Senate Banking Committee Hearing: “How Private Equity Landlords are Changing the Housing Market.”

On October 21st, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing with witnesses who testified targeted private equity’s rent increases and eviction filings. These are both significantly higher than other types of investor property owners.

Chairman Sherrod Brown said during the hearing, “Private equity is all about the quick buck – everyone else be damned…Private equity profits depend on squeezing every last nickel from workers and renters, without any kind of real investment in their employers or their communities.”

The top Republican on the panel, Pat Toomey defended private investments by stating, “There’s nothing wrong with investors putting their own money to work to meet the needs of renters…Private ownership is vastly preferable to the state. That’s the American dream after all.”

The witnesses and Senate Democrats are seeking greater regulation of their practices and the practices of all corporate landlords. Senate Republicans shrugged off any concern about private equity, asserting that private equity in housing accounts for around 1% of all owners.

Housing Advocates Urge Democratic Leaders to Preserve Housing Investments

Witnesses who have struggled with housing insecurity and various housing advocates asked Democratic leaders to preserve $300B of housing investments during the House Financial Services Committee meeting on October 21st. President Biden’s initial $3.5T Build Back Better proposal included historic investments in public housing, down payment and rental assistance, and affordable housing construction incentives. As Democrats are looking to cut the package down to appease more moderate members who do not want to spend more than $1.5T on a final package, they are considering scaling back these housing investments. While Republicans on the committee expressed their sympathy for these witnesses, they felt that the Democrats used these witnesses as part of the debate over the price of the final reconciliation package. 

Chair Sherrod Brown and Chair Maxine Waters Ask for Preservation of Housing Investments

Sherrod Brown, Senate Banking Chairman and House Financial Service Committee Chairwoman, Maxine Water held a press conference to ask the Biden Administration and Congress to protect the$300B housing investments in the reconciliation package. President Biden stated that $2T from the initial $3.5T package will be cut, meaning that it is likely every area of the package will be affected by these cuts. Brown and Waters expressed the critical need for this funding and branded the hashtag #HousingISInfrastructure.

Employers are Still Struggling to Find Workers

According to Thomas Barkin, President of Federal Reserve Bank of Richmond, employers are still struggling to find workers in the current labor market. The peak of our nation’s employment-to-population ratio peaked in 2000 at 64.7%. Today, it is currently sitting at 58.7%. Barkin says there are four barriers that are keeping workers from joining or returning to the workforce: mismatches, family care, health, and incentives. Barkin states, “Reservation wages for lower-wage and lower-educated workers are up significantly post-pandemic…Potential employees expect higher compensation, benefits, or workplace flexibility.”

ERA Distribution Nationwide

NLIHC reported that 73% of state grantees have spent between 0-29% of ERA1 funds and 37% of local grantees have spent between 0-29% of ERA1 funds. They also reported:

-18% of state grantees have spent between 30-49%.

-10% of state grantees have spent 50% or more.

-23% of local grantees have spent between 30-49% of funds.

-39% of local grantees have spent 50% or more.

-Thirty-seven states (73%) had not yet reached a 30% expenditure ratio as of August 31st.

NLIHC Weekly Call

The National Low Income Housing Coalition expressed their concern on cuts to housing investments in the Build Back Better Act during their weekly call the week of October 18th. The initial $3.5T plan included $90B for rental assistance, $80B for public housing repairs, and $37B for the national Housing Trust Fund. This funding is likely to be cut due to the large price tag of the package as a whole.