AMAC Exclusive – by Seamus Brennan
The Democrats’ acceleration of their longstanding efforts to wipe out the suburbs and achieve the left’s ambition of eradicating zoning protections for single-family neighborhoods by passing such provisions as their nearly $5 trillion dollar package of budget and infrastructure bills is raising questions about recent real estate moves of big Wall Street banks and financial investment firms.
According to a Wall Street Journal report, investment giant BlackRock is purchasing entire neighborhoods’ worth of single-family homes, which they are then converting into rental structures. As a deep pocketed Fortune 500 company, BlackRock is able to outbid young middle- and working-class Americans who are looking to purchase homes for their families. “Yield-chasing investors are snapping up single-family houses to rent out or flip,” the Journal reported. “They are competing for houses with ordinary Americans, who are armed with the cheapest mortgage financing ever, and driving up home prices.”
This trend will make U.S. housing even more expensive, even as lumber shortages and rising material costs are already driving up construction costs—and possibly on a permanent basis. Incredibly, John Burns Real Estate Consulting (JBREC) estimates that approximately one out of every five houses sold “is bought by someone who never moves in.”
Houston has been a particular hotspot for investors who, according to estimates, account for 24 percent of all homes purchased in the city. The neighborhoods of Miami, Phoenix, and Las Vegas have also been subjected to similar investment strategies. As the Journal reports, JBREC tallied more than 200 companies that appear to be following this model, including house flippers like Outdoor Technologies Inc., investment firms like J.P. Morgan Asset Manager and BlackRock, and rental management companies like LGI Homes Inc.
The campaign to convert single-family homes into rental structures comes on the heels of several legislative initiatives in blue states to ban or greatly limit zoning for single-family homes, including Oregon and Minnesota in 2019. Just last month, the Democrat Governor of California Gavin Newsom signed a series of bills into law that essentially abolished single-family zoning in his state. The legislation includes provisions that permit as many as four housing units on a single-family lot and enable the government to construct buildings with up to 10 units. In the summer of 2019, Oregon became the first state to disallow single-family zoning, citing an alleged affordability crisis—a move that was quickly adopted by Minnesota and is almost certain to follow in other states in the months and years ahead.
To justify their anti-suburbia initiatives, Democrats have cited vague concerns of “systemic racism” and “environmental justice”. President Joe Biden has pushed to change federal zoning laws on the basis of “racial discrimination,” “the racial wealth gap,” and “racial injustice.”
The tendency of the Biden administration and many Democrats to hide behind the all-encompassing charge of systemic racism to jam through policies that would, in effect, urbanize and ultimately eradicate suburban America may not have any direct connection to private companies’ recent home-purchasing binges. But the possibility of cooperation between the two is becoming increasingly difficult to overlook, as many companies are now sounding like they have completely bought into the identity politics and social engineering pretensions of the hard progressive left. BlackRock announced plans earlier this year, for example, to conduct “racial audits” to investigate how its business ventures may be contributing to “racial inequities in the financial system.”
But what is unmistakable is that the left’s ruthless insistence on chipping away at single-family zoning is paving the way for major corporations and investment groups to come into American neighborhoods, purchase large swaths of the housing stock and convert them into rental units, and then wait until the Democrats get rid of single-family zoning in that jurisdiction. The inevitable result is to drive up housing costs and stop working class families from buying new homes. Should Democrats’ legislative efforts to phase out single-family zoning at the state and federal levels continue to move forward apace with the activity of large financial asset managers’ making speculative purchases of whole-scale neighborhoods, America could very well be turned into a nation of renters.
Despite Democrats’ insistence that their war on the suburbs derives from a need to combat racism and stave off environmental catastrophe, the fact remains that most Americans of every background aspire to live in the suburbs of single-family neighborhoods. They simply want to live and raise their families in a house rather than in a rental or apartment unit. Owning property is the quintessential American freedom that has made our country unique among the nations of the world. By depriving working class Americans of their ability to own their home, Democrats are crushing the American Dream for millions of families. If the big banks continue to help the Democrats in that mission, Republicans will have no choice but to be the party that champions restoring the dream of homeownership for every American.
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