Annie Lowrey: The great affordability crisis breaking America

Global capital is, to be sure, a fundamentally amoral force, and investors’ pursuit of quick returns through the purchase of apartment buildings has encouraged rent hikes that greatly outpace income gains for most families. Yet the distortions have been worst where local government policies—such as zoning restrictions, historic-preservation and environmental rules, and other measures—have most tightly restricted the construction of new housing. Indeed, for-profit companies’ behavior is entirely predictable, based on the financial incentives that local governments have created. When tight supply sends housing prices skyrocketing, deep-pocketed investors like Blackstone are far better positioned to take advantage than small-scale landlords are.

The American housing market has changed since the Great Recession. The United States has long had explicit policy preferences for homeownership, entrenched through the federal tax code, transportation spending, and local zoning laws. Yet over the past 15 years, the nation has seen remarkable growth in the number and share of households who rent their homes. Nearly 36 percent of households rented their homes in 2019, up from 31 percent at the peak of the subprime-mortgage boom in 2006. Renting has traditionally been more common among young households without children, and among low-income and nonwhite families. But since 2010, the fastest-growing group of renters are households earning more than $75,000—a group that has a wide range of choices in their living situation.

The types of homes that compose the U.S. rental market have also changed over the past decade: both single-family homes and large multifamily buildings (those with 20 or more units) make up more of the market than they used to. The changing composition of rental housing has important implications for affordability, because apartments in small multifamily buildings tend to rent for lower rates than either single-family homes or apartments in large buildings.

Both of those two fast-growing segments are undergoing shifts in ownership. Small rental properties have long been attractive investments for mom-and-pop landlords—that is, individuals who own a few rental units as supplemental-income sources—or small, privately held family businesses. Large apartment buildings have typically been owned either by specialized firms called real-estate investment trusts (REITs), which develop, own, and manage a wide range of real-estate properties, or by insurance companies and pension funds that hold stakes in apartment buildings because they need stable assets with long investment horizons to match their payout schedules.

Howard Husock: Public housing becomes the latest progressive fantasy

When families search for a new apartment, they are less interested in the corporate structure and size of their landlord than in how much their monthly rent will cost, the quality of their home, and its location. Subtle gradations in landlord quality—for instance, how quickly landlords respond to maintenance problems, or how aggressively they raise rents at the end of a lease term—are usually secondary concerns when finding a place to live.