That is true in theory.
In reality, these massive companies buying up apartments can hold apartments vacant for 20 years. If an investment company has $100 billion in funds, what does it matter to them if they have $100 million in apartments in Manhatten? It's only .001 of their funds. It's nothing to them. And as new properties become available to them, they can snap them up creating even more of a oligopoly and quasi-price-fixing - or at least contribute to it.
And the problem is that it is everywhere, not just New York. "Fundrise LLC, an online property-investing platform that purchased 124 houses in Conroe, Texas, for $32 million, paying building firm D.R. Horton Inc. "roughly twice what it typically makes selling houses to the middle class" — illustrating how home builders stand to make more money by selling houses to investment firms instead of middle-class Americans who want to own their first home." The report goes on to detail how "yield-chasing investors are snapping up single-family houses to rent out or flip," contributing to the scarcity of houses for sale and driving up prices for everyone. According to one estimate from John Burns Real Estate Consulting, as many as 1 in 5 houses sold in the nation's top housing markets is purchased by someone who will never move in. As a result, the consulting firm expects prices to continue to rise. "You now have permanent capital competing with a young couple trying to buy a house," said company CEO John Burns. "That's going to make U.S. housing permanently more expensive." Burns notes there are more than 200 big money companies and investment firms competing with families and first-time buyers for houses, including titans of finance J.P. Morgan Asset Management and BlackRock Inc.
These companies will buy up new neighborhoods or start buying piecemeal in desireable neighborhoods and due to the near monopoly will jack prices up double.
All this can lead to a housing bubble, to be sure, but then the capital companies snap up undervalued homes and hang on to them, just like they did in 2008.
Invitation Homes is owned by Blackstone Group, the world’s largest real-estate investor. Created after a company called Treehouse Group was folded into Blackstone, then renamed in 2012, Invitation Homes was on a $10 billion spree, purchasing $150 million worth of houses per week. “At an auction in Sacramento, a house flipper named Ryan Heck was bewildered by a bidder who bought every house that hit the block,” Dezember writes, noting that the bidder went one dollar over every other bid until the other bidders conceded. “He had a handful of cashier’s checks,” Dezember writes. “The new guys had duffle bags full.”
The bonanza really took off in 2011, when Morgan Stanley issued a report called “A Rentership Society.” With over 1.6 million foreclosed homes in the United States and more on the way, the report forecast “a surge in the number of renters and a potentially massive opportunity for investors to convert the glut of repossessed homes into rental properties.”
America’s investment managers were all in. By 2012, “more than $1 billion had been raised by investors for the purpose of doing just that. Some of the biggest names in finance were hoarding houses.”
Soon we will return to feudal times when there are a few vast landholders and everyone else is a serf.
There is even a lobbying organization, the National Rental Home Council, to look after large investment companys' interests in the government, such as defeating rent-control laws.
a three-bedroom, two-bath home in Spring Hill, Tennessee, that went on the market in April 2017. In the strong, fast-growing market, the seller had four bids on the house within hours.
“The high bid of $208,000 came from a couple with a child looking for their first house,” Dezember writes. “American Homes 4 Rent matched their offer, all cash.”
American Homes got the house, the seventh it had purchased on that street. since 2010, 700 houses in Spring Hill have been purchased by just four companies, including American Homes 4 Rent and Progress Residential, Dezember writes. As a result, rents skyrocketed. The town’s vice mayor, Bruce Hull, in April 2017, said, “It hasn’t been that long since you could get a three-bedroom, two-bath for $1,000 a month.” Those houses were now closer to $1,800 a month, and this was by design.
Personally, I think the government should put limits on how many units - houses, apartments, duplexes, etc - that a corporation or subsidiaries can purchase. I don't like this, but the larger societal implications must be taken into account.
Meanwhile, people need apartments right now. To live.