Feb 26 A top Federal Reserve official on Tuesday urged a better understanding of the investors, large and small, who are buying up the stock of foreclosed homes and converting them into rental housing.
"This is something that really needs to be understood: who these investors are, and how do different types of investors behave in different sorts of situations," Fed Governor Jeremy Stein told a housing conference in Washington.
Since the U.S. mortgage-market implosion sparked the 2007-2009 global financial crisis, home prices have dropped as Americans who lost homes turned increasingly to rental housing.
Although the housing market started gaining traction last year, regulators such as the U.S. central bank are increasingly interested in exactly who is in control of the housing stock that has been newly converted to rental.
That question remains unclear, Stein said, adding that officials need to think about what's best for families.
"My gut instinct is that it's probably hard to (find) simple, sweeping, one-size-fits-all answers ... that this is a good thing or a bad thing," he said.
Stein added that the answer will likely depend on the nature of the housing stock, whether it is urban, suburban or rural, as well as on the characteristics of the investors.
"However strongly you feel about ... the values of home ownership, I think one has to recognize that this is an inexorable part of at least the short-run adjustment mechanism," he said. "And the alternative would have probably been more unattractive. If we hadn't had this equilibrating mechanism we would have likely seen ever bigger declines in house prices, and a harder-to-arrest spiral."
Stein did not comment on monetary policy or the economy.