5 ms·

There are always investment opportunities outside of housing. Just look at Warren Buffett and Charlie Munger.

maxxxxx 8y ago
Why do a lot of the millionaires and billionaires buy overpriced housing in London, Vancouver and other places instead of investing in something else? Speaking about too much money: Companies like Apple sit on hundreds of billions of dollars and don't know what to do with it. Theoretically they should invest it in new profitable products but they don't.
- nopinsight 8y ago
  Can/do any of these companies with excess cash invest in the housing market perhaps through funds like REIT (for better liquidity than direct purchases)? It looks like a good diversification from bonds if chosen judiciously but there could be regulatory reasons not to do it.
- crooked-v 8y ago
  > Why do a lot of the millionaires and billionaires buy overpriced housing in London, Vancouver and other places instead of investing in something else? Having a big house is nice. Living in a major city is nice. The combination of the two is very nice, but expensive.
  - PeterisP 8y ago
    The whole point of questioning "millionaires and billionaires buy overpriced housing in London, Vancouver and other places" is that it's not about living there - overwhelmingly, they just buy housing. They don't live in these places, they don't intend to live in these places not even when visiting that city, they either get rented out but often simply stay empty. In the top end housing of e.g. London the prices get set by people for whom it's purely an investment, not about having a fancy home.
- dawhizkid 8y ago
  Because it can be safer to park their money in countries with strong private land ownership laws than keep it in their own country, even if the home drops in price a bit i.e. Chinese buyers.
  - apatters 8y ago
    I don't understand why this comment was downvoted--my understanding has been that a major component of rising housing prices globally is Chinese investors wanting to move their money out of the Chinese economy and into something they perceive as more stable, less corrupt etc.
    - pessimizer 8y ago
      > Chinese investors wanting to move their money out of the Chinese economy and into something they perceive as more stable, less corrupt etc. That's an extremely favorable reading of the Chinese(Russian, African, South American, etc.) buyers and of the markets they're buying into. These are often, and I would argue largely, the corrupt connected elites who dominate corrupt economies trying to move money out of their countries before losing power, being caught, or before disasters in their local economies cause their investors to attempt to cash out. They are helped by a west that has lost manufacturing capacity and largely survives economically by circular credit scams that need a constant influx of these colonial resources to maintain the illusion of growth. The best thing about real estate is that it never goes to zero; the best thing about western real estate is that your networks of accounts and holding companies will never be seriously investigated, because skimming from and taking commissions from transactions between those things is the only inflow of wealth, source of new investments, and source of political contributions. You can also let your kids live in it while they're going to school in London and NY.
- mtgx 8y ago
  Worse than that. They sit on hundreds of billions of dollars but still borrow money in the tens of billions thanks to fed's still very low interest rate. If that's not systemic issue I don't know what is.
  - toast0 8y ago
    Sitting on money in foreign accounts and borrowing US dollars to pay dividends was to avoid incuring tax on repatriation. That shouldn't need to happen anymore since taxation on foreign income is no longer deferrable by delaying repatriation. I still expect companies with lots of cash to borrow for some expenses and anyway keep large lines of credit open, but it would be strange to borrow to pay a divident if you already have more than enough cash on hand.
- a3n 8y ago
  Real estate is an excellent way to launder or park money.
- loeg 8y ago
  They've already made it — they care about stability more than growth.
  - maxxxxx 8y ago
    But we are told if we just give them enough tax cuts they will invest and "create" jobs.
- sunstone 8y ago
  The super rich don't really care much about the cost of the house they live in. They just pay what they have to pay to get the house they want. Overall this cost represents a small percentage of their net worth. That's why they don't care if it's over priced or not. Any other house in any other market where they don't personally want to live get's a different assessment.
- CydeWeys 8y ago
  Some of it is really that they have an unbelievable amount of money and it's hard to spend it. Even really nice cars tend to max out around a million, and if you have billions that's nothing. Hence why you see people spending hundreds of millions on yachts that they rarely use, too. It's a good way to spend (and be seen spending) vast sums of wealth. So too are really luxurious apartments in the world's elite cities.
- wbl 8y ago
  Where else would they buy? Agglomeration economics are real. No one is going to make Merthyr Tydfil great again.
repsilat 8y ago
Buffett has been candid about not being able to find good investment opportunities lately... Berkshire is sitting on a mountain of dry powder (in short term Treasuries) and iirc has (shockingly for them) considered buybacks or dividends because they say everything is overpriced.
- deleted 8y ago
  [deleted]
- atomical 8y ago
  That's completely different. They are waiting for the best possible deals during an economic downtown -- something that they have always done. They will continue to buy stocks.

Why do a lot of the millionaires and billionaires buy overpriced housing in London, Vancouver and other places instead of investing in something else? Speaking about too much money: Companies like Apple sit on hundreds of billions of dollars and don't know what to do with it. Theoretically they should invest it in new profitable products but they don't.

nopinsight 8y ago
Can/do any of these companies with excess cash invest in the housing market perhaps through funds like REIT (for better liquidity than direct purchases)? It looks like a good diversification from bonds if chosen judiciously but there could be regulatory reasons not to do it.
crooked-v 8y ago
> Why do a lot of the millionaires and billionaires buy overpriced housing in London, Vancouver and other places instead of investing in something else? Having a big house is nice. Living in a major city is nice. The combination of the two is very nice, but expensive.
- PeterisP 8y ago
  The whole point of questioning "millionaires and billionaires buy overpriced housing in London, Vancouver and other places" is that it's not about living there - overwhelmingly, they just buy housing. They don't live in these places, they don't intend to live in these places not even when visiting that city, they either get rented out but often simply stay empty. In the top end housing of e.g. London the prices get set by people for whom it's purely an investment, not about having a fancy home.
dawhizkid 8y ago
Because it can be safer to park their money in countries with strong private land ownership laws than keep it in their own country, even if the home drops in price a bit i.e. Chinese buyers.
- apatters 8y ago
  I don't understand why this comment was downvoted--my understanding has been that a major component of rising housing prices globally is Chinese investors wanting to move their money out of the Chinese economy and into something they perceive as more stable, less corrupt etc.
  - pessimizer 8y ago
    > Chinese investors wanting to move their money out of the Chinese economy and into something they perceive as more stable, less corrupt etc. That's an extremely favorable reading of the Chinese(Russian, African, South American, etc.) buyers and of the markets they're buying into. These are often, and I would argue largely, the corrupt connected elites who dominate corrupt economies trying to move money out of their countries before losing power, being caught, or before disasters in their local economies cause their investors to attempt to cash out. They are helped by a west that has lost manufacturing capacity and largely survives economically by circular credit scams that need a constant influx of these colonial resources to maintain the illusion of growth. The best thing about real estate is that it never goes to zero; the best thing about western real estate is that your networks of accounts and holding companies will never be seriously investigated, because skimming from and taking commissions from transactions between those things is the only inflow of wealth, source of new investments, and source of political contributions. You can also let your kids live in it while they're going to school in London and NY.
mtgx 8y ago
Worse than that. They sit on hundreds of billions of dollars but still borrow money in the tens of billions thanks to fed's still very low interest rate. If that's not systemic issue I don't know what is.
- toast0 8y ago
  Sitting on money in foreign accounts and borrowing US dollars to pay dividends was to avoid incuring tax on repatriation. That shouldn't need to happen anymore since taxation on foreign income is no longer deferrable by delaying repatriation. I still expect companies with lots of cash to borrow for some expenses and anyway keep large lines of credit open, but it would be strange to borrow to pay a divident if you already have more than enough cash on hand.
a3n 8y ago
Real estate is an excellent way to launder or park money.
loeg 8y ago
They've already made it — they care about stability more than growth.
- maxxxxx 8y ago
  But we are told if we just give them enough tax cuts they will invest and "create" jobs.
sunstone 8y ago
The super rich don't really care much about the cost of the house they live in. They just pay what they have to pay to get the house they want. Overall this cost represents a small percentage of their net worth. That's why they don't care if it's over priced or not. Any other house in any other market where they don't personally want to live get's a different assessment.
CydeWeys 8y ago
Some of it is really that they have an unbelievable amount of money and it's hard to spend it. Even really nice cars tend to max out around a million, and if you have billions that's nothing. Hence why you see people spending hundreds of millions on yachts that they rarely use, too. It's a good way to spend (and be seen spending) vast sums of wealth. So too are really luxurious apartments in the world's elite cities.
wbl 8y ago
Where else would they buy? Agglomeration economics are real. No one is going to make Merthyr Tydfil great again.

repsilat 8y ago

Buffett has been candid about not being able to find good investment opportunities lately... Berkshire is sitting on a mountain of dry powder (in short term Treasuries) and iirc has (shockingly for them) considered buybacks or dividends because they say everything is overpriced.

deleted 8y ago
[deleted]
atomical 8y ago
That's completely different. They are waiting for the best possible deals during an economic downtown -- something that they have always done. They will continue to buy stocks.