than your five
minutes i will probably tap lightly to let you know that you need to wrap up your statement. i would ask that you be mindful of the timer so that we can be respectful of both witnesses and the committee members'time. without objection, your with written statements will be made a part of the record. mr. baker, you are now recognized for five minutes to give an oral presentation of your testimony. >> good afternoon chairman greene, ranking member, members of the subcommittee, i am jim baker with the stakeholder project. we focus on private non equity firms on wall street firms with ordinary people including residents of apartments, mental homes, and mobile homes. since the global financial crisis of 2008 private equity firms have acquired growing portions of u. s. housing, helping to drive appearance and home prices to different levels. the impact has been sharp in the single family rental industry which was created by private equity firms. rents for rental homes
have grown more than 13% over the past year, and even more sharply in some areas. for example, 39% of miami, and 19% in phoenix. just over a decade ago no single landlord could do more than 1000 homes. now the top five partners, at american homes for rent, amherst holdings, service capitals -- to get their own or operate almost 300,000. in 2016 party in partner pitched investors that quote unquote households, they are unable to obtain mortgages, becoming renters, thus driving high occupancy rates. as the same firms have in recent years aggressively competed with homeowners four houses, in some areas, this prediction has increasingly become a self fulfilling prophecy. private equity backed homes have accelerated during the pandemic. for example, petty and partners own progress presidential on one from 40,000 homes in january 20 21 to 80,000 homes in march 2022. private equity firms have drawn capital from global investors.
for example, last april the wall street journal reported that singapore -- canada's psp investment board, german insurer al eons a c was investing hundreds of millions, or billions of dollars, into u.s. single family homes. december 2021 investigation by the washington post -- drawing on the pandora league of offshore financial records showed pouring money into rental homes part of an infant precedent and flow of global financing to u.s. suburbs that is less stressful in its wake. the investigation also pinpointed how these partners were able to grab the lion share of home inventory away from ordinary families by quickly making all cash offers. in the first quarter of 2022 investors made up a record 28% of single family home purchases up from 19% in 2021 and 16% on average from 20 2017 to 2019, according to recent reports by -- housing studies, investors with large portfolios at least 100 properties drove much of that growth. in april, the wall street journal reported that
large investors had deployed about one quarter of the 89 billion dollars in capital they had amassed rental homes. some are projected to share rental homes owned by large investors will hit 7 million homes, or 40 to 50% market share by 2030. we tracked eviction filings during the pandemic across dozens of counties, in georgia, florida, texas, arizona, and nevada. large single family rental landlords like putting in partners, invitation homes, and amherst holdings were among the most frequent evictions we saw get -- including when the cdc election inventory -- we felt evict more than 3000 residents. and more than 2100 residents. amherst holdings, more than 1200. we also found that podium partner's rental home -- black counties in georgia, and significantly higher rates than they did residents in majority white counties in florida. katrina chisholm, a tenant from georgia, provided testimony to a july 2021 house hearing saying, i felt expendable, they
showed me i was. i was not given any considerations as a long-term tenant with a good track record. i felt as if i broke a law somehow while in the middle of the pandemic. there is no concern for my life for my son's life as they focused on their profit margin. i was not profitable so i was booted out with almost no notice. in the covid-19 pandemic, it was a test of how landlords would deal with tenants. some of the largest single family landlords failed that task miserably. we believe lawmakers should take steps to protect tenants and home buyers from predatory behavior in the housing market. they should limit the private equity by up of our homes. require private landlords to disclose beneficial leadership of hones and provide regular disclosures of eviction filings, evictions, as well as rent increases. creating a corporate land board consumer database to track landlord practices and provide residents of form to give responses to complaints. as well as, acting on protections that are just cause objections and legislation. facing
eviction have -- including mandatory fees. thank you. >> thank you mr. baker. the chair now recognizes mr. shad bogany. you are recognized for five minutes to give an oral presentation of your testimony. >> you may be on mute. >> thank you mr. green. for affording me this opportunity to speak before the financial services committee, impact investors. and on the affordable housing market. my name is shad bogany and i have over 40 years experience helping families purchased their first homes. i've been an advocate for crusading for families in the communities, and involvement. i have served this chair, the texas realtors, the chairman association of
realtors, the chairman of houston, urban league, community development corporation, board member tech support, and community affairs. currently, i'm president of the finance corporation. my radio show that i started 32 years ago focuses on educating, encouraging would be home buyers on the availability of financial mortgage products, and benefits of being first-time homeowners. my meage, you can be a homeowner. recently, the conversation has changed. the discussion there is about institutional investors buying up houses, competing with first-time homeowners, for a limited housing inventory. more alarming, investors are targeting minority communities since historically, they are undervalued, lower priced, and driving up the prices for residents making the houston dream of homeownership for the population unachievable. home owners are having to compete with investors, that are putting, cash over the list price. reserving an increase in
investor purchases. in houston alone, 40% of the buyers are investors in dallas, 52% of the investors are buyers, creating a generation that will miss out on the benefits of home ownership. the ability to create wealth, and stabilize communities. the risk today, should people liquidate their massive real estate, or will be a decreasing property value causing subdivisions to decline, and an increasing community in crime? low, loss of tax base municipalities for municipalities, lastly developing new ghettos, creating rent only subdivisions. this trend started when congress incentivized, rental markets that made home ownership equal to renting by lowering the taxs benefits of home ownership. homeownership around black americans has been declining in recent years. it is the lowest, by increasing the percentage of renters in the black community. that institutional investors are creating a modern day share cropping, colony, governed by
21st century jim crow law. in 1968 the supreme court establish that the housing discriminations are bad. it is linked to slavery. it reminds me of my ancestors'history over 100 years ago. they lived on the land, they have a place to say, but all your hard work and money goes to benefit someone else. connecting with our past, learning from policies that is oppressive, and paves the way for housing discrimination. change is not here yet. we are requiring higher credit scores in rental that are not there for home mortgages. minorities typically have more non-traditional credit, which the score system does not consider. the latest jim crow, recently, indenting, texas, home owners, passed by laws that land laws banned from renting to families of housing vouchers. a modern-day
redlining. not only do black communities missed out on opportunities, and other minorities, to benefit from this generation, but home ownership offers are being pushed out of the rental market. they are driven to less desirable parables, high poverty, and crime. and worse, people are becoming homeless. congress, we need you to act. let me tell you what you can do. you can mandate all foreclosures. freddy mack, fanny may, they stipulated that they offer full first-time owners capability to sell to investors. the other thing you can do is create tax incentives for sailors on the property is sold to a first home owner. wave the 90-day flipping rule. this would allow first-time home owners more return, and better financial terms. the largest rental system program, is housing charge, and we are now using housing charge vouchers, not only for leasing, but also, moving buyers into home purchasing. i personally have had a tremendous success in helping families move to home ownership who own section eight in high opportunity neighborhoods. this needs to be
expanded on a national scale. the bottom line, we cannot tell sellers who they can sell their property to. but, we can encourage them to incentivize them to sell to first time home buyers. i appreciate this opportunity. to shine a light where the tire meets the road in your districts. >> thank you for your testimony. the turnout recognizes miss lopez. you are recognized for five minutes to give a presentation of your testimony. >> thank you. good morning. thank you for the opportunity to testify today on private equity ownership of single family rentals. my name is sofia lopez, and the deputy campaign -- we are national organization working at the intersection of bristle justice and wall street accountability. i had the opportunity to testify last fall in the senate committee hearing on private equity loans. i shared stories tenants had told me about conditions in their homes. we talked about one tenant facing
eviction because thousands of dollars in fees, he was facing, for charges he did not understand and fines for landlord requirements he had already complied with. we talked about a mother of small children who had mold and small broken stairs, and whose basement flooded covering an electric outlet. when she called her landlord to shut it off, she was told to turn it off herself. it would've required her to lead through electrified water. more recently, i heard about tenants in north carolina and las vegas who faced rent increases of 100 $200 a month. they must do it quickly or face months a month leases with double monthly rent. the national rental home council, but institutional single fan -- insists institutional landlords are professionalizing the single family rental industry. the so-called professional liz them is making record-breaking profits. i am struck by how consistent tenants experiences are across geographies and landlords. tennant stories make it crystal clear. profit maximization has no place in
our homes. research shows that institutional single family business models follow five core practices. first, large french increases. for example, on the 2021 call holmes had were 30% in phoenix, 29% in las vegas, and 20% in the atlanta. the profits increased 30% in 2021 from the prior year. second, fees are so central to the private equity landlord model that one ceo called the failure to get revenue -- as an example, strike on residential, whose profits tripled in 2020 and 20 to 1 or called taking $600 per home, per month, in fee and other revenue. they anticipate increasing the figure to 850 to $900. third, inadequate maintenance. in 2021 tenants living in havenbrook homes, now managed by progress residential, recorded waiting up to a year for urgent things like holes and ceilings, broken
stairway's, led planes, flooding, faulty electric systems, in operable things, and black mold. the following year the city of columbia hires, in a minneapolis suburb, -- put residents lives at risk. eviction filings, many of these landlords obtained low-cost front through these securities. in 2017, invitation home securities were underwritten based on 94% occupancy. to maintain cash flow and debt, and a favorable rating to get more cheap financing, landlords must address non paying tenants quickly. last, convoluted ownership and use of llc leaves tenants unsure who really owns their home. and who to appeal to when problems arrive. despite institutional landlords insistence that make compound near 2% of the market, the portfolios are heavily concentrated and slit specific markets across -- tenants rights are generally more favorable to landlords. of course, this concentration is not race neutral. this committees survey data show, and survey, and part in
particular, in memphis, they've a 64% black population. they have the lowest rate of black homeownership in the 50 largest cities. yet, the finest year of investment ownership of homes. research found similar things in los angeles county, fulton county, in the city of atlanta. institutional ownership was correlated with higher concentrations of black residents. because of these companies purchasing criteria, tenants have expressed feeling like they have few options but to rent from institutional landlords to live in certain communities, close to jobs, family, and quality schools. let's be clear, private equity and wall street is in every sector of the housing market. and, residents in the sectors often face the same practices that yield immense profits for investors. the most straightforward fix for the worst conditions for the equity tenants are national tenant protections including protection from excessive rent increases and excessive fines and fees. just cause provides a reasonable explanation for ending tendency, and to give tenants to defend themselves
against unsafe living conditions. we also need a comprehensive landlord registry so he know who owns what and tenants know exactly who to contact. lastly, we need massive federal investment and truly affordable housing. there are harmful practices, not dedicated to fulfilling fundamental rights to housing. the housing market is ravaged league changing. landlords, builders, and financers are increasing a partnership with one another. our communities are neighbors will feel the consequences until we follow the lead of tenants and housing justice organizers to create a more just housing system. thank you, i look forward to your questions. >> thank you miss lopez. dr. raymond, you are now recognized for five minutes to give an oral presentation of your testimony. >> thank you chairman greene. ranking member, emmer, and members of the committee for the chance to testify today. my name is elora lee raymond, and i am assistant professor at the school and city of georgia
tech. since 2015 i have researched institutional landlord eviction practices, links to gentrification, and growing market share. in the 15 years since the foreclosure crisis we have learned a lot about the impact of institutional investors on households and neighborhoods. far from being good landlords, these firms have exceptionally high eviction rates and profit from gentrification. more recently, during the pandemic, institutional investors dominated housing markets in metropolitan areas across the country. and outbid homeowners trying to buy single family homes. the eviction practices of institutional investors are concerning. in a study in 2015 my coauthors and i found that institutional investors had an eviction filing rate of 20% in atlanta. that is to eviction filings for every ten homes that they owned. we confirmed that this exceedingly high eviction rate was due to the landlord not other factors, by using statistical modeling. even with controls for tenants and property characteristics, renting from an institutional investor was the biggest predictor of an eviction.
institutional landlords use eviction to boost profits. firms leverage the threat of an eviction to enhance rents collection, rental increases, or to evict tenants in order to replace them with higher income households paying higher rents. these profits come at a heavy cost. high eviction rates are devastating for tenants, neighborhoods, and schools. in addition to displacement through this, institutional -- in a study of institutional investors multi family purchases, we found that neighborhoods in atlanta with an institutional investor purchase of rental housing lost 166 more black residents than adjacent neighborhoods. these purchases lead to long term gentrification of black communities out of atlanta. many researchers have found that institutional investors crowd out home ownership at the neighborhood level. we see this in atlanta, where homeownership has fallen by 6% since the mid
2000s. my colleague at georgia tech, dr. brian anh, estimates that we can attribute 1. 4% of the decline in home ownership, specifically, to large institutional investors. particularly, during the pandemic. institutional investors have outbid homeowners and mom and pop landlords trying to buy single family homes. in a recent study of tampa, miami, and atlanta on my coauthors and i found that institutional investors bought one in six of all single family rentals last summer. in atlanta alone, institutional investors bought over half of the single family rentals and 17% of all single family homes. the prices these firms paid by 20% rose each quarter. that is an increase from an average price of $130,000 in 2019 to $275,000 in 2021. by contrast, household purchase prices rose by 9%
every quarter. institutional investors'ability to out-bid would-be home buyers being charged exceedingly high rents. it is particularly x -- this affects all communities. that is because institutional investors continue to target moderate income black and hispanic neighborhoods. in our study we look at the average democrat -- the average neighborhood was 84% non white, and 62% owner occupied. these high market shares and urban sub markets are far more meaningful measure of market power than national percentages. economists, antitrust lawyers, they do not define markets nationally. we look at meaningful, regional, local market definitions. the increased market power of institutional investors to affect home crisis and set rates is a growing concern. not only are there grave effects
for households being priced out but it is problematic if institutional investors have the market power to set sail prices of homes and neighborhoods, where they have existing assets that they're using as collateral, for their financial instruments. because the use of corporate vehicles like llcs and trust, it is impossible to identify all of the homes that these firms purchased. researchers like myself can only provide conservative estimates. we need rental property registers to accurately understand these firms growing market shares. with accurate deterrent because policy makers should probe for anticompetitive practices and undue market power in the home for just market and the rental market. policy measures should examine ways to strengthen tenant legal protections so that the threat of eviction is not used to support the aggressive use of fees and increasing rents. thank you mr. chairman. >> thank you dr. raymond. the chair now recognizes miss jenny schuetz. you are now recognized
for five minutes to give an oral presentation of your testimony. >> good afternoon chair green, ranking member emmer, and members of the subcommittee. thank you for the opportunity to testify today on this important issue of institutional investors and access to home ownership. it is an honor to be here before you this afternoon. my name is jenny schuetz and i'm a senior fellow at brookings institution. my comments today will provide broader context on housing affordability and availability in the u.s.. the growth of institutional investors is a symptom rather than the cause of extremely tight housing markets. rental housing is an attractive financial option for investors of all types, because of market fundamentals. demand for both rental and owner occupied housing has grown during the past decade due to job growth and raising incomes. since the great recession the u.s. has not built enough housing leading to historically low vacancy rates and rapidly rising costs. private equity firms and other institutional investors benefit from tight housing supply, but they did not create the problem. local governments across the u.s. can
adopt policies that make it difficult to build more homes where people want to live. zoning rules that limit the construction of small, moderately priced homes, are politically popular with existing homeowners and local elected officials. the burden of high housing costs is not equal across all households. rising housing costs create the greatest hardship for low and moderate income households. the poor 24% of households spend more than half their income on rent. leaving them to little cash to pay for food and other necessities. housing cost burdens have been rising among low and moderate household incomes for several decades. before the growth of institutional investors. black and latino households continue to face higher barriers to homeownership reflecting historic, and ongoing disparities and access to credit. fewer than half of black and latino households under homes compared with nearly three fourths of white
households. first-time white home buyers often receive family assistance with down payments. black and latino households have been systematically shut out of the means of intergenerational wealth building which puts them at a greater disadvantage when competing with institutional investors. housing quality intended legal protections are important to renter households while being regardless of who while being regardless of who owns the property. housing maker should be equally concerned about poor quality housing and fair treatment of tenants, regardless of whether or not rental properties are owned by private equity firms, mom and pop landlords, public agency, or non profit organizations. media reports have raised concerns about housing property and customer service and properties owned by private equity firms. the
existing data makes it difficult to determine whether they are systematic quality differences between private equity firms and other types of landlords. better data and more transparency are central to inform better policy responses. single family rentals are an important part of the housing ecosystem. home ownership is not the preferred choice for all americans. of all points in any person's life. having a diverse set of tenure choices and structure types, in diverse neighborhoods, is important for economic opportunity. families may want to live in communities where they can afford monthly rent, but cannot afford to purchase a home. congress can improve renters, and home buyers while being by four channels. first, work with state and local governments to
expand the supply of housing. particularly, moderate priced rental and for sale homes. several existing proposals along these lines have bipartisan support in congress, and are included in the biden administration's housing supply action plan. second, really financial stress on low and moderate in outcome households. increased funding for housing vouchers, or renewing the expanded child tax credit. they are highly effective tools and also have bipartisan congressional support. third, provide more resources to state and local governments to assist their efforts in ensuring housing quality and tenant protections. fourth, better data collection from federal agencies could increase transparency of rental property ownership. there are no silver bullets to make housing cheaper and more abundant overnight. helping renters and home buyers will require sustained, and coordinated policy efforts from federal state and local governments. thank you again for the opportunity to testify. i look forward to your questions. >> thank you for your testimony. i will now recognize members for questions. members are reminded that they will have five minutes for questions, and that at the end of the five minutes there will be a light to indicate that they are exceeding their time. also, we do ask members to try and ask
the questions so that they may be answered within the time that you have been allotted. what i recognize the chairwoman of the full committee, my friend miss waters, for five minutes. >> thank you very much congressman. i appreciate this hearing. i would like to direct my question to miss lopez. renters who live in single family rental units owned by private equity investors pay higher rent compared to other renters, and are more likely to see steeper rent hikes each year. nationwide rent has increased at the fastest rate in decades. with year over u. s. single family rent. raising about 14% in april, 2022, more than doubled compared to a year earlier. miss lopez, in addition to the aggressive rent hikes, the committee survey of the five largest, single family
rental companies concluded that these rental lease increase by approximately 40% from march 2018 to september 2021. the total number of renters were fallen behind on late fees and rent has doubled in that time. have you observed single family rental companies taking advantage of renters to increased and fees? can you explain how the security-ization of rental income creates unique pressures to create -- an increased fees each year? >> yes, thank you so much for the question, chair woman waters. i mentioned a couple of examples in my testimony of the ways in which these companies are taking advantage of tenants who are, otherwise, shut out of the home ownership market. this is to increase rent. so, for
example, i named invitation homes as one company that is increasing runs by 30% in the phoenix market. it was 29%, and then the longest vegas market -- that is just a short overview. american homes for rent has also done the same thing. i also mentioned finding visas as an important source of revenue for these companies. so, i gave the example a strike on residential who said that they increased by, or were able to bring in $640 per home, per month, in fee revenue, and anticipate growing this number to 850 to $950 per home, per month. i just, to think about that in context, for myself, i could not imagine my housing cost increasing by 30% from one year to the next. i could not imagine being made to pay fines and fees for things like a smart home system, or a pet fee,
or having utilities registered in my name, which is one of the examples that i mentioned of stories i had heard from tenants. having those fees add up to 850 to $950, per month. i think a survey data also shows that tenants are struggling to keep up with these fees, too. i was struck by just how many people are behind on rental and feed costs. >> thank you, do you believe that this incredible increase in rent is going to spare efforts by neighborhoods for brunch control? >> do i think that rent control could help cut some of these incredible rent increases? i think, absolutely, we have to consider every single tool, potentially, available to us. and, i agree, actually, with what miss roy jenny schuetz said, a lot of the dynamics across the rental inventories -- i think the level of agree
just friends increases that we are seeing in institutional, single family rental properties, means that we, absolutely, need to find ways to cap both brent increases and other increases. >> well, i want to thank you. i yield back, mr. green. thank you. >> the general lady yields back. the chair will now recognize the ranking member of the committee, subcommittee, mister emmer, a gentleman from minnesota. my friend, mr. emmer, you are recognized for five minutes. >> thank you mister chair. again, as i mentioned in my opening statement, inflation is at 8. 6% in americans actually need solutions, right now. but again, we are here to discuss the institutional homeowners role in the single family
rental home market. a market where they make up only 2%. my colleagues across the aisle have insinuated that institutional investors take opportunities for home ownership away from americans, everywhere. what they feel to acknowledge is that not everyone is able to purchase a home at a mortgage rate of 6% for a 30 year fixed loan. institutional homeowners actually give americans quality, affordable rental housing. thanks to the hidden tax we call inflation, which is definitely not hidden anymore, many prospective home buyers simply cannot afford to pay for monthly mortgages. the hidden costs pile on top, like maintenance and repairs. these institutional homeowners removed the additional barriers and cost that coincide with home ownership. they provide maintenance services, and many even offered their tenants financial readiness classes. here is the reality. prices are through the roof, gas is up, groceries are up, housing is, up inflation is putting americans in the face. actually, americans are being sucker punched when you add on climbing mortgage rates that
make homes more expensive. yet, where we are. my democrat colleagues do not seem to realize that congress is careless spending, without regard for real solutions, has made it harder for americans to save him for a home. doctor jenny schuetz, can you explain how inflation impacts the everyday lives of renters? so i can speak more specific at the role of housing costs in the way that housing cosplay into inflation. so we know in fact that the cost of housing has been rising faster than household incomes for roughly the past ten years. so this is not just a short term problem that we've seen in the pandemic, although it is certainly gotten worse with supply chain shortages that affected construction of new housing. but i think it's important for a member -- long term problem cause fundamentally -- not building enough homes and at the housing supply has not kept up with demand. >> can i ask you, have single family rental homes addressed the increase in demand for suburban community living at least during the pandemic? >> so we do see an increase in the demand for basically all types of rental homes. the past several years, he particularly seen increase the number of higher income renters, people who probably would have been homeowners in other generations when housing prices for cheaper. so that the growth of
high income renters also the growth of older renter households or two are the factors that drives the demand for a single family rentals. that said, we also see a very high demand for multi family rentals and for owner occupancy. basically there is demand for more housing across the board. >> listen, over the past few months, my democrat colleagues continue to find a scapegoat for inflation. they've determined institutions buying entry level housing are leaving americans without opportunities to buy. yet according to the national realtors association, the united states is behind like you pointed out, doctor schuetz, in actual housing available. we're behind according to the realtors by 6. 8 million housing units. doctor schuetz, is it true that a regulatory barriers at a local level are impeding or part to blame for the problem with the
housing supply across the country? >> absolutely. the fundamental reason we're not building enough homes in particularly in high demand locations is that our housing production system makes it very difficult. so a combination of rules, zoning rules like bans on apartments, large minimum lot sizes in a discretionary process or existing homeowners get to weigh in on the developments and essentially have so that they don't want additional housing to be built. so this pushes a lot of demand into neighborhoods that either aren't built, areas on the urban earth range or in places where the existing residents are more friendly or less able to push back against the development. >> thank you. i would also add that the idea that iran controls are somehow going to solve the problem, that's just another local regulation that
quite frankly is going to frustrate the incentive for people to build more housing when we're already behind. i want to thank the chairman and all of you for being here today. and i urge my colleagues across the aisle to consider the trillions of dollars we spent of the last two years alone and then decide who has stolen the american dream of affording a home. i yield back. >> the gentleman yields back. the chair now recognizes the gentleman from missouri, the subcommittee on housing and chairperson. my friend, mr. cleaver, you are now recognized for five minutes. >> thank you mister chairman. before i even get to my questioning excuse me. i really would like to express my appreciation for your willingness to bring this issue
of to the subcommittee. i think it's a critically important issue and i don't think that it has been discussed around the country and if it has it has been listened to enough. when we start, miss lopez. thank you for have you ever heard of coup capitalism. you probably haven't because i made it up. my own self. when i talk about who capitalism. it's a coup d'état because there's an overthrow of the home ownership in the urban cohort. as a regime change that comes in -- i have here mister chairman, an article from the -- it was a pretty extensive story that they wrote last december. it talks about the land grab and the, on the east side of kansas city and frankly on the west side. the west side has
probably been historically, maybe over 100 years, -- a hispanic area. near east side has been fully african american. they go through and they point out all of the issues that have arisen. and i began to call it coup capitalism because the people have been overthrown. they're leaving the west side. probably already lost. also, miss lopez, one of my issues, when my questions is do you think that the federal government -- i don't think a municipal
government can do it, pass some kind of legislation that would require these vulture capitalists, before they can come in and do work ahead to be opportunities for local homeownership and then local participation in purchasing of houses and land. in historically poor areas? >> thanks so much for the question, congressman. i think you are touching on several very key things. someone, you mentioned policy at the national level. i think we all know that right now we have people patchwork of policies that protect homeowners, the protect tenants, that all come down to the local -- of where you happen to live, or you have
been to have been born, one place you are community. so i agree, the most broad reaching things being federal policy. i think you're absolutely right. make no mistake about it, these companies engage an equity stripping. as of 2019 for every $1 of white wealth belonging to, of well filling into white americans, black americans had 17 cents. and these companies make that wealth gap worse because they buy homes in communities like yours and instead, transfer to shareholders. that's the exact same thing that happened during the foreclosure crisis. i think you're absolutely right. we do everything we can to make sure that wealth stays locally. and continues to support -- experiencing the same thing as you described. dynamics that we've seen -- >> thank you very much. i might add right here that institutional purchases of homes in missouri -- which means that those areas are pushed out. we had a 500 unit town houses -- it was under the first caucus in the country. it's about to go under after all these years. my greatest fear and the fear of the fewer
citizens who still in that area. is that they're going to wake up one day -- may put the property on, sell the property after it's eventually goes into default and so forth, can't find a developer. and then we wake up one morning and the international bad people's cooperation, i'm just getting started. thank you very much. miss lopez, thank you mister chairman. >> the gentleman yields back. the chair now recognizes the gentleman from south carolina,
my friend, mr. timmins, for five minutes. >> thank you mister chairman. thank you for witnesses for being here today. another day, another new excuse from our friends across the aisle trying to explain their role in causing record-breaking inflation. first as you recall, inflation was transitory. then it was the high class problem according to presidents chief of staff. then it was just used cars and energy. then it was putin's fault. next it was the evil corporations price gouging. and now they're trying out a new bogeyman, wall street and institutional industrialists. none of these attempts to explain away inflation worked. and with the midterms quickly approaching the president's approval ratings of the gutter, my friends are throwing but at the wall with the hope that
something sticks. but the american people are too smart for this, it will not work. they know exactly was responsible for the 40 year high levels of inflation we are seeing. primarily -- biden administration and congressional democrats support trillions of dollars and fiscal stimulus on the -- economy that was exploding out of the pandemic shut down that the forces on the country. there were so much pent-up demand and americans had record levels of savings, even before the so-called american rescue plans was passed. on this committee, republican members all raised the alarm on inflation last spring while this body was deliberating. so did notable democrats like larry summers. they did not listen. they wanted to expand their social welfare state to unprecedented levels and increase every american's dependence on the federal government. instead, we got a record levels of inflation. which is my friend, mr. style said, is punching americans in the face. i would say it more apt description to be a sucker punch but i guess reasonable minds can differ on
that. anyways, today's hearing is suppose about how private equity is buying up all of the single family homes across the country and preventing families from pressuring homes and instead, forcing up rental costs. this is just the latest scapegoat for the broad based inflation that has spread throughout our entire economy including in the housing market. i actually looked up the data on institutional, a single family homes in my state of south carolina. the numbers are still a different story. then the one the majority is trying to tell. there are just over 5100 single family homes owned by private equity in south carolina. there are over 300,000 single family rental units of a state and over 2. 3 5 million housing units in south carolina. the percentage of housing units owned by institutional industrialist in south carolina is less than one quarter of 1%. one quarter of 1%. but yet we are suppose believe that this is why housing costs are on the rise? i'm not buying it, i don't think the american people are either. there is no doubt that inflation across the board, defending the housing market,
need serious policy solutions that will bring down prices for our constituents. with that in mind, miss lopez, your organization, the american center on race and the economy, states on its website, quote, we envision a u.s. where the land and housing are publicly owned and he was for the overall public good. so i guess my question is yes or no please. do you agree with that statement? >> yes. >> can i get a show of hands with the panel? does anyone else believe that all prohibited homes should be owned and operated by the government? i find a pretty outlandish. i guess one more follow-up. miss lopez, during the pandemic. your organization attempted to organize a nationwide rent and mortgage strike including a pledge to participants withhold rent payments from property owners or lenders whether they could
actually pay rent or not. whether they've even lost their jobs or not. so miss lopez, yes or no, were you involved in organizing this quote unquote rent straight? yes. okay i guess >> and you think that it's appropriate that if someone didn't lose their job they should stopping rent or their mortgage? >> my recollection, my focus was on people who have lost their jobs and have lost the ability to pay. i think, in solidarity with people who have lost their jobs, you are absolutely open to people who are interested in engaging, also. >> okay. i do not know if the american people would agree with that sentiment. if you don't lose your job you should stop paying rent, but i have one last question. mr. shad bogany, what would be the impact on your business if the government took control of all private property and homes? >> it would have a huge impact and i do not think our membership and realtors will be in favor of that. not at all.
>> okay, i appreciate that answer. mister chairman, thank you for having this hearing. witnesses, thank you for being here. i yield back. >> the gentleman yields back. the chair now recognizes the gentlelady, my friend, miss alma adams from north carolina. >> thank you jim, mister chairman, and chairman waters. thank you ranking members for hosting the hearing today. thank you for your testimony. in particular, chairman, i want to thank the staff on the subcommittee for working to put this together. >> miss adams, let me remind you, your voice was elevated for a moment and then it went down. is there something that you can do to raise the level of your voice? >> okay, what about now? >> a little better. a little better, but it is not where it was at one point. >> now i am at 100, is that better? >> that is better, thank you.
>> i did want to think the committee for putting the information together for the study. but, i represent charlotte and another county in north carolina. we say, a lot, that we have a lot in charlotte. a lot of great opportunities to hear a lot of great people. but, we have a lot of things that we need to do. affordable housing is cheap among them. we have a shortage of more than 30,000 housing units in the city right now. according to the research done by the u. n. c., charlotte, urban stewed, single family rental conglomerates have belt portfolios of homes, heavily concentrated in the starter home market. now, according to their research 93. 5% of the 11, 000, 500 homes, have private equity firms as they approach. they were under $300,000. most of those houses have been and, what we call, the -- were more
black and brown families call home. mister chairman, without objection, i would like to submit that article for the record. >> without objection it is submitted and received. >> thank you. miss lopez, can you speak to how this trend exacerbates the affordable housing crisis, and hurts people of color and low income individuals? >> certainly, congresswoman. thank you for the question. i am not at all surprised to hear the financial study that you mentioned. it is consistent with what researchers all across the country have found. institutional, single family rental landlords focus on communities where black and brown families live. because of the market segment, where many of these institutional landlords focus their purchases, they have billions of dollars at their fingertips and sophisticated algorithms that tell them exactly what they should pay for a property. people of color cannot compete to buy those homes. if families want to live in a family home,
of course, there is a high likelihood that institutional landlords, particularly in counties where s are institutional landlords and as much as one and four single family rentals. i heard from some tenants the ceiling that, if you are stuck with one landlord, rather, who is raising your rent 100, $200, every single month, and you want to find a different place to live, you turn around and many of the options available to you are also single family rental, institutional landlords who have the exact same business practices. they are fairly clearly documented in their own sec filings. these are things they say to their investors. these tenants, in many cases, are feeling like they are stuck without options. they have nowhere else to go. >>. thank you. miss jenny schuetz, in your testimony described how private equity is benefiting from a tight housing market and how private equity concentration in a local markets can lead to higher local rental costs. we might disagree that targeting the
subset of landlords could include renault's, but we agree on the need to increase housing supplies. can you discuss how increasing the housing supply, we have through public housing, or more funding for houses would immediately blunt the impacts to renters that we have observed? >> sure, thank you for the question. it is important that we increase the supply of housing both on the market right side, to absorb higher income households, and designated, low income housing. we know that the poorest 20% of households just do not earn enough to pay for market rate housing without a subsidy. the question is, how can we, most effectively, help those households build new housing. it takes time. even a relatively, fast building places like charlotte. one option is to use things like the affordable housing trust fund to acquire existing, older apartment buildings, and put them under long term affordability restrictions. there are two advantages to
doing acquisition of her new construction. one is that it brings the housing online, much faster. the other is that it is generally cheaper. we have been talking, today, about the single family rental market. we also know that institutional investors are buying multi family rental buildings that are older, often during rehab, and then raising the rents on them, and essentially moving them up from a class be, or classy, to class the apartment building. a public entities or nonprofits, which required those apartment buildings and put them under long term affordability, that would increase the affordable stock into it very quickly. >> thank you very much. mr. children, i yield back. >> the lady yields back. the chair now recognizes the gentleman from south carolina, my friend, mr. -- >> thank you. chairman greene, i, like mr. timmins, have sat here and listen to some of this
dialogue. it really astounds me that we are blaming everybody from institutional investors, to landlords who are greedy -- >> mr. chairman, mr. chairman, i do not see your representative on the screen. >> mr. norman, you are no longer on the screen. can you please turn on your camera? >> oh, i am sorry. okay, how about now? >> not quite. >> okay. >> how about now? >> i still do not see you sir. >> okay, i am sorry. >> i tell you what's. would you mind if i give you an opportunity to see if you can make an adjustment? i will go to one additional person and come back to you.
>> yes, that would be great. thank you a lot. you know, now i have a picture of what appears to be something that you might have in your home. there. there you are. you are up now. >> okay. thank you, i am sorry. we had technical difficulties. as i sit here and listen, it is a stoning that everybody is blaming different ones. i have not heard putin's name and i have not heard santa claus yet. i guess we should get enough time. housing is how people are living. do you all realize how many trades are affected by one saying, and one thing alone?
gas prices. it is over 137 different trades. now, multiplied the increase in doubling the gas. no wonder people cannot afford it. now, i think, you mentioned there are no silver bullet. there is one silver bullets that could happen overnight. it is this administration opening up the gas from the keystone pipeline, from canada, from alaska, and not providing it to countries that do not like it. that would affect the housing industry more than anything. so goes housing, so goes the economy. it's astounds me that, i think, doctor raymond, did i hear you right, these institutional investors are using evictions to boost profits? did i hear that right?
>> that is correct. >> where did you get that information? >> there has been a fair amount of research looking at how landlords can use the threat of eviction to pressure tenants to accept even higher rents. you know, you think about housing as a basic need, it is like water, air, food, you cannot go without it. if someone says hey, i am going to take your tv away, or your luxury getaway, you will say, that is fine, i can live without it. but, if someone says i will take your house away unless you pay me 400. >> excuse me, ma'am. do you realize what it takes? do you realize what it takes to evict somebody? >> it is pretty easy. in georgia, it is very easy. >> no ma'am. >> so states like this. >> no ma'am, i am reclaiming my time. have you ever owned property to evict anybody? that
is the last thing you want to do. you have this thing called elise where you sign people up for 12 months. typically, or six months. or different. to evict, that calls to the investor. i have never heard this before. you are telling me something. -- >> investors do not like vacancies. during the pandemic we saw a lot of that. -- >> miss lopez, did you say that you object to different fees, pet fees, smart home fees, did i hear you right on that? >> yes, can you hear me? >> yes ma'am. >> i said those fees can be concerning when they are required of tenants. absolutely, i would object if they were required. >> you know that upfront, before you sign attendance up, the reason you have pet fees is sometimes animals cause problems in apartments, or in a home. sometimes it takes a tremendous amount of money to go back and remediate the things that come with owning a house. so, you can either have a pet or not. miss lopez, i think i understood you right to say that rents controls were probably a good thing? >> in an environment where
people are facing 30%, even 10% rent increases from one year to the next, i think we need to find ways to mitigate people facing the impacts of those dramatic consequences and cost increases. >> let me say this, miss lopez. if you want to stop construction, and stop people from investing, you try rent control. would you be in care or okay with government having rented test control as well? we have seen, in most cases, to buy property, to develop, to put infrastructure in, bill structures, the regulations have gone up, some as high as 35% of your total project. are you in favor of limiting government from that? from raising their regulation, and regulatory costs?
>> i am not sure i understand exactly the mechanism you are describing. >> if you are in favor of putting gun controls on those who build apartments, and build housing, and rents them, would you be in favor of putting controls on government to raise taxes? an increased regulation? >> i am still not sure i understand the mechanism you are describing. >> what is good for the goose, is not good for the gander. you are in favor of limiting and the investor, put limits on the -- i think i heard you say that the investors that make rents go up $100 a month, did i hear that you say that? >> i talk to tenants who struggle to cover 100 to 200 per month rents increases. >> rental increases, i have never heard that. typically you have a least. i have never
heard of an investor that signed a six months fixed income. i have never heard of that. maybe i'm interested in the wrong part of the country. we are in a severe problem with construction. this administration let gas -- your time has expired. we asked that you submit your question in writing. the chair now recognizes the gentlewoman, from michigan, my friend, miss rashida tlaib. >> thank you so much miss lopez for pointing that out. it is happening in my community. we are one country, one nation. i know that when some of our families are struggling to pay rent, it is especially increases. we see it over an over again because the threat of evicting people happens if they do not comply. changes are constantly done so many are families who are renting. it is
a reality. these are not things that many of the folks and housing groups i work with are represented with buy in court with some of these challenges with folks not following through on their leases, or agreements. you know, the housing increases our second after gas prices. you cannot really address inflation without taking on the highways in crisis. by the way, the housing crisis existed prior to what we are dealing with right now with inflation. doctor raymond, is that not true? it's not true that the housing crisis, it has really impacted the cost of living for families prior to everything that the rhetoric coming out of many of my colleagues today? >> absolutely, during the trump administration we have an affordability crisis that extends to the state. it is exacerbated by the pandemic. it is responsible for a lot of the inflation that we are talking about. although, i really think that what we are talking about here is institutional investors, not inflation. this is not a hearing about inflation. >> yes, and mr. bogany, i saw you nodding your head. you are an agent. you see this. this has been a crisis in our country. no matter, really, the administration, we have not been able to address that. the law of corporations and corporate greed come before the need of the american people.
>> we have a lack of inventory. that is just the bottom line. this is straight economics 101. what's happening is the reason is these investors are buying the properties and do not give them an opportunity to buy them. nothing comes out of investors buying property that does not increase the economy. you are enriching the rich. you are selling a piece of property. you are going to include, and expand the economy because everybody, now, has an opportunity to grow and get more money. go ahead, sir. >> for every house that sold, 53 to $55,000 on an average goes back into the economy. for any new home that sold, $113,000 go back into the economy. when somebody rents something or no vested buys a house, no money comes into the economy. >> very few benefit from that. i completely agree. we're not trying to stop that. we're just trying to stop -- because what happened is, people benefited from the suffering of our
families during this recession, the great recession. in the aftermath only alone in my community, y'all, we had hundreds of -- hundred thousand properties were foreclosed on for just delinquent property taxes because of the crisis. many were overtaxed basics under million dollars, we're dealing with a crisis. as well as over half of the inventory in my community right now though is valued less than $100,000. and my residents are struggling to get these, to obtain mortgages. just really struggling to get these traditional banks because it's not profitable for them. a lot alone finding seem to need to repair our aging single family housing stock and living conditions. i have partnered with capture and chairwoman waters to produce -- propose it's called community restoration and revitalization fund. which was included in the president biden's agenda in build back better. it would've provided federal funds to -- community land for us and nonprofit housing partners. i
know these are not the corporate friendly folks that might colleagues on the side of the aisle support. but these are community based organizations that help families redevelop vacant properties and to affordable rental housing starter homes and shared equity homes. there is nothing wrong in being able to invest into -- 501(c) (3)'s are doing the work in providing housing for some of our families. mister baker, would invest in our neighborhoods with nonprofit community partners be effective alternative to allowing this whole private equity scheme to continue buy -- to buy a for housing stock? >> thank you, representative. what we have seen from the private equity investment and housing. sort of this is, we've kind of seen the outcome, right? in terms of sharply rising rents, in terms of dramatic, in some cases, maintenance issues that lead to safety issues frankly for residents. we've seen these firms really being the quickest to affect residents or to file residence
for the pandemic. and so certainly an alternative that avoids -- generate high returns for -- >> i know. it's all about making money and no matter what. even when such an exorbitant disgusting amount of profit. versus what they could've been, they just don't care because it's open. i have a number of questions chairman. i will send those to the witnesses. i cannot thank you enough for having this very important hearing. >> thank you very much and the gentlelady yields back. the chair now recognizes my friend miss garcia. the gentlelady from the state of texas. >> thank you, mister chairman. and i do want to thank you for putting together such a fine group of witnesses to discuss this very, very important topic. this is not an excuse, this is not make believe. this is real and it's happening across america. i know in my
district, which is 77% latino, it is a very critical topic this housing shortage. particularly what is happening in this arena. i can tell you that throughout harris county in houston, my district, the housing market and particularly the rental market, has been volatile. specifically for renters, the cost burden has gotten worse and does not show any signs of improving. the share of renters who are cost burden has now become the majority of both houston and harris county. as rent has increased faster than wages. it appears it is becoming more and more difficult for houstonians, particularly latino and black houstonians, to come out of the rental market and purchase a home. i just want to first start with miss lopez. just to miss lopez -- example that you used. i have heard of it. unlike my colleague who's never heard of it. i can tell you i've heard of it. not just as a
member of congress now listening to constituents, listening to town hall meetings. but more importantly, during my days in the housing landlords section. tennant section. with legal services. some of this is not new. some of this was happening when i was practicing law back then. and that's the sad part that these things are still happening. what's at stake is even greater. as urban areas have gained population, we've now really also gained in the housing market. my question to you is you said in your testimony that we needed was true affordable housing. you use the word true. can you just tell me, in a minute or so, what do you mean by true affordable housing? >> i'd be happy to, thank you so much for the question, congresswoman. as someone who
also has worked in housing in my local community -- i live in san antonio texas. there are some people who live in what is turn affordable housing yet tell me that they pay well over 30% of their income on rent. maybe they've put half of their income on rent, maybe they do more. i didn't think there is a national standard of 30%, i think even that, if you're somebody who makes $20,000 a year, like many of the public housing residence but i spent time talking to, that is still a massive share of your income to spend on rent every single month. so i mean 30% or lower when possible. >> thank you and mr. but where do the, i cannot help but ask you a question as a fellow houstonian. given your direct experience here in the houston market and major urban metropolitan area, from your perspective, how do you see the impact of this home equity firms and these institutional investors buying homes, how has that impacted our houston market? and are you seeing some of them, have you seen a growth in that and i know i've been,
i've heard of investors buying homes, specifically for the purpose of putting them on airbnb. and these networks. particularly around places that are like tourist attractions or destination points like around the medical center here in houston or around the tech center. are you seeing that -- >> yes, congressperson. i am seeing it all over houston. and you're right the airbnb a deal, anytime it's anywhere where it may be a tourist attraction, you're seeing it. the bottom line to me is that these homeowners can't buy these houses because they're being outbid. when you have an affordable house come up, and
you have 20 bids on that house, 20 consumers trying to buy that house. and the investor comes in interest rates a check for it. he outdid's the other 19 people. it is a huge problem in the east houston area. we don't have a lack of people not wanting to buy. they can't buy, they're being forced to rent because they can't buy these homes. because of the past situations in our economy. pass situation with rand -- it's cheaper to own a home in houston than rend. and that's the thing, and i think that's across the country to a certain extent. it's cheaper to own. but they're not giving that opportunity. >> thank you. mister chairman, i only have seven seconds. i have two more questions. had one from mr. -- one for doctor -- also met those in running for the record. hope to hear the responses. i really want to focus on the eviction right because i think that is just horrific. that is -- i think mister baker said that it was more in the nonwhite neighborhoods where evictions
were higher. then other neighborhoods. we really into explore that. thank you without your back. >> the lady yields back. and the chair now recognizes, my friend from georgia, the gentlelady miss williams. >> thank you, mister chairman. and i want to thank all of the witnesses for joining us today. especially my constituent, dr. raymond, from atlanta. as i mentioned my opening statement, one of the biggest problems with increasing control of large landlords over a single family and multi family housing is how difficult it is for tenants to hold the landlords accountable. sometimes, the results and fully deteriorating housing like forest cove here in atlanta and its doctrine highlights, it can also mean
poor regular maintenance. high eviction rates. hi hidden fees. and aggressive front increases and investor-owned rentals. doctor raymond, what would be the value of the federal government providing more revenues and resources to help hold large landlords accountable for predatory behavior towards their tenants? >> i think that it's part of the reason that these firms are able to expand so massively in cities like atlanta and in the -- because of the amount of leverage that they have over tenants to increase rents. to apply hidden fees and so balancing that playing field between landlords and tenants a little bit so that tenants have a balance set of rights and obligations will be really helpful. and i think also that we need to think about home ownership and how homeownership is being eroded. homeownership is very important. way to build household wealth. it's a very important way for people to be able to access their equity to support college funds. retirement funds. we are seeing the homeownership rate in places like metro atlanta declined by 6%. and i agree that we need more construction but i also don't think of
atlanta's been particularly supply constrained. this is not boston or san francisco this is atlanta georgia were pretty relaxed about building new housing. so i offer new construction but i also think we need to do things to shore up home ownership. in our city. which worse -- i also think that we need to do something to reduce these infection rates because they're just way too high for schools to operate for people to live their lives. >> so doctor raymond, just to go down the infection rate to a little more. your research has explored how depictions are more likely to be pursued by institutional investors. and larger corporations to own single family renters. what effect says this had on the broader housing and security trends in places like atlanta? we're seeing it every day here. the mayor has been very vocal about it. what effects are you seeing? >> i would say that we have an overall extremely high eviction
rate in the state like georgia. i think south carolina has among the highest eviction rates in the country but george's up there as well. in fulton county, we see around 20% every year. in terms of the eviction filing rate. and then around 6% of completed evictions. there's a difference between starting eviction process and then actually breaking someone from their home. that's been pretty consistent overtime. and that's just too high when we look at elementary schools like the elementary schools served by forest cove. a lot of the school teachers were saying, we can teach when a third of our students are disappearing every couple of months and. then another third are coming in. it's completely disruptive and that impacts the next generation. it's a great way to squeeze as much friend at your tenants as possible. i understand it from a profit perspective. institutional investors, they're there to make a profit. it's a great tool for that. the harm that it's doing to our communities is unsustainable. and we have an unsustainable high of action
right in georgia. it needs to be lower. much lower. >> thank you, dr. raymond. congress, one of my main focus is closing the racial wealth gap. which we know atlanta leads the nation in unfortunately. that means for running home ownership. in your testimony, you mentioned that institutional investors purchasing single family homes can crowd out individual homeownership's. what policies should congress pursue to help put individual homeowners on a more equal footing with institutional investors in purchasing single family homes, and what impact was successful policymaking in this area have been closing the racial wealth gap? >> i think if we waive the 90-day flip rule, we incentivize sellers to sail to for some home buyers with -- maybe a tax spread of some sort. and i think if we increase the housing voucher money where people are able to buy homes with their housing voucher. some of these landlords we've been talking
about, they won't even take housing vouchers. so those people are still having a hard time looking for a house. so i think those are the things, things that i would say working to increase homeownership. and increase landlords to take housing vouchers. they will not take housing vouchers. i'm sharing with you what's happening out in the field. >> thank you so much. mr. chairman, i'm out of time but i will ask for the other witnesses to answer that final question for me so that we can actually get solutions and help the people that were in congress to serve. thank, you mr. chairman. >> thank you. the chair would ask that the witnesses please submit their answers in writing. and the chair now recognizes any other members who desire to be heard on the committee before the chair poses questions. are there any other members available and desiring to be heard for questions before the chair proposes questions? all right. hearing none, the chair now
recognizes himself for five minutes. for questions. i remember during the great recession what it was like. we had testimony before this committee indicating that people of color. more specifically african americans lost a generation of wealth, a generation. this is why it was called to a certain sense the predatory lending process that was taking place. we now have what i call predatory lending process taking place. mr. bogany, would you tell us why you would agree that this is predatory purchasing behavior that is being executed? >> well, a lot has to deal with the purchasing of these homes. we've got lenders, if you look at where all the negative, the
predatory lending, it's all in african and brown neighborhoods. it's all there. what's happening is that when our people so far behind based on past issues, we never really dealt with the housing discrimination issues. we talk about it but we hadn't really dealt with, we have rules on the books right now congressman that are not being enforced if we just look at what's happening right now up in texas with those 81 families that are being evicted because they own housing vouchers. now that they didn't keep their yard up, not that they destroyed the neighborhood. it's because of what were their income comes to do their vouchers, and so we've got to do a better job with making money's available with mortgage credit certificate programs, down payment assistance programs. and we all
seem to think that we need affordable housing for a single family. it can be a condo, it can be a town house. there are things that we don't always have to say everything has to be single family. we've got to start trying to grow income. and currently right now, in my community, there's no income being grown. thank you, the chair would ask miss lopez to respond to the question. is this predatory purchasing, miss lopez, the way these equity firms are behaving, moving into certain areas, excluding other areas? >> yes, thank you for the question, chair. it is unquestionably predatory purchasing. i think as mr. baker's testimony noted, there are multiple instances where many of the heads of these companies have said, whether in their initial public offerings or elsewhere, that there is an incredible opportunity from a business standpoint, presented by people bearing bought out of
home ownership. these companies seized on that opportunity, bought these homes, and are counting on people not being able to buy homes but still wanting single family rentals, often in black and brown communities. yes, 100%, you look at the rent increases they are charging. the rents they charge. they are banking on really high revenues and fee revenue being generated through both rent and fees, because they own these assets. >> let's talk a minute about the wealth gap. we have to try to close it. let's move to you, miss jenny schuetz. this wealth gap is what we are doing or seeing occur with these predatory purchases. does that go on to close the wealth gap? >> thank you for the question. so, we know that homeownership is actually the single biggest contributor to the racial
wealth gap. black and latino families have been excluded from being homeowners and prior generations were not able to build up money to pass along to their kids and grandkids. it makes it that much harder to get into home ownership now. so, one thing that is important to remember as you build wealth in homeownership overtime. it is not that you buy a home and suddenly are wealthy. you paid on the mortgage and develop wealth overtime. it means that even if we got rid of all the discrimination -- >> if i may, let me ask this question. if you cannot buy a home because the homes that first-time homeowners might acquire, are being acquired by large corporations, in concentrated areas, does that help a first time home buyer who might be a person of color? >> first time home owners in home ownership are not just a factor of private equity. as
mr. shad bogany pointed out, we have bidding wars were 20 people are betting on the same house. even if you took out the quiet equity firm, you would still have 19 individual home buyers who do not win that house. ultimately, we are not going to be able to get enough people into home ownership. >> i regret to tell you that my time has expired. i assure that i would love to hear more from you. our time has expired. >> mister chair? mister chair, i am seeking recognition. >> for what purpose please? >> there are a couple of letters that i would like to introduce for the record if the terrible allow it. i also wanted to point out, for the chair, and the rest of the folks on the hearing, ralph norman, our colleague from south carolina. >> excuse me sir, your time for giving your statements has lapsed. if you would like to introduce something into the record the chair will entertain this. not a false statement.
>> i was only welcoming ralph norman to the committee, and your subcommittee, sir. >> okay, well you consider him wreck welcomes. >> i would like to mention two letters were received in advance of the hearing. the first is from the national run throw home counsel regarding the question posed by the title of today's hearing which is where all the houses have gone? the letter says the answer is simple, they were never built in the first place. it describes the gap between supply and demand, and how it drives up home prices. >> if i may. >> the second one is from the amherst. >> excuse me, the chair is speaking sir. you may enter your exhibits without objection. but, we would do it without the additional commentary. >> thank you sir. >> okay, the chair accepts the exhibits without objection. and now, the chair would like to thank our witnesses for their testimony today. without objection, all members will
have five legislative days within which to submit additional, written questions for the witnesses. to the chair, it will be forwarded to the witnesses for their response. i ask witnesses, please be responsive and please respond as quickly as possible. without objection all members will have five legislative days within which to submit extraneous materials to the chair. this is for inclusion of in the record. i remind members that written questions and materials for the record should be submitted to the email address that have been provided to your offices. the hearing is now adjourned.
during his confirmation hearing to be the administrator of the tsa, david pekoske talked about the importance of equal pay. the importance of equal pay within the agency. he's held the position since 2017 and if confirmed, will serve for another five-year term. senators also asked him about facial recognition technology and proposals for more efficient airport security. this is an hour and five minutes.
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