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The "disrupt" mantra endorsed by Softbank et. al. has grown extremely old. Housing prices in my area have inflated 25% in the past year - one year - and real es
by dralley 5y ago
The "disrupt" mantra endorsed by Softbank et. al. has grown extremely old. Housing prices in my area have inflated 25% in the past year - one year - and real estate companies like Zillow immediately buying up everything on the market is a primary contributor.
This isn't disrupting an industry, this is disrupting people's lives, and for what? What good is supposed to come from Zillow (et. al.) oligopolizing the housing market, and driving up prices like this?
- silisili 5y agoAgree 100%. My opinion on this president, congress, governor, and local government(so, not partisan) hinges completely on whether they do anything to curb this. I don't care if it started under X, they inherited the problem and have done nothing to even attempt to fix it, which is maddening. Prices in my area are up 75ish % since 2018. Rent prices about 50.
- esoterica 5y agoHome prices and rents are up because of low interest rates and nimbys who block new construction. Corporations buying homes have literally nothing to do with it. If they buy homes to flip they have no net impact on home prices (because they buy and sell in equal quantities). If they buy homes to rent out they exert downward pressure on rents, so they are not responsible for rising rents. The reason why the government has done nothing to fix it is because 1. The median voter is a homeowner and WANTS homes to be unaffordable so their investment goes up. 2. The median non-homeowner does not understand basic supply and demand and does not understand that the lack of housing is the main driver of high home prices, so they complain about red herrings like Zillow buying up houses instead of pushing the government loosen zoning restrictions on multifamily housing. You fall into the latter category, which means YOU are part of the problem. You complain about the government not doing anything to fix the housing problem but people like you are literally the reason why it doesn't get fixed.
- space_fountain 5y agoI’m not an economist but it feels to me like more most be going on. Capital is flowing into real estate because the people investing feel that they don’t have better places to put it. The fed is struggling to get capital into the places that would lift employment, like new buildings, infrastructure, new business formation, and instead a lot of that money is going to bid things up
- esoterica 5y agoThat just falls under interest rates. Yields are down in every asset class because of the low rate environment.
- PaulDavisThe1st 5y agoI still am not seeing enough commentary about how we are currently at more-or-less peak Boomer retirement. There are a metric shit-ton(ne) of people who owned a "family home" for long enough to own it outright, have the seen the price climb, and are selling out and moving on. But Paul Davis, First of His Name, you cry, that means someone is still buying those ex-Boomer family homes! Why yes, yes it does. But those retiring boomers, in great numbers and armed with (relative) boatloads of cash, are moving to places that they would not have settled in before reaching this stage of life. 20-30 years ago, their money would have sloshed around inside the places they already lived, as they perhaps needed 1 more or 1 less bedroom. [0] But now, they are on the move. Bend, Santa Fe, Bellingham, Ithaca ... many, many communities seeing huge influxes of cash buyers that would not have happened before. I'm sure there are many other forces at work in today's crazy residential real estate market, some of them possibly larger/more important. But I think that this time period, right in the middle of the Boomer retirement wave, is also affected by this too. Disclaimer: I resemble the above remarks. [0] EDIT: also, as noted by others here, some of the buyers of those homes are not in any way "other people buying family homes" but investment/financial service corporations.
- unethical_ban 5y agoPersonal attacks and accusations of ignorance are not welcome here. The average renter doesn't understand supply and demand? Really? Zillow isn't the only big buyer of homes, and not all buyers are doing it to flip. The problem is renting in general. I would welcome regulations that bar any institution or individual from owning more than a handful of rental properties, and some kind of incentive for mortgage lenders to de-emphasize down-payments in lending. Hell, I'd like to hear a great debate on the ethics of renting-without-equity, period. Perhaps all residential units should offer equity in the living space over time, even apartments. Eliminate the renter class altogether by bringing everyone into the ownership class.
- throwaway6734 5y agoIirc the reconciliation bill getting worked out right now has a good chunk of money to develop more housing
- b9a2cab5 5y agoIt's not money that's the problem, otherwise San Francisco would've solved everything by now. It's NIMBY legislation that limits buildings to 4-6 floors instead of 50. We could literally have 10x density if zoning laws allowed for it.
- Gibbon1 5y agoI being a prat and suggest all this can be fixed by old fashioned wage inflation and the government underwriting a buttload of multifamily construction. It's been dropped down the memory hole but that's what the Truman Administration did after WWII. But with single family homes.
- giantrobot 5y agoWhat good is additional housing if Zillow just buys it up to resell at higher prices?
- chrismcb 5y agoIsn't the whole point of this article that Zillow is stopping homes at a loss? At some point, it won't be worthwhile for Zillow to do that.
- firstplacelast 5y agoThe quicker we can reach the tipping point of inequality, the better. I have no faith that anything will fundamentally change until things get bad enough that it explodes. I hope we get to the point where the top 10% of individuals own 95% of wealth/assets in the next decade.
- matt123456789 5y agoWhy do you think that will be a tipping point? What do you think will happen once the purported “explosion” happens? And why do you think it will be better than the status quo?
- frazbin 5y agoThat's an absurdly callous worldview and there's a 100 percent chance you would hate getting what you're asking for.
- inter_netuser 5y agoThe good? Shareholder profits, what else?
- dragonwriter 5y ago> What good is supposed to come from Zillow (et. al.) oligopolizing the housing market The same good that is supposed to come from essentially every action by a for-profit corporation. How you get there through monopolization/oligopolization is pretty obvious.
- asdff 5y ago"You will own nothing and you'll be happy"
- throwaway_Aef8 5y agoseems to make sense. Power and money consolidates to the top.
- thatfrenchguy 5y agoTo be fair, housing in places without institutional investors have also shot up a lot, so it’s hard to know whether that’s their effect of just the pent-up demand due to the pandemic linked to people having more money to throw on housing after a year or not going/vacationing out.
- inter_netuser 5y agoRural places shot up? Where? I haven’t seen it.
- sokoloff 5y agoAll over southern/central NH and VT definitely shot up in the last 1.5 years.
- ldbooth 5y agoTo couch this for the US assets, 2020 M2 money supply shot up 30%, a historically significant amount. I'm still waiting to see if the "gains" in stocks/housing since 2020 is really a gain or the immediate result of price inflation due to money printing. Or "quantitative easing".
- sokoloff 5y agoThe M2 inclusions changed in May 2020: https://gonzoecon.com/2021/04/m1-and-m2-have-changed/ https://gonzoecon.com/2021/04/m1-and-m2-have-changed/
- nostrademons 5y agoFrom your article, M1 inclusions changed in May 2020, to include Savings & other Checkable deposits which were previously in M2. M1 is now effectively the same as M2 and is no longer reported independently. To my knowledge, there have been no significant changes to the definition of M2 in 2020. The increase there is real. The M2 definition change mentioned in the article was on Jan 1, 1973.
- esoterica 5y ago> Housing prices in my area have inflated 25% in the past year - one year - and real estate companies like Zillow immediately buying up everything on the market is a primary contributor. No it isn't. Real estate companies buying up homes literally rounds to 0% of the market. Reflexively blaming everything on evil big corporations is an intellectually lazy copout. Housing prices are up because of nimby politics that prevent new construction and collapsing interest rates. Zillow is a trivial insignificant minnow has absolutely no impact on broader market. Even if Zillow were large enough to move the market, all they are doing is flipping houses, not hoarding them, so they have zero net impact on supply and demand (every buy is paired with a sell).
- bink 5y agoIMHO blaming the price increases in nimbyism is equally lazy. There are plenty of places in the US with no shortage of land and no harsh zoning restrictions that are still seeing huge increases in housing prices. I think your second factor plays a much larger role. Interest rates are well below where they should be and the government will buy up just about any conforming mortgage. The cost of raw materials plays a role as well, but smaller.
- AlexandrB 5y agoEvery HN discussion about home prices attracts a vocal group of people blaming everything on NIMBYism (regardless of jurisdiction) and lecturing about supply and demand. It seems inconceivable to them that converting single-family homes to long-term rentals or AirBnB pads also reduces supply and pushes home values up.
- gzer0 5y agoA large portion of homes are being bought and listed as rental properties. And whilst the overwhelming majority are purchased by individual investors, a non-negligible amount is via LLCs, LLPs, and corporations. This has the same effect of complete removal from the supply-side as the home is no longer considered part of the 'for-sale' pool. This leads to artificially inflated prices for homes that are actually for sale, since rental properties are removed from that pool.
- pxeboot 5y ago> real estate companies like Zillow immediately buying up everything on the market is a primary contributor. No such corporate buyers exist in my market, but prices have gone up a similar amount. The cause of recent price increases is likely far more complicated. If Zillow or a similar company is able to disrupt the realtor and mortgage industry, there is potential for massive savings for both buyers and sellers. Right now middle men skim close to 10% off each transaction.
- jeffbee 5y ago> far more complicated. Or far simpler: not enough homes to satisfy demand.
- djrogers 5y ago> Right now middle men skim close to 10% off each transaction. It’s 5% at the most in most markets right now, with lost of options for even lower commission or flat rate listings.
- pxeboot 5y agoThat only covers the agent commissions. The mortgage industry also charges substantial fees with little to no benefit for the buyer. Origination fees, lenders title insurance, appraisals, etc...
- Permit 5y ago> Housing prices in my area have inflated 25% in the past year - one year - and real estate companies like Zillow immediately buying up everything on the market is a primary contributor. Did anything else notable happen in the last year that could have contributed? What city is this?
- djrogers 5y ago> real estate companies like Zillow immediately buying up everything on the market is a primary contributor I’m not at all sure that Zillow buying a few hundred homes out of the many thousands of listings was a primary contributor. Phoenix has historically had huge booms when people start to leave California, and many other markets without any Zillow purchases at all are experiencing huge growth.
- dralley 5y ago>I’m not at all sure that Zillow buying a few hundred homes out of the many thousands of listings was a primary contributor. Zillow is currently looking to offload seven thousand homes in my area, not a few hundred.
- PeterisP 5y agoI presume the sellers are happy that they have been paid the inflated prices; and if Zillow eventually lists the houses at a loss then it comes out as effectively as paying a subsidy to local homeowners.
- tacon 5y agoA lot of supply is off the market because people do not want strangers traipsing through their house during a pandemic. Also, there have been eviction and foreclosure moratoriums that have restricted supply. These factors will all ease over the coming year.
- tmcw 5y agoHaving a hard time reconciling the headline about “selling at a loss” with the words “driving up prices.”. Which is it?
- gremlinsinc 5y agoI think their doing to homes what Zales did to Diamonds... there's supposedly more diamonds than anyone could imagine using, in warehouses owned by Zales, w/ the only purpose of the warehouses is to ensure diamond supplies are very thin, so the prices of Diamonds remain high... Housing market seems to be following the same trend.