‘Your tax dollars are helping Wall Street': Big-money institutions could control a stunning 40% of US rental homes by 2030, analysts say — here's why that's a problem

Now analysts worry history may repeat itself. According to a 2022 report from MetLife Investment Management, 4-in-10 single-family rental homes could be owned and controlled by Wall Street within just seven years.

This could pose a problem not just for ordinary renters, but also for the rest of the economy. Here’s a closer look.

Wall Street wants to buy your block

After the 2008 financial crisis, home prices had plummeted while the central bank reduced interest rates to support the economy. Wall Street suddenly had access to cheap capital and cheap distressed assets.

For much of the past decade, interest rates have been lower than the rental yield on most properties. That meant the corporate-landlord business model was lucrative. Companies backed by private-equity firms like Blackstone and Pretium Partners purchased hundreds of thousands of homes.

Institutional players, like Tricon Residential, Progress Residential, American Homes 4 Rent and Invitation Homes, have extensive portfolios of rental homes across the country, currently owning some 700,000 SFRs, or 5% of the market’s inventory, according to the MetLife report.

Given the recent surge in inflation and the Federal Reserve’s raising of interest rates in response, many ordinary homeowners could be forced to sell, as these financial pressures seem likely to persist. MetLife believes institutions will step in to buy many of the newly available homes, along with others that will be constructed in the coming years, giving the Wall Street-backed investment firms control of 7.6 million SFRs — 40% of the market — by 2030.

The impact on rent

Researchers from the University of California, Berkeley dug into the public financial reports from institutional landlords and found reason to believe that ordinary Americans are bearing the brunt of the ongoing Wall Street takeover of residential housing.

Institutional landlords, according to the 2022 study, enjoyed a period of easy profits after the 2008 financial crisis because many of the single-family homes they bought were cheap and foreclosed.