and into the mailbag. We go, this week’s today’s letter comes to us from little Marie. Linda Marie writes, Dear George, gee, how do you feel about sharing? Oh, what a great question. Little Marie I, I’m for it. I am for it. I am for reciprocity. I believe that reciprocal relationships are far better than one sided relationships. I have a wife and three kids, which means I do lots of sharing. And we emphasize the importance of sharing and try and teach our children to be good shares. And I can tell you that it’s one of the most mortified things in the world when your child does not want to share. And that makes me wonder if just as human beings we are hardwired to not, or it’s just when we’re little, we’re just more selfish, because we know we need to stay alive. I’m probably reading way too far into this. What I don’t like to share is dessert from having ice cream, I’m not interested in sharing that I’m going to eat all of it. I’m going to eat all the ice cream. I love sharing a cup of coffee with somebody. But that’s where we both have coffee, you get the idea. shared experiences are wonderful. What do you think about the sharing economy? That’s really part of what I wanted to talk about today, but not really, what do you think about the sharing economy? You know, the whole ride sharing food being delivered? Airbnb VRBO. How do you feel about that? How do you feel about having if you did have an Airbnb next to your house? Does that change the math for you? Does that make you probably less excited about it? And maybe that even all of a sudden turns you into a NIMBY? You know, Matt, in my back yard kind of a person I am for all of these things just so long as they’re not close to me. We’re going through a lot of this right now in the country. All of this sounds like an awesome idea until it actually shows up on your doorstep. And then you know what? It’s less cool. less excited about having this stuff go on. So what I did actually want to talk about little Maria’s, how do you feel about companies, big corporations, buying single family homes? How do you feel about that? Have you been in the housing market for a while? Have you been out looking for homes only to lose out because somebody comes in at the last minute with a cash deal? And it’s some big company, not Black Rock? If you black stone, but definitely not Black Rock? Some big company coming in and scooping up, frustrating, terrible. That’s such a bummer. Such a not cool experience. I’m sure what prompted all this there was an article in the Wall Street Journal last week talking about this very thing. And I wanted to dig into it a little bit. The article talked about how there’s quite a bit of legislation that is has either been enacted, or it’s being worked on by our infinitely wisdom, infinitely wise, elected officials all across these great United States. There’s HOAs that have policies, cities, towns, municipalities, are all grappling with whether or not this makes sense. Should we allow big companies to purchase it? Should we allow rentals to take place? So it’s all working on this perceived problem. But is it really a problem at all, isn’t really a problem. I appreciate the emotional, the emotional connection and response that we have to our homes. And I appreciate getting excited about being able to buy a home, and then only to have the rug pulled out that sucks. But like everything else, there’s just a lot going on here. So let’s get into it. From really the only appropriate starting point from my perspective, which is, let’s dig into the American Dream, the American dream of home ownership. It’s deeply ingrained in the fabric of the United States and our history and culture. It’s evolved over time alongside everything with society and the economy and different policies and beliefs. But you can trace it back to Colonial America, the 1600s 1700s. Back then land ownership was was paramount. It was tied to wealth and power. It meant autonomy and opportunity for early settlers. On to homesteading in the 19th century, we were moving west. And that allowed settlers to acquire hundreds of acres of land for really inexpensive so long as they lived on and improve the land for five years. So that motivated a lot of people to get into stagecoaches and to traverse the Oregon Trail as it would be I don’t know if that’s actually true or not. But what a fun game that was. And then in the post World War Two in the 40s and 50s In homeownership became really deeply embedded in the American dream. The GI Bill allowed returning veterans to to buy homes and low cost mortgages and all these other great things. And then in the 50s suburbs came to be suburbanization. suburbanization Levittown people started to move out of big cities, and that really became emblematic of the American dream, offering these cookie cutter homes to middle class families seeking better lives outside of busy urban areas. In 1968, the Fair Housing Act led to or rather eliminated or attempted to eliminate discrimination in the housing. And over the years, innovations in mortgage, long term fixed rate mortgages and Fannie and Freddie, it just allowed more people to become homeowners, more people to embrace and follow the American dream. And if you remember the housing market crisis, we’ve actually had a lot of them, we’ve had the savings and loan crisis in the 80s. And obviously, the subprime mortgage crisis in 2008, that resulted in tons of foreclosures and declines in home values. And, really, I think it caused us to take a step back and say, You know what, there are risks that are inherent and associated with being a homeowner, we need to be more attuned to these. Today, recent years, we’ve got rising housing costs, we’ve got stagnant wages, we’ve got young people with student loan debt, demographic challenges, and lions and tigers and bears, oh, my. And, obviously, obviously, we’ve got inflation. And we’ve got just by very nature of big companies coming in and buying inventory, just for a kind of a kind of a cold word for homes for sale. Making prices go up, making it harder for young people who would typically be buying these starter homes, making it really hard for them to get into the housing market in the first place. So what’s the role of government in all of this? Do they have a role is zoning regulations, affordable housing, there’s a lot of talk about affordable housing and the lack of affordable housing in big urban areas that’s potentially leading to homelessness. And I’m not interested in talking about that right now. Just that we are experiencing, this is just something that is going on right now. The newest addition to this is just squatting. So if you can’t seem to get into a home, you can just go ahead and move in and live there. Apparently, what a disaster that is. Can you even imagine put yourself in the shoes of people that are having to deal with some squatter living in their house? Wild Wild. That’s, that’s an episode for a future day for sure. So there’s that. So many of us so many Americans, my heart goes out to them are frustrated because they’ve essentially been boxed out by the home because of prices going up. So high interest rates increased much they’ve had inflation. At every level, I don’t care what anybody says Blasian is down. No, it’s not the cost of everything is way more than it was a couple of years ago. So I guess the next question is, where I wanted to go from here is how long have companies been buying single family homes? How long has that been going on? Little Marie didn’t ask that in her letter, but I’m sure that she would be curious about it. So it’s great question. But the practice of companies purchasing single family homes has been around for a long time decades, gained significant attention in 2008. During the financial crisis, big companies, big institutional buyers, big companies began buying up distressed properties in bulk to capitalize on low prices and the potential for rental income and future appreciation. Turns out they have a right turns out your right. If you bought a bunch of single family homes in 2008, you made the right decision.

So there weren’t any. There aren’t there weren’t any explicit prohibitions against companies buying homes prior to that the scale of it has increased substantially, post 2008. But there’s just so many things that have gone into why companies pivoted away from never doing this or doing it very sparingly to we’re going to do we’re going to take a real active role. This is going to be a big part of our portfolio. Certainly a part of our portfolio was fundamentally the number of distressed properties that were available. So in the late 2000s, there were just so many homes that were available, there was just money. So there’s access to capital access to financing, which allowed institutional investors companies to come in and purchase big, large portfolios of them. People became renters. If I don’t have a house to live in, if I can’t buy it, well, I need to live somewhere. So rental market opportunities sprung up REITs so real estate investment trusts, these are just opportunities for a company to raise money to go out and start buying residential real estate and then packaged it up as an investment vehicle. So there’s a lot of that going on.