The rent is too darn high. Could Wall Street help?

Wall Street is jumping into the landlord business, making bids to turn pools of foreclosed homes into rental properties. Prominent hedge funds, private equity firms, and other firms are bidding on Fannie Mae homes through a pilot program the government has just launched to turn 2,500 homes into rentals through bulk sales, The Wall Street Journal reports.
(David Zalubowski - AP)

Not everyone’s a fan of the development: Some argue that the government should try to sell groups of homes to small local investors, and others worry that the government will accept bids that are too low, potentially losing taxpayers money. But the sales could also begin to shift the big imbalance in the housing market right now. Relative to demand, there are still too many homes for sale, and too few rental properties, which has resulted in rising rents even as home prices have continued to drop. So increasing the supply of rentals could help tame rents.

That said, the government’s initial foreclosure-to-rental program is mostly comprised of homes that are already being rented out, so the impact on the rental supply will be subdued. But if it succeeds, it could be expanded on a large scale, encouraging other big financiers--on Wall Street and otherwise—to jump into the landlord business.