Wall Street Investors Barred from Buying Single-Family Homes, But Will It Ease Homebuying in Chicago?
The White House has recently signed an executive order aimed at blocking institutional investors from purchasing single-family homes, but experts say this measure may not have a significant impact on the housing shortage in Chicago. Institutional investors, including private equity firms that own thousands of rental units, are often excluded from the new guidelines.
These large-scale investors tend to buy properties in cash or with private financing, rendering the executive order less effective. According to Frank Manzo, an economist at the Illinois Economic Policy Institute, "Institutional investors typically purchase their properties in cash...or if they're financing it, they're using private sources." This makes the new guidelines ineffective against these types of buyers.
Chicago, where the share of homes owned by investors is lower than the national average, might also see limited benefits from this executive order. Investors purchased nearly 2,400 homes in Chicago during the third quarter last year, a relatively small increase compared to other cities nationwide.
The primary cause of Chicago's housing shortage remains the presence of institutional investors, who have been aggressively purchasing properties, driving up home prices and reducing the available supply of homes for individuals and families. According to Manzo, "Investor purchases have declined in the last two years," but this decline has not kept pace with rising home prices and valuations above the national average.
Manzo's research suggests that these institutional investors tend to focus on purchasing homes in trendy neighborhoods like those on Chicago's North and West sides, where younger people are looking for rentals. While some argue that these investors do good by rehabbing properties that might otherwise fall into foreclosure, they often raise rents, skimp on maintenance, and turn homes into vacation rentals, reducing housing options.
Elected officials from the Greater Chicago region have expressed similar concerns about institutional landlords in their communities, citing difficulties reaching property owners about maintenance issues and code violations, a decline in homeownership rates, and limited government resources for regulating these investors.
To address the housing shortage, Manzo recommends stronger congressional laws to spur new construction and buy-backs of homes from investors. He emphasizes that Illinois has a high homeownership rate, despite relatively high property taxes, and needs to find ways to provide more affordable housing options.
The effectiveness of this executive order in addressing Chicago's housing shortage remains uncertain, as institutional investors remain a significant factor contributing to the problem.
The White House has recently signed an executive order aimed at blocking institutional investors from purchasing single-family homes, but experts say this measure may not have a significant impact on the housing shortage in Chicago. Institutional investors, including private equity firms that own thousands of rental units, are often excluded from the new guidelines.
These large-scale investors tend to buy properties in cash or with private financing, rendering the executive order less effective. According to Frank Manzo, an economist at the Illinois Economic Policy Institute, "Institutional investors typically purchase their properties in cash...or if they're financing it, they're using private sources." This makes the new guidelines ineffective against these types of buyers.
Chicago, where the share of homes owned by investors is lower than the national average, might also see limited benefits from this executive order. Investors purchased nearly 2,400 homes in Chicago during the third quarter last year, a relatively small increase compared to other cities nationwide.
The primary cause of Chicago's housing shortage remains the presence of institutional investors, who have been aggressively purchasing properties, driving up home prices and reducing the available supply of homes for individuals and families. According to Manzo, "Investor purchases have declined in the last two years," but this decline has not kept pace with rising home prices and valuations above the national average.
Manzo's research suggests that these institutional investors tend to focus on purchasing homes in trendy neighborhoods like those on Chicago's North and West sides, where younger people are looking for rentals. While some argue that these investors do good by rehabbing properties that might otherwise fall into foreclosure, they often raise rents, skimp on maintenance, and turn homes into vacation rentals, reducing housing options.
Elected officials from the Greater Chicago region have expressed similar concerns about institutional landlords in their communities, citing difficulties reaching property owners about maintenance issues and code violations, a decline in homeownership rates, and limited government resources for regulating these investors.
To address the housing shortage, Manzo recommends stronger congressional laws to spur new construction and buy-backs of homes from investors. He emphasizes that Illinois has a high homeownership rate, despite relatively high property taxes, and needs to find ways to provide more affordable housing options.
The effectiveness of this executive order in addressing Chicago's housing shortage remains uncertain, as institutional investors remain a significant factor contributing to the problem.
. I mean, it's about time they tried to take on these institutional investors who are basically sucking up all the affordable options in Chicago 
. They're not just buying up homes and renting them out for a profit - they're also driving up prices and limiting people's ability to buy or rent in the first place 
.
. These investors are basically cash cows that aren't affected by regulations 
. And since most of them are buying up homes in trendy neighborhoods, they're only making things worse for people who actually need affordable housing 
.
. That's the kind of change I'm rooting for 
. They've got the cash to snap up properties left and right, so it's hard to see how this new rule is gonna stop them.
. These institutional investors might be making a profit, but they're not exactly contributing to the community, you know? They're just renting out those properties without putting any real effort into maintaining them or helping the local economy.
. But if it's just a Band-Aid solution, then we need to keep pushing for more serious reforms 
and btw what's with all the cash and private financing? that just makes them immune to regulation. stronger laws for new construction would be a better move imo 
. It's all about lining their pockets, not solving the problem. What we really need is more affordable housing options 
and some serious government backing to build new homes 
. Maybe then we can start to see a real difference in chicago's housing market 