Lack of new construction and corporate landlords contributing to skyrocketing rent

every american is feeling the bite of  inflation groceries cost more gas costs more   everything seems to cost more this past week  the federal reserve raised interest rates   in an effort to tame the highest inflation in 40  years the cost of rent is really through the roof   residential rents across the country went  up an average of 15 percent last year   nearly twice the overall inflation rate that's  particularly painful for tenants because according   to census bureau data they now often have to  spend as much as half their total income on   rent why are rents rising so much well it turns  out that big wall street firms are playing a   role but we found the fundamental problem was  years in the making and will take years to fix the story will continue in a moment how much did your rent go up they attempted to  raise it 400 a month that would have been a 40   jump for justin blocky and brittany house she's a  nursing student and he's an occupational therapist   in jacksonville florida when they first rented  their apartment a year and a half ago they were   paying just over a thousand dollars a month i  eventually came to terms with them for a thirty   percent increase which was three hundred dollars  still thirty percent i've never heard of anything   like that do you know why your rent jumped  that much they told me the market justified it   and they were right because i looked at 30  other apartments and they were all way too   too much for us to afford so when your rent goes  up 30 what's the impact are you having to give   things up yeah our fridge is uh does not look  the same as last year before our lease really   cutting back on groceries yeah it's pretty much  universally true rents are going up all around the   country but it's even more severe in migration  destinations like the sun belt of the country   austin phoenix florida a lot of people are moving  there and there's just more demand for rents   daryl fairweather is the chief economist at  redfin a nationwide real estate brokerage firm   that pulls together real-time statistics  on both the sales and rental markets for   example their numbers show that rents increased  31 in jacksonville last year 40 in austin texas   what's causing this we are not building enough  housing for everybody who needs a place to live   we built fewer homes in the 2010s than  in any decade going back to the 1960s   and at the same time millennials are the biggest  generation and they're entering into home buying   age millennials aren't living in their parents  basement anymore or shacking up with roommates   they want a place of their own and we didn't build  any housing for them in the last decade because   we are still so traumatized by the last housing  crisis we didn't put any investment into housing   in the economic crisis of 2008 and 9 construction  of new housing came to a grinding halt   but even when the economy recovered home  construction didn't so how big is the rental   shortage in the united states the government  has estimated that we are short about four   million homes in this country and that number  is likely growing especially since the pandemic   four million shy yes that's the whole that  we're in that we need to build ourselves out of   that number four million is that mainly  in the south and southwest or does that   include new york city and san francisco that's  the entire country with something as essential   as housing in such short supply you'd have to  figure that wall street would see an opportunity   buying modest single-family houses the kind you'd  see on any middle-class suburban street and then   renting them out in places like jacksonville  atlanta charlotte investors are buying almost 30   of the homes that are available for regular  home buyers this is a home we bought this is   3518 shiner drive right in jacksonville this  home is 1700 square feet how many bedrooms   three bedrooms two baths it was built about three  years ago gary berman is ceo of tricon residential   a toronto-based company that has quietly become  one of the largest owners of single-family homes   in the united states so today we own about 30  000 single-family rental homes across the u.s   largely in the sun belt and we've got probably  about 75 000 people living in our homes you are   a multi-billion dollar company you're publicly  traded on the new york stock exchange correct   and the toronto stock exchange toronto  stock exchange i even read in one of   your own documents that your revenue went  up last year by 67 percent is that correct   yeah we're expanding i mean when you think  about it we have an incredible amount of demand   for what we do so leslie in any given week we  might have two or three hundred homes available   for renting for renting and we get  about 10 000 leasing inquiries a week tricon is trying to buy 800 houses a month and  there are companies even bigger invitation homes   owns more than 80 000 rental houses american  homes for rent close to sixty thousand   some of the all-stars of finance goldman sachs jp  morgan blackstone have put hundreds of millions   of dollars into these companies they all  offer rental homes online and all focus on   the sun belt our largest portfolio would be in  atlanta in charlotte in phoenix in tampa and   those are the cities that young millennials are  flocking to this is where americans want to be   we're finding that americans are moving from the  northeast from the midwest to move to the sun belt   because taxes are lower it's a friendlier business  environment it's better weather and so there's a   movement taking place and the pandemic unleashed  powerful nesting trends and work from home trends   nesting trends powerful messengers when we survey  our residents why did they move uh to be with us   the number one reason is they want more space big  investment companies like yours are being blamed   for this huge increase in rents across the country  and you can set the rent any way you want really   given the demand you're talking about first i mean  corporate landlords represent two percent of all   single-family rental housing so there's a lot more  going on than just corporate landlords bidding   up homes it's a very competitive and difficult  environment it's true that big investors don't   own nearly as many houses as mom and pop landlords  people who might have just a few properties but   big firms like tricon do play a larger and growing  role in the sunbelt cities where they're active   rent increases are all over the map 35 percent  in new york but just 9 in chicago 29 in portland   only 10 in la and in only one big city were  rents actually down last year kansas city   gary berman says tricon strictly caps how  much it will raise rent on existing tenants   when they renew their leases but let's say i  come in as a new renter here with the rent here   be 30 more than it was about a year ago it  could be because it when we come in and buy   a home we have to pay a market price for the  home and then we have to set a market rent   right here are two examples of homes tricon  recently bought in jacksonville this one   they're charging 40 percent higher rent than the  previous owner asked this one 30 percent higher   these before and after pictures taken by tricon  show how they fix up many of the houses they buy   they also have a fleet of trucks and technicians  to service them this is a standard tricon home   and you put in the kitchen these you put in the  appliances this home was built three years ago   we put in about fifteen thousand dollars most of  our homes are a little bit older we probably put   in about twenty or twenty five thousand dollars  this is very typical of what our product looks   like when you move into it it's in move-in-ready  condition it's broom swept and if things go wrong   if there's a leak if things go wrong if we have a  leaky faucet or the you know oven or microwave's   not working you will call us you'll call and our  maintenance tax will come and service the home   the houses tricon and other investors  are buying in places like jacksonville   are what might be called starter homes usually  selling for about three hundred thousand dollars   when one of those comes on the market  investors are ready with all cash offers   i would say probably a third of the listings  that i'm putting up are getting investor offers   heather crouay is a redfin real estate agent  in jacksonville she represents both buyers   and sellers you are seeing a lot of these wall  street investors that are coming in you know you   put a house on the market and within an hour i'm  getting offers full price cash and so these the   sellers are seeing that and oh okay cash we can  close in 15 days it's very enticing to people   when they see that offer come across so when you  sell are you having to stage the house paint it   put furniture in make it look really nice not  now it's not necessary now in this this way the   way the market's going now you really don't need  to do anything to your house to sell it typically   the investors never look at the home never they  don't even look at that they never look at it   that plus the fact that investors often waive  inspections puts would-be first-time home buyers   at a serious disadvantage before they can even see  a starter house it's gone most people our age are   not going to be able to have 350 000 in liquid  cash justin and brittany the young jacksonville   couple facing steep rent increases are starting  to lose hope they'll ever be able to buy a home   even tricon's own presentation to investors  says quote home ownership is increasingly   out of reach in our portfolio the majority cannot  buy home cannot afford to buy home or don't have   the credit to buy the home so for example they may  have student debt or they may have medical debt   and therefore they can't qualify to get a mortgage  and if they want access to a single-family home   which we think is incredibly important this is  the best way for them to obtain it i think if you   asked a lot of millennials and that tends to be  our primary resident they would probably tell you   they don't necessarily desire to own a home or to  own a car they've grown up in the sharing economy   and for what's important to them is lifestyle  right and so if they can move into this   what we call a turnkey or hotel ready home  and have a low maintenance lifestyle that's   very compelling for them very compelling we were  told by the head of one of these big companies   that people your age want to rent that you're not  as interested in buying a house no i mean i think   the american dream is owning your own property  and having your own dirt that you own that's   specifically why we moved here was to own a house  i realized my first house is probably going to be   a starter home it may not be that dream house but  it's a house it's a home now the our dream is now   unattainable it's it's very it's disturbing most  people desire that single family home with the   picket fence and if they can't buy it because they  can't afford it their only option is to rent it   yeah but the investors buying it yeah  and they're getting that wealth that   normally or in previous years would have gone to  the person living there so what's happened to the   american dream when we used to say that it meant  owning a house what's the american dream now well   if we think the american dream is is embodied in a  suburban home with a yard and a white picket fence   then i think we're making the american  dream much more accessible rent your   american dream you can rent the american  dream that is if you can afford the rent

Channel: 60 Minutes

Views: 1,597,771

Keywords: 60 Minutes, CBS News, rent, home ownership, housing

Id: ZEwxYvQVU5g

Length: 13min 19sec (799 seconds)

Published: Sun Mar 20 2022

Reddit Comments

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[u/FizzyBeverage]

Mortgage on my townhome is $1700/month. My neighbor pays $3500/month in rent for the same floor plan and similar looking kitchen/baths.

It’s insane.

[u/Drill-or-be-drilled]

“But millennials want to rent and be flippant. Why get the American Dream when you can just finance it.” /s

Fuck that CEO.

[u/PeekyAstrounaut]

The biggest mistake this country’s ever made was not breaking up the banks after they nearly destroyed our economy. They are fostering and fueling the environment for this type of business.

[u/Traditional_Gate4671]

Should be illegal. Best way to take over a country is by buying out all real estate & land. Foreign countries giving citizens low interest loans to buy in America.

[u/MlyMe]

My husband just showed me that. Said he almost woke me up to show me. I just sat there yelling at the tv and that grimey CEO.

[u/Thinkwronger12]

I hate when people say that “renting allows flexibility!!!”

If I’m spending over 50% of my income on RENT, and my car breaks down, I might not have the “flexibility” to be able to afford to fix it cuz all my money and “flexibility” went to pay my corporate landlord so he can afford $500 haircuts and leather jackets for his interview on 60minutes.

If they’re talking about the “flexibility” of being able to pick up and move across the country, then I have that as a homeowner as well! I can put my house on the market, not do a thing to it, and have it sold within two months like the Redfin lady said! If I signed a 1year lease on an apartment and get a job offer across the country 2 months in, where is my “flexibility” then???

We should outlaw all foreign “investment” in this country for the sake of “flexibility”.

[u/jarkeb]

Brave man putting his face out there for the world the see like that!

[u/[deleted]]

Barf. He is terrible.