We hear a lot about how the housing market has improved, with home values rising steadily. One of the primary reasons is the entry into the market by institutional investors looking to make a speculative play on the now undervalued and foreclosed homes available in many metropolitan markets. As reported in the JacksonvilleBusiness Journal, here in Duval County 20 percent of home sales in October were to institutional investors like Blackstone Group LP, who now own more than 275 homes in Duval County.
This is fueling a new housing bubble. Over the past year there has been a 29% increase in median sales -- fifth highest in the nation.
An insane and perverse process reveals how the further accumulation of wealth by finance capital is facilitated by the continuing dispossession of working Americans. The financial sector contributed directly to the housing crisis and the foreclosure explosion, which continues unabated. This same financial sector is now taking these properties from the victims of the crisis, as speculative long-term investments and as short-term rental properties. The victims, no longer homeowners, now have the privilege of renting the homes and therefore becoming once again dependent upon the vultures of finance capital.
And if this were not enough, in order for Blackstone and the other private equity firms to turn the highest profit on this exercise in robbery, they are bundling the rental properties into securities that they are selling to investment banks such as JP Morgan and Deutsche Bank.
Does this sound familiar?
Salon sums it up well: “Now, as the housing market rebounds, billions of dollars in recovered housing wealth are flowing straight to Wall Street instead of to families and communities.”