The new order limits federal support for large investor firms from buying real estate, turning them into rentals, blocking families from owning a starter home.
Housing Expert Richard Rosso, says big investor companies got involved trying to improve the housing market during the housing crisis in 2008, by buying homes that would go into foreclosure. Companies like Blackstone were the first to start this, and at the time, it made sense. However now, the housing market is frustrated, but he says it’s nowhere near where it was in 2008 or in 2020.
“I was contacted during Co-Vid, myself, with people wanting to buy my home. We don’t need Wallstreet to swoop in during bad times to try to take advantage of people. At least, that would stop with this executive order.” Rosso said.
He says message it sends to the American people is ethical but may not move the needle as much. “We want individuals and families to own homes. We don’t want Wallstreet doing it. When you look at the numbers, it’s sort of a non-event. According to Housing Wire, 1-2 percent of overall homes are owned by Wallstreet.” He said.
In his opinion, Rosso says the real problem are what he calls: “rental nations” which are miles of single-family rental homes- none to buy.” He says this is where we could use government regulations. In addition, he says the large investor firms focus more on foreclosures, and that percentage would be closer to 25 percent and higher, according to the Federal Reserve Studies at the Bank of Philadelphia.
Rosso applauds the president’s move last week to buy $200 billion in Fannie Mae and Freddie Mac government bonds, dropping the mortgage rate 10 points from 6.16 to 6.06 percent. In the meantime, we will have to see what the guidelines specify as to whether it will include foreclosures. Although, it’s a shift, it may not be enough to make a significant difference.