By Kevin Smith, San Gabriel Valley Tribune
Posted: 06/28/15 – 4:23 PM PDT |
The Southern California real-estate market is feeling the sting of a changing climate, as a pair of new reports finds renters, would-be homebuyers and black households losing ground in the face of competition from investors and a widening racial wealth gap.
In a survey of 80 community-based nonprofits, the California Reinvestment Coalition found that long-term tenants are being displaced by high rents while potential first-time homebuyers are losing out to all-cash offers from investors.
“The irony in Wall Street profiting from a foreclosure crisis they helped create is not lost on anybody,” Kevin Stein, the coalition’s associate director, said in a statement. “Even worse, Main Street banks like JPMorgan Chase & Co., Wells Fargo and Citigroup, who are subject to the Community Reinvestment Act, are enabling these harmful practices by financing these investors or by securitizing their portfolios.”
The Community Reinvestment Act is designed to encourage lenders to help meet the credit needs of the communities where they operate, including low- and moderate-income neighborhoods.
Eighty percent of survey respondents felt that institutional investors have a “negative” impact on clients and neighborhoods, while 77 percent said qualified homebuyers “often” or “always” lose out to cash investors when trying to buy an REO — or lender-owned — property.
Blackstone, Colony, Waypoint and American Residential were the REO-to-rental companies named by survey respondents most frequently as being problematic.
Half of the nonprofit housing developers surveyed for the study said they have been outbid by cash and institutional investors.
Lori Gay, president and CEO of Neighborhood Housing Services of Los Angeles County, can tell you all about that. Her agency helps low- to moderate-income families obtain affordable housing and stay there.
“As a nonprofit, we had a grant awarded to us through HUD’s Neighborhood Stabilization Program,” she said. “We got $60 million, which has really helped us to compete. But even with all of that cash, we still get outbid by investors — sometimes before the properties are even placed on the market. In some cases investors are buying up 500 homes at a time.”
The glut of investor-owned rental properties, combined with California’s ongoing drought, have served to hike the rental price of homes, according to Kevin Patterson, president of Palmdale’s RentSource Corp., which specializes in home rentals throughout the Antelope and Santa Clarita valleys.
They are currently handling 350 properties.
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