Housing speculators rushed into real estate markets across the US when the bottom fell out of housing during the great recession of 2008. Large, private equity-backed real estate firms bought up houses from sea to shining sea at fire sale prices, converting hundreds of thousands into rental homes – predictable revenue streams for out-of-town corporations, from what once were family-owned properties producing revenues that circulated in their local communities. The trend has drained wealth out of these communities.
In communities like Bloomington, where the values of even modest homes are steadily increasing year over year, distant corporate owners don’t even need to have these properties occupied to derive benefits from them. If they sit empty, they don’t generate rental income. But they depreciate more gradually, and generate tax losses that can be used to offset gains from other properties that are generating revenues. And the empty homes are growth assets in themselves – like stocks and other securities – generating capital gains when they are ultimately sold.
The COVID-19 pandemic is causing this speculative housing rush to happen all over again.