The Affordability Trap we are all facing did not happen overnight.
It did not happen because one political party or another caused it. Both parties are responsible including local and state governments who have silently or not so silently now enabled this to happen.
Pat Ryan in 2024 Stated "Where have all the houses gone?" and demanded an FTC investigation of price gouging by Wall Street private equity firms. By 2030 He stated 40% or more of all single family homes will become rentals controlled by private equity firms.
These same private equity firms that caused skyrocketing housing prices are now on track to do the same to the rental landscape!
Remember what Mr. Christian Spicer of SDRE Homebuyer & Vertical MVMT construction said to his investors and I quote - "more prospective homebuyers priced out of the market will become indefinite renters."(you will need to scroll down the page for it he has made so many)
AND NOW THEY WANT TO CONTROL THAT MARKET TOO!!!
So how did we get here?
BEFORE THE GREAT DEPRESSION1930's homes were purchased through what were called Building & Loan Associations
AFTER THE GREAT DEPRESSION The Home Owners' Loan Corporation (HOLC) was created in 1933 to assist people who could no longer afford to make payments on their homes from foreclosure.And the Building and Loan Associations began to evolve into Savings & Loan Associations (S&L) and were granted federal charters. At their height they generated 2/3 of the nation's home mortgages. It was a simple principle: local banks lend to local builders, no exotic investments, no speculation.
DEREGULATION OF 1970's, 80's and 90's
The deregulation of financial markets in the 1970s and 1980s threatened the thrift S & L business model, which depended on low-cost retail deposits. Congress broadened thrift powers, which led many institutions to venture into riskier investments like junk bonds and lending activities. In the late 1980s and the 1990s, hundreds of S & L's failed.
This allowed Big Banks to swallow up local S & L's community banks and credit unions. No longer local loans from Community banks and local credit unions, now Wall Street analysts from afar were telling builders how to do their job.
Choking off home supply and turning them into institutional investment vehicles, pushing prices far beyond what ordinary Americans can reach.
Turning homes into investment vehicles for private equity firms.
New home construction and the resale of existing home markets have been fundamentally reshaped over the last 4 decades according to Matt Stoller Director of Research at the American Economic Liberties Project, former advisor to the Senate Budget Committee and author of Goliath: The Hundred Year War Between Monopoly Power and Democracy and the private equity firms hate him……wonder why
But instead of going back to the tried and true system of the local S & L our Federal government did the opposite.
In 1989 the first Bush Administration created The Resolution Trust Corporation which was part of a package of programs established through the Financial Institutions Reform and Recovery Enforcement Act of 1989 to address the S & L crisis.
https://newbagehot.yale.edu/docs/us-resolution-trust-corporation
This brought in Wall Street firms into the real estate sector scooping up homes, land and construction equipment at fire sale and selling them in bulk to private equity firms and Wall Street giants
Susan Hudson Wilson real estate analyst described it as the “greatest transfer of wealth in this Country perhaps the whole world.” Great wealth was effectively taken from the people.
In the 90’s Wall Street was demanding higher and higher growth and big builders were now forced into endless mergers and acquisitions. To show growth the overpaid for land and small building firms and the goal was MARKET DOMINATION.
In 2001 Bill Pulte founder of the Pulte Group the 3rd largest Home Builders in the U.S. said basically we want a monopoly and have everyone else fighting over the scraps.
INTERESTING FACT - His grandson also named Bill Pulte and heir to the massively wealthy home builders fortune today in 2025 runs the Federal Housing Finance Agency along with Freddie Mac and Fannie Mae.
He is also the one championing the 50 year mortgage.
Stay tuned for Part 2 of The Affordability Trap