LETTER: The attack on institutional housing investors
The Friday Review-Journal editorial criticizing state Sen. Dina Neal’s proposal for reducing the cost of single-family housing by restricting corporate buyers is justified, but it does not go far enough in pointing out the danger of fiddling with the free market.
Statistica reports that there are more than 90 million single-family units (homes and condos) in the United States, and the recent average sales price is almost $450,000. That means the total value of these single-family units is about $40 trillion (with a T). Let’s say Ms. Neal and her ilk in other states are successful in driving down the value of homes by as little as 10 percent nationwide. The would be $4 trillion in homeowner equity wiped out nationwide.
Both homeowners and home lenders would be seriously impacted. The financial repercussions, bankruptcies, defaults and foreclosures that would result are unforeseeable and could lead to another real estate crash with trillion-dollar bailouts, similar to 2008.