>> Americans have been fired up over news that private equity firms are
snatching up the limited inventory of residential housing to basically turn them into rentals,
to become the largest slum lords in this country. Now, people are understandably upset about that,
I've been upset about that, we've talked about it at The Young Turks, but
Wall Street doesn't like that we're paying attention to it.
So CEO for Coldwell Banker goes on CNBC and tries to lie to the American people about
the reality of the situation. Let's watch. >> I wanna ask you about an issue I hear
more and more concerned about which is the role of investors in the market,
and the extent to which they're driving up prices or elbowing out other buyers.
In fact Peter Boockvar, an economist and market strategist spoke to this in
his note today where he said, it's a private equity yield grab that's
in full force in the first time buyer, in his words, is getting screwed here.
How much competition do you see from buyers like these, from investors in the housing market?
>> Well, certainly like your last guest was mentioning that
housing and real estate in general is a bit of an inflation hedge,
there's certainly a lot of money flowing toward that. So you would think that with a lot of this
institutional capital flowing into it that some buyers will be squeezed out.
I will say today though, is a very, very small percentage of the overall
market. Yes, cash flow offers are very high,
the vast majority of cash offers even in multiple offer situations are coming from individuals,
who are looking to occupy the home and own the home just as they would any other.
So institutional buyers I think are gonna continue to grow, money is going to continue to flow into
that category as well it should, the multi-family category is very strong and has been for a long
time. I think single family rental will continue to be strong in terms of impact on the overall
market though, we're talking about percentage points, low, single digits at this point.
With some markets trending, a little bit higher than that, so something to watch,
but not as concerning as it might sound. >> No, no, no not single digit percentage points,
no, he's a liar. And also you might have missed it, but this is the important part
of his statement because it reveals what his actual intentions or biases are, right?
He says that I think institutional investment is gonna keep pouring into the industry, and I think
that's a good thing. Yeah, you think it's a good thing because you are the CEO of Coldwell Banker.
You're a Wall Street CEO, and you're the very kind of person that loves this kind of stuff.
>> But he's not concerned. >> Of course he's not concerned.
>> Yeah. >> You know what?
>> We're different. >> Let's bring on
a bank robber- >> To talk to us about
why bank robbery is a good thing. >> Robbers are gonna continue to
flow in and as they should, and I've seen that really worried about it.
>> Now as you guys know, I like to provide actual evidence to my argument,
not just say things and then not actually back it up. So let's take a look at Houston for instance,
Houston is a favorite haunt of investors who have lately accounted for 24% of home purchases there.
Investors slice of the housing market grows as it does in other boom towns such as Miami,
Phoenix and Las Vegas, among property is priced below $300,000 and in decent school districts.
So in other words, in decent school district areas where families might
wanna buy their first home, in those areas, that's where they're buying up the houses.
And then are they flipping the houses, which is also an annoying thing that people do, no,
that's not what they're doing, it's even worse. They don't ever put it back on the market, so
workers, middle class families can actually buy them,
as the literal only way left in this country to build wealth for ordinary people.
They just turn them into rentals, and then they neglect them, okay? The corporate landlords,
we did a story on that recently, are incredibly neglectful of the properties that they own,
they don't do the necessary repairs. We showed a video of a family whose child is suffering
from serious respiratory issues as a result of black mold in the building, it is awful.
And for this guy to come on there and for CNBC to invite him on as if
he's a credible person who has an interesting and relevant thing to say about this. No,
he's the very person who gets to take advantage and exploit how the system is set up.
And look, the one thing that he seems to agree with us on is that there is limited inventory,
let's hear the second part of that video. >> Some of the new construction inventory
is highly sought after, a lot of builders have even looked at shutting down their sales centers.
Because frankly, they don't have enough to deliver whether there's lumber shortage, labor shortage or
land just can't get ready quickly enough. >> Yeah, there are lumber shortage,
housing shortage, it's real tough, so maybe there should be regulations in place
to prevent private equity firms from snatching up the limited inventory.
One of the other arguments that I hear John is,
well, that Wall Street Journal story that drew attention to this, they covered how one of these
private equity firms bought an entire neighborhood. The thing is they developed
that entire neighborhood specifically so the private equity firms can buy it.
Does that make things better somehow? Let me give you the details and I wanna hear what you think,
John. D.R. Horton, Inc built 124 houses in Conroe, Texas,
rented them out and then put the whole community, Amber Pines at Fosters Ridge
on the block. A Who's Who of investors and home-rental firms flocked to the December sale.
The winning $32 million bid came from an online property-investing platform, Fundrise LLC,
which manages more than $1 billion on behalf of about 150,000 individuals. So if we have
a shortage of housing, and we keep hearing that we need to build more housing, cool.
Why are we building housing specifically for private equity firms?
And why is it that we aren't putting laws in place ahead of time before there's any type of
construction boom? >> Yeah.
>> Because normal Americans, working Americans, do not have the capital to buy these homes in cash.
And they're competing with private equity firms who get money from the federal reserve, right?
They get cheap money from the federal reserve,
and they can buy homes in cash. >> Yeah, and if it were just that
there are these multiple simultaneous things making it harder, like a lumber shortage,
like an inventory shortage, like companies buying up a whole bunch and then not literally
just holding them back to restrict how many are on the market any given time.
And they're also international buyers and all
that, that would be bad enough but of course these things do combine.
If there's a lumber shortage, then a whole bunch of individual homeowners trying to get a home
built are probably going to have a difficult time getting access to limited resources.
And lumber is like shorthand for, there's difficulty in getting literally everything.
A company that's developing an entire neighborhood is gonna buy in bulk, and probably get a better
deal and preferential access to a lot of these resources that are still more than a year out
quite limited. So these things are are combining, and I know you expressed anger at the fact that
they had this guy on as a guest, but of course you're not surprised that they do.
>> Right. >> This is what a business network
is. It's not so much about business as it's for business, and I'll say what I've said many times,
why isn't there a business that work that's about business, but designed for regular people.
>> Right. >> That doesn't actually exist.
It is only for the wealthy. >> Yeah of course.
>> And I understand that they're the ones who have the money or whatever, but I think that something
like that is necessary to help fight back against some of the narrative. When you see Forbes and
CNBC and Wall Street Journal and Fox Business, all agree on virtually everything, because this
isn't really about ideology in some sort of broad sense, some sort of cultural or social sense.
This is about maintaining the status quo, using the massive amount of money that they have for
lobbying to make sure that there's no challenges to that in terms of legislation. We need something
to counterbalance that, that doesn't exist. >> It doesn't exist.
>> It doesn't exist in our media, and it doesn't exist in the way the country is governed, right?
So I'm not against building more housing, but I am against
building more housing without first ensuring that the people who have the upper hand as a
result of the Fed's monetary policy, don't just snatch up those homes as soon as they're built.
That's what needs to be discussed and it's not discussed.
You think the CEO of Coldwell Banker is gonna go on that network and be like, here's the problem.
We're just taking too much of the sheet money from the federal reserve and it gives us an
upper hand and that's how we're pricing all of these ordinary Americans out of the market.
No, he's not gonna say that, he's not gonna say that. And every single time I
hear someone on CNBC say, this inflation though, the inflation is transitory,
it's transitory, it's transitory inflation transitory inflation, transitory inflation,
it's not transitory. Yes, there's a labor shortage right now, that is not the only thing-
>> Contributing to inflation. >> Contributing to inflation.
>> Yeah. >> When the Federal
Reserve prints money and there's more money and banks and private equity firms and all of these
Wall Street goons have access to that cheap capital, right?
They don't loan it out to people. That was the idea of the federal reserve's monetary policy.
They're not loaning it out to ordinary people, they're using it to buy shares of
their own stock or they're using it to make these types of real estate investments. And
the low interest rates, that's also contributing to
the inflation we're experiencing right now. So these arguments about just being transitory,
it's just this temporary thing, it's gonna all go away and everything's gonna be wonderful.
No, there's a reason why the so called economic recovery is
not true for everyone. It's an unequal recovery, much like the unequal recovery we experienced
following the 2008 economic collapse. >> Yeah, so.
>> All right, I spent a lot of time on that story, sorry, I get heated about it.
>> It's a housing story I expected it. >> Sorry.