No, it’s not just you. Renters nationwide are paying soaring rental rates while the multifamily and single-family rental industry reaps the benefits of over $4.3 billion in net income.
To make matters worse, price gouging by exploitative companies has been compounded by swiftly rising inflation. Recent reports from the Consumer Price Index revealed that housing was the “largest contributor to the monthly all items increase” in January 2023, swelling by a “striking” 8.6% over the previous year, despite the Federal Reserve’s repeated interest rate hikes aimed to combat inflation.
As a result, the cost to rent a 2-bedroom apartment has skyrocketed in nearly every neighborhood, and American renters are being priced out of safe, affordable housing.
The Biden Administration has taken notable steps to curb housing costs, including introducing a Renter’s Bill of Rights, which outlines key protections for tenants and combat disingenuous landlords. But their efforts have met resistance from the powerful housing industry, whose ballooning profits would be threatened by any legislation aimed to protect consumers.
A closer look at the six largest companies raking in those profits reveals a concerning pattern of double-digit rent increases, excessive fees, and “abusive tactics” to evict tenants. As consumers struggle to avoid exploitative housing practices, Accountable.US has released a report highlighting the major industry profiteers.
Here are two quick things to remember:
#1: The three largest publicly-traded apartment companies increased their profits in 2022 by nearly 40%, bringing their total to over $2.8 billion.
Starwood Property Trust, an affiliate of Starwood Capital Group, raked in $1 billion in profits while forcing drastic rent increases of up to 93% on renters of its 115,000 units, increases that CEO Barry Sternlicht argued that tenants seemed “capable and willing to pay.” Despite the shocking numbers, Starwood could not be bothered to address the “elevator that was out of service for three weeks,” “uncontrollable mold,” and “broken appliances” that plagued their renters. Meanwhile, Starwood spent over $591 million in dividend payments and over $200 million in acquiring 540 new rental units in one quarter alone.
Meanwhile, Mid-America Apartment Communities (MAA), the second largest publicly-traded apartment owner, performed “ahead of expectations” due to “higher fee income” and “continued growth in average rent per unit,” leading to $654 million in net income, a 19% increase from the previous year.
AvalonBay saw its same-store operating results jump 11%, and its net income climb 13.2% to over $1.1 billion thanks to a “double-digit rent increase.” While their renters suffered, AvalonBay COO Sean Breslin celebrated the company’s quick rise as a “very favorable outcome” that set the company “up well for 2023.”
#2: When it comes to single-family rental homes, the story is the same.
The largest single–family rental companies saw their 2022 income jump over $541 million to $1.47 billion––a 58% increase from the previous year. In addition to raising rents, these companies utilize “ancillary” fees to boost revenue and have announced plans to “‘continue to roll out fees and other ancillary services over the next few years.’”
Invitation Homes, who own and operate 83,000 units, engaged in “abusive tactics” to aggressively remove tenants from their homes during the COVID-19 pandemic. Their approach included refusing to participate in rental assistance programs and instigating eviction filings, leading to 27% of their residents losing housing.
AMH and Tricon Residential have been accused of “driv[ing] up housing costs” and exacerbating the affordable housing shortage, respectively. Tactics that have garnered them both record profits and growth.
As housing costs continue to surge, one thing is clear: Wall Street investors and corporate executives are taking advantage of working Americans to make easy profits.
FOLLOW US ON TWITTER (@ACCOUNTABLE_US) FOR THE LATEST INFO ON HOUSING PROFITEERING & MORE!