5 ms·

While this behaviour by corporations (eg: Zillow buying and flipping, or Blackstone buying and renting out houses [0]) is inflating housing prices across the co

by sgpl 5y ago

While this behaviour by corporations (eg: Zillow buying and flipping, or Blackstone buying and renting out houses [0]) is inflating housing prices across the country, I don't see them stopping anytime soon even in the face of temporary losses (in the case of Zillow here). As a corporation they can withstand this, triage the situation internally and get smarter about flipping in the future. Personally I feel that this only makes housing more unaffordable in the long run for most people and only policy level intervention by the government is going to stem such actions in the future. Obviously real estate/housing is seen as a good investment because it's one of the few asset classes available to average/retail investors where they can access leverage in a massive way to build up a portfolio of housing assets over time so if any legislation about this is even considered, it'll probably face a lot of opposition even from people it won't possibly affect (because that's what happens these days + FUD). I guess I don't really see any meaningful changes in the near future that'll make housing affordable for the masses (at least in some of the most desirable real estate markets, can't talk about rural markets as I don't know enough). For more context, I live in Toronto and unless I settle for owning a condo or housing in the suburbs, owning a house in the city is pretty much a no go for me and most of my peers. [0] https://www.wsj.com/articles/blackstone-bets-6-billion-on-buying-and-renting-homes-11624359600 https://www.wsj.com/articles/blackstone-bets-6-billion-on-bu...

space_fountain 5y ago
I think the danger is when they assume that making money will only require some simple tweaks, happy to sell at a loss in the meantime and then at some point in the future realize that actually the whole things was a capital fueled house of cards. I think one could argue that something like this has happened with Uber and Lyft (though perhaps covid + inflation has more to do with those price increases)
unreal37 5y ago
I've seen Zillow in interviews claim that they are actually physically improving the homes before selling. And they sell for basically what they bought for it intentionally, so they're not actually inflating prices. They're improving homes, helping sellers get out of homes faster, and not raising the prices. This isn't like those home flippers on TV who buy a house for $70K, put $20K into it, and sell it for $200K. The story you're commenting on says they sell 90%+ for less than they paid. This isn't a simple "Zillow buying homes must be bad". More analysis required.
- deleted 5y ago
  [deleted]
ajsnigrutin 5y ago
I'm generally against taxes on stuff that is not vastly limited (buildable area in a good location is very limited compared to other stuff), but progressive tax here would solve a lot of problems (eg, 0% on your first property and primary residence, 1% yearly on your second one, 2% on third, ...). This would basically make owning more than two or three properties very expensive, and owning hundreds or thousands of properties impossible.
- jdross 5y ago
  How do you suggest multi-family housing or single family suburban infill housing gets built affordably?
  - ajsnigrutin 5y ago
    You can never go below cost... that's a nonissue. But we have shitty houses, worth $100k in labour and materials going for millions+, due to sheer unavailability of housing. Housing is something people need to live, not an investment option. Also, USA has a problem with building large apartment buildings, where even overcrowded places like san francisco still build single family houses, instead of 5, 10+ story apartment buildings everywhere.
    - jdross 5y ago
      These are zoning and policy issues, not tax or incentive issues.
  - JKCalhoun 5y ago
    Progressive tax applies only to single-family homes.
    - ajsnigrutin 5y ago
      It doesn't have to. You can still build an apartment highrise, and sell the apartments and make profit... and the owners, if it's their only realestate, still get taxed at minimum rate.
rahimnathwani 5y ago
"Personally I feel that this only makes housing more unaffordable in the long run for most people" In the long run, housing prices are determined by supply and demand. Supply (housing stock) is increased when prices are high (as developers can make money). And supply stays flat when prices are low (but developers don't destroy the existing homes). If this short term trading by Zillow etc. is causing market prices to be high at the moment, you'd expect that to increase long term supply. So future prices would be lower than they would be without Zillow.

by sgpl 5y ago

space_fountain 5y ago

I think the danger is when they assume that making money will only require some simple tweaks, happy to sell at a loss in the meantime and then at some point in the future realize that actually the whole things was a capital fueled house of cards. I think one could argue that something like this has happened with Uber and Lyft (though perhaps covid + inflation has more to do with those price increases)

unreal37 5y ago

I've seen Zillow in interviews claim that they are actually physically improving the homes before selling. And they sell for basically what they bought for it intentionally, so they're not actually inflating prices. They're improving homes, helping sellers get out of homes faster, and not raising the prices. This isn't like those home flippers on TV who buy a house for $70K, put $20K into it, and sell it for $200K. The story you're commenting on says they sell 90%+ for less than they paid. This isn't a simple "Zillow buying homes must be bad". More analysis required.

deleted 5y ago
[deleted]

ajsnigrutin 5y ago

I'm generally against taxes on stuff that is not vastly limited (buildable area in a good location is very limited compared to other stuff), but progressive tax here would solve a lot of problems (eg, 0% on your first property and primary residence, 1% yearly on your second one, 2% on third, ...). This would basically make owning more than two or three properties very expensive, and owning hundreds or thousands of properties impossible.

jdross 5y ago
How do you suggest multi-family housing or single family suburban infill housing gets built affordably?
- ajsnigrutin 5y ago
  You can never go below cost... that's a nonissue. But we have shitty houses, worth $100k in labour and materials going for millions+, due to sheer unavailability of housing. Housing is something people need to live, not an investment option. Also, USA has a problem with building large apartment buildings, where even overcrowded places like san francisco still build single family houses, instead of 5, 10+ story apartment buildings everywhere.
  - jdross 5y ago
    These are zoning and policy issues, not tax or incentive issues.
- JKCalhoun 5y ago
  Progressive tax applies only to single-family homes.
  - ajsnigrutin 5y ago
    It doesn't have to. You can still build an apartment highrise, and sell the apartments and make profit... and the owners, if it's their only realestate, still get taxed at minimum rate.

rahimnathwani 5y ago

"Personally I feel that this only makes housing more unaffordable in the long run for most people" In the long run, housing prices are determined by supply and demand. Supply (housing stock) is increased when prices are high (as developers can make money). And supply stays flat when prices are low (but developers don't destroy the existing homes). If this short term trading by Zillow etc. is causing market prices to be high at the moment, you'd expect that to increase long term supply. So future prices would be lower than they would be without Zillow.