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The amount of private equity in housing is really underreported I think - still the vast majority of people owning second homes or additional property are doing

The amount of private equity in housing is really underreported I think - still the vast majority of people owning second homes or additional property are doing it for investments, but there is nothing stopping an “uber for housing” where they use VC money to buy up massive amounts of properties and influence pricing. I believe this is one of Zillow’s primary models. My take is that we need to treat housing as an actual human need, and there should be penalties for buying houses to rent or for investment purposes outside of ones primary residence. That sort of exists in the mortgage interest tax deduction but with rates near 0 that’s become far far less effective.

epistasis 5y ago
I think the problem is as much in the ownership as it is in anything else. In China, where housing costs are skyrocketing as well, there are protests when enough housing is built to start to make it affordable again. Putting the majority of a person's life savings into their house is, in the end, a pretty bad idea.
jurassic 5y ago
> there should be penalties for buying houses to rent or for investment purposes outside of ones primary residence. There are lots of people who don't want to own a home (e.g. who value the mobility/flexibility of renting), and people who are unable to afford the fully loaded homeownership costs. In these rent-vs-mortgage discussions people often overlook the non-mortgage homeownership costs which can be very significant and hard to predict. I say this as a person who found myself needing an unexpected $25k+ roof replacement in my first year of homeownership. I suspect living standards for the bottom quintile would actually fall if they had to maintain their own homes. E.g. how are the people who can't put together $400 in an emergency, the minimum wage employees living hand to mouth, etc going to be able to afford to replace an unexpected leaking roof (a $10k+ problem) or a broken water heater (a $5k problem) or refrigerator (a $500+ problem)? A lot of basic amenities are legally mandated for landlords to provide that I think low-income tenants would not be able to maintain on their own. A landlord with a larger net worth is better able to absorb these cashflow problems and keep the property in a healthy state.
xibalba 5y ago
Anecdotally, I live in rapidly growing, tech-friendly metro and track housing data in the area. The county assessor's office exposes homeowner's names and you can easily spot the "private equity" owners. They are very few and far between. > The amount of private equity in housing I think this issue is, at least at the moment, overstated. Could be a problem in the future though.
- taurath 5y ago
  I think nationally it just approached 1% of all purchases being done by "e-buyers", with much heavier concentrations in certain areas they're targeting.
  - xibalba 5y ago
    Interesting. Where are you getting that 1% figure from? I'd like to learn more.
rory 5y ago
> That sort of exists in the mortgage interest tax deduction but with rates near 0 that’s become far far less effective. FYI, mortgage interest on an investment property is also tax deductible. In fact, there's no limit on it like there is on your own personal-use home. It's basically treated like a business expense (which, arguably, it is).

epistasis 5y ago

I think the problem is as much in the ownership as it is in anything else. In China, where housing costs are skyrocketing as well, there are protests when enough housing is built to start to make it affordable again. Putting the majority of a person's life savings into their house is, in the end, a pretty bad idea.

jurassic 5y ago

> there should be penalties for buying houses to rent or for investment purposes outside of ones primary residence. There are lots of people who don't want to own a home (e.g. who value the mobility/flexibility of renting), and people who are unable to afford the fully loaded homeownership costs. In these rent-vs-mortgage discussions people often overlook the non-mortgage homeownership costs which can be very significant and hard to predict. I say this as a person who found myself needing an unexpected $25k+ roof replacement in my first year of homeownership. I suspect living standards for the bottom quintile would actually fall if they had to maintain their own homes. E.g. how are the people who can't put together $400 in an emergency, the minimum wage employees living hand to mouth, etc going to be able to afford to replace an unexpected leaking roof (a $10k+ problem) or a broken water heater (a $5k problem) or refrigerator (a $500+ problem)? A lot of basic amenities are legally mandated for landlords to provide that I think low-income tenants would not be able to maintain on their own. A landlord with a larger net worth is better able to absorb these cashflow problems and keep the property in a healthy state.

xibalba 5y ago

Anecdotally, I live in rapidly growing, tech-friendly metro and track housing data in the area. The county assessor's office exposes homeowner's names and you can easily spot the "private equity" owners. They are very few and far between. > The amount of private equity in housing I think this issue is, at least at the moment, overstated. Could be a problem in the future though.

taurath 5y ago
I think nationally it just approached 1% of all purchases being done by "e-buyers", with much heavier concentrations in certain areas they're targeting.
- xibalba 5y ago
  Interesting. Where are you getting that 1% figure from? I'd like to learn more.

rory 5y ago

> That sort of exists in the mortgage interest tax deduction but with rates near 0 that’s become far far less effective. FYI, mortgage interest on an investment property is also tax deductible. In fact, there's no limit on it like there is on your own personal-use home. It's basically treated like a business expense (which, arguably, it is).