(The Center Square) – Americans are finding it increasingly difficult to purchase an affordable home as large investors increase their market share. The House Financial Services Committee held a hearing Tuesday to address private equity ownership of single-family rentals and the impact it's having on average Americans.
"Today's hearing will examine troubling issues regarding the mass predatory purchasing of single-family homes by private equity firms," said Rep. Al Green, D-Texas.
A number of private equity firms, along with other large corporations, have been purchasing individual homes to turn them into rental properties for years.
According to a report published earlier this month by Redfin, a real estate brokerage company, investors purchased fewer houses during the first quarter of this year than they did in the last quarter of 2021, but even with that decline, investors increased their overall share of American homes.
Redfin reports that investor market share hit a record high of 20% of homes sold in the first quarter of 2022, the highest seen since the first quarter of 2000.
According to Redfin, investors are purchasing fewer homes this year for the same reasons everyday Americans are: higher interest rates.
One of the witnesses Tuesday, Shad Bogany of Better Homes and Gardens Real Estate, argued that the real problem behind consumers' inability to purchase homes is that investors are outbidding potential homeowners.
"Homeowners can't buy these houses because they're being outbidded," he said. "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 and just writes a check for it, and he bids. He outbids the other 19 people. It is a huge problem in the Houston area."
Democrats at the hearing agreed with Bogany's point.
"This has been a crisis in our country," said Rep. Rashida Talib, D-Mich. "...we haven't been able to address it because we allow corporations and corporate greed to come before the needs of our American people."
Republicans pushed back, arguing the higher prices are a result of inflation, which has soared since President Joe Biden took office.
"Today's hearing is supposedly about how private equity is buying up all of the single-family homes across the country and preventing families from purchasing homes and instead forcing up rental costs," said Rep. William Timmons, R-S.C. "This is just the latest scapegoat for the broad-based inflation that has spread throughout our entire economy, including in the housing market."