Study on Foreclosures Places Nebraska Among the 10 States with Worst Housing Conditions Due to Large Investors

Study on Foreclosures Ranks Nebraska Among the 10 States with the Worst Housing Conditions Due to Large Investors

A recent analysis ranked Nebraska among the 10 states with the most precarious housing conditions, largely due to the significant impact of corporate investors.

The Private Equity Stakeholder Project released its first state-by-state “risk index” to inform the public about the problems that may arise from disproportionate investment by large private equity firms.

The study focused on four areas (employment, health, pensions, and housing) to determine the risk posed by private equity. The study found that Nebraska’s overall score was 42 out of 100, placing it among the 15 states with the worst conditions in these four areas. However, when focusing solely on housing, Nebraska scored 63, placing the state ninth nationwide. This undoubtedly represents a significant risk to the entire Nebraska real estate market, including major cities like Lincoln.

To reach this score, the study focused on data from single-family homes provided by CoreLogic and Pew Charitable Trust from 2018 to 2022. It found that during this period, medium, large, and mega investors acquired around 10% of homes in Nebraska. Additionally, the study revealed that the percentage of homes purchased by these investors increased by approximately 60% over the last five years.

One of the analysts who worked on the study expressed that the massive purchases by these large corporations can be harmful, as their fast processes and vast capital prevent average families from entering the housing market. In fact, Omaha Habitat for Humanity had to make significant efforts to continue helping its clients compete for available homes in the Lincoln real estate market and across the state, focusing efforts on educating and guiding them on mortgages, foreclosures, and everything related to the market, including low-interest loans.

To somewhat compete with these large investors, and with the support of some local banks, Habitat made cash offers on behalf of clients, seeing it as an alternative solution to give community residents a small chance.

One of the problems that arise with large investors, according to Carol Bodeen, director of policy for the Nebraska Housing Developers Association, is that corporate owners are known for turning properties into rental homes and raising rents, making them unaffordable for most people.

Nationally, private equity firms own at least 1.6 million housing units. Researchers noted that corporate investment in local housing systems gained momentum after the 2007-08 mortgage crisis when Wall Street companies purchased a large number of foreclosed homes, a situation that worsened with the COVID-19 pandemic.

In a recent legislative session, Omaha State Senator Justin Wayne proposed a measure to prevent companies and private funds with no state ties from buying single-family homes in Nebraska. However, Senator Brad von Gillern of Elkhorn opposed the idea, citing his capitalist beliefs and skepticism about the bill’s effectiveness in preserving homeownership.

Although his project did not move forward, Wayne emphasized the need for the state to address the issue to prevent foreign adversaries and sanctioned nationals from purchasing farmland in Nebraska.

Earlier this month, Midwest Newsroom highlighted VineBrook Homes, one of these large investors in Nebraska, citing tenant complaints in cities like Omaha, Kansas City, and St. Louis about unresolved maintenance issues, baseless evictions, and aggressive rent collection tactics.

Possible solutions to address the problems being caused by private equity firms in local housing markets include rent caps and bans on evictions for reasons other than specific causes, such as nonpayment of rent.

Available Foreclosures:

Omaha: 150 homes available

Lincoln: 75 homes available

Grand Island: 30 homes available

By Elias DaSilva | September 25, 2024