Wall Street is taking over Portland's rental market
This weekend, we mentioned that Portlanders had begun slapping “No Californians” signs on homes for sale in only slightly mock protest of rising prices they fear are being driven by outsiders.
It turns out their fears weren’t at all misplaced, according to Lee Van Der Voo of Investigate West, a journalism nonprofit: Wall Street is taking over the city’s rental market.
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American Homes 4 Rent (AMH), a $3 billion company based outside Los Angeles that went public in 2013, now owns more than 200 Portland-area homes, Van Der Voo reports. And as a publicly traded company, they face outside pressure from investors to bring in as much revenue as possible, regardless of the consequences to the renters themselves. As Van Der Voo writes:
A recent earnings call for investors — which by law must be held publicly — made plain the pressure the company’s leadership faces from its investors. Brokers from JP Morgan, Morgan Stanley, the Jefferies group and others questioned why the company wasn’t raising rents higher faster, and if American Homes 4 Rent could be expected to perform better financially in another three months.
Indeed, CFO Diana Laing stated on the call that revenues had increased 4.6% in Q2 year-over-year “driven by modestly improved average occupancy combined with rental rate increases as well as higher fees,” while CEO David Singelyn admitted, “People are giving us more scrutiny for raising rents on families.”
Van Der Voo highlights the story of one family that was subject to a bogus fee after they called about a strange alarm sound coming from their walls:
After spending the night with friends, the Dluehoshs arrived home. Still the siren wailed. American Homes 4 Rent summoned first a plumber, then an electrician. They checked the attic, the crawlspace, a sump pump. Nothing. Slowly, somewhere, the batteries ran out of whatever caused the sound. The noise grew fainter, sputtered and was gone.
Later, American Homes 4 Rent billed the Dluehoshes $442 by for making a frivolous maintenance call — more than a quarter of their rent payment.
The Dluehoshes successfully fought back against it, but such charges are not an anomaly.
But AMH isn’t the only megacompany moving in: Van Der Voo counts 26 companies and individual investors that purchased more than 10 homes each for cash in Portland’s Multnomah County between 2006 to 2014. These groups “were competing directly with traditionally financed homeowners for real estate, a phenomenon that contributed to rising costs,” she writes.
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.