Even in the midst of the worst financial crisis of a generation, some asshole is always out there figuring out how to turn a profit.
The latest entry in this genre comes from Tricon, a Wall Street real estate firm owned by the Canada-based company Tricon Capital Group, which has been systematically pricing out low-income and middle-class citizens from the Charlotte area, according to a bombshell report from the Charlotte Observer. The newspaper reported on Wednesday that in tandem with Mel Watt, a former House representative for Charlotte and the director of the Federal Housing Finance Agency, Tricon has spent the past decade buying up hundreds of homes in the Charlotte area and raising rents at a clip significantly higher than the average rate, all in an attempt to grow their profit margins.
According to the Observer, Tricon and a group of other Wall Street firms—Invitation Homes (a Blackwell Group spin-off) and American Homes 4 Rent, per a 2017 Observer article—have bought up nearly 10,000 houses after owning nearly none before 2010. They’ve done this by offering cash up front to the existing owners, denying the opportunity to buy to a large swath of normal people attempting to buy the homes the conventional way by taking out bank loans.
Tricon has then turned around and raised the rent on single-family homes by an average of 28 percent, a rate nine percent higher than the average rent increase on the same kind of homes in the surrounding Charlotte area, according to the paper. With the current generation not buying homes as soon as previous ones because of stagnant wages and a myriad of other factors, Tricon has taken to targeted younger people looking to rent homes in the area, particularly those with the existing wealth to keep up with repeated rent hikes. As the Observer points out, the average price of these homes went up 42 percent, from $165,800 to $236,000, between 2012 and 2015—but to say the obvious part out loud, the vast majority of Americans are not making 42 percent more than they were five years ago.
Naturally, the folks they’re successfully pricing out are usually low-income residents who need Section 8 aid to pay the bills—in a 2014 report, Tricon chalked this up as part of their “efforts to improve tenant quality.” This is where Watt enters the equation.
As the head of the Federal Housing Finance Agency for the past five years, Watt could have used his power to ensure at least some of these homes went to community groups that specialize and focus on providing affordable housing to those that need it. Instead, the former politician who received a quarter of all his contributions from finance, real estate, and insurance institutions has opted for the more profitable option.
Watt’s repeatedly shied away from fighting for solutions like lowering principal reductions (the money owed on mortgage loans from Fannie Mae and Fannie Mac, the institutions he’s tasked with overseeing). Just last year, Watt fought for Fannie Mae’s decision to approve a $1 billion loan for Invitation Homes from Wells Fargo, which Invitation Homes used to buy up 428 homes in Charlotte. (Watt was also the subject of a sexual harassment allegation earlier this fall.)
Of course, scuzzy Wall Street firms buying homes in bulk with cash in hopes of turning around and renting them isn’t really anything new—what the Observer’s report does is put names and numbers to those responsible for trying to squeeze every last dollar out of the newest group of home-owners and renters. So, when the bubble pops and Wall Street dumps all these houses and fucks over anyone living in Charlotte or any of the other similar suburban areas that the firms have targeted, remember the names Tricon and Mel Watts.