The Bullish Mega-Landlord Story Doesn’t Add Up

by Rick Ackerman

Continuing on yesterday’s theme of how the stock market has completely decoupled from reality, we note that the shares of some publicly traded companies immersed in the home rental business have gone bonkers. A story on the front page of Tuesday’s Wall Street Journal noted that “Investors are flocking to the U.S.’s mega-landlords, drawn by signs that companies that emerged from last decade’s foreclosure crisis owning huge pools of rental houses are weathering the economic shutdown far better than feared.” Oh really? In the first place, these companies bought up whole blocks of homes, and even started building them as the trend gathered steam, near the top of the market. I learned about this first-hand from a friend who was sent by his employer to buy up every home he could find in the very-inflated Denver market. Although company had never before been involved in real estate, they got immersed in it up to their eyeballs in just two years, according to my friend.

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