4 ms·

Why is this so hard to understand? Let's try a small example. In a city there are ten houses. Five are vacant, let's call them new construction. Five people

Why is this so hard to understand? Let's try a small example. In a city there are ten houses. Five are vacant, let's call them new construction. Five people are moving to the area. Everything sounds good, right? Blackrock buys 3 of the homes. Now 5 people have to fight over 2 houses. This drives housing price up as they bid with each other. The remaining 3 losers are forced to rent. Blackrock can now charge more money because a) house prices went up, and b) there are no other places to live. To be clear, this is talking about what's happening in -my- area. And based off your Nimbyism comments, I can assure you that it's not the same as your area.

throwaway6734 5y ago
Blackrock isn't the only player in the market. If their rental prices are "too high" other rental properties will be listed for less.
- brendoelfrendo 5y ago
  The problem is single-family homes being bought by investors to rent in the first place. People want to buy, but even low interest rates allowing my bank to offer me cheap money can't out-compete a large investor that has more more assets that allow them access to even more cheap money. I get that no one has a God given right to home ownership, but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it.
  - WalterBright 5y ago
    Lots of people prefer renting. They may be in the area for only a short term. They may be unwilling to make the financial commitment necessary. They may be uninterested in the work and hassle of owning (like mowing the lawn, cleaning the roof, etc.). They may not want to deal with all the hassles and stress when selling.
    - brendoelfrendo 5y ago
      Yeah, that's great and all, but there aren't enough houses for the people who want to buy. The fact that some people like to rent doesn't change anything about what I said.
      - WalterBright 5y ago
        > there aren't enough houses for the people who want to buy. That's true of every item on the free market. It's why markets exist. Note that air is essential to life, but nobody is selling air. There's no marketplace for free software, either.
        maxerickson 5y ago
        Lots of markets are well supplied and have prices that more or less follow costs. And then there's businesses that do sell bottled air and people that do contract work or paid support on free software.
        WalterBright 5y ago
        > then there's businesses that do sell bottled air They're selling compressed air. That's added value. > and people that do contract work or paid support on free software They're being paid for a service, not the software. But hey, I'm an enterprising man. Send me $100 and I'll send you a package with air in it and instructions for downloading free software.
        silisili 5y ago
        Sorry, I'm dipping out of this conversation because I don't like arguing...but this is a troll position. Would you feel the same way if you or your SO had some awful disease, and someone was buying all the medication and selling it at a price out of your reach? 'Sorry honey, we can't afford medicine, that's the market working lol.' And before the argument starts 'well, someone else would just make more...' that takes a lot of lead time, like houses do. And by then, aforementioned medicine buyer has made enough profit to buy even more. I mean, it happened with TP or all things. There was enough for everyone, until people got greedy with it. Happens with gasoline yearly. Seems people with houses don't care because it's good for them. Hell, I made a lot of money in all of this even. Please understand I'm not arguing from a position of need. I don't need a house, and if I did, I'd just buy one. I'm arguing for people like my brother, who worked hard their whole life and keep getting priced out by asshole investors. In summary, I only ask you attempt to look at problems from a lens different than the one people like you and I currently look at things. It's easier when you know and love people affected, admittedly.
  - throwaway6734 5y ago
    Then we need to build more housing to meet demand. > but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it. But it's not the "investor class" that's cornering the market, it's current homeowners. Housing prices are going up due to a limited supply, something that many current homeowners actively fight for
    - brendoelfrendo 5y ago
      > But it's not the "investor class" that's cornering the market, it's current homeowners. It can be both. One keeps supply from entering the market, the other buys out the supply that does enter the market. Long term, yes, we need to build more houses. Americans should also probably adjust their expectations and zoning laws to expect less detached single-family houses. We also probably need to stop treating residential property as an investment, however we go about doing that.
WalterBright 5y ago
Your scenario is that of a monopoly. Monopolies don't happen in a free market. They happen when the government outlaws competition. The usual way the government accomplishes this in the housing market is by making it difficult or impossible to build more housing.
- bumby 5y ago
  >Monopolies don't happen in a free market. They happen when the government outlaws competition. This is true for a subset of regulated monopolies, but there is also the concept of a natural monopoly which does not require any governmental intervention
  - WalterBright 5y ago
    Name one!
    - bumby 5y ago
      The most obvious historical example is Standard Oil, but many would consider social media companies to be natural monopolies in the current context. Here, read up for yourself. https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp
      - WalterBright 5y ago
        SO never had a monopoly. Ironically, throughout the long anti-trust trial, SO's market share kept sliding. SO was never convicted of having a monopoly, it was convicted of certain business practices. > many would consider I don't. Many of the current top ones replaced the previous top ones. Not many even remember AOL.
        bumby 5y ago
        I mean, they essentially operated 9 of every 10 refineries. That was enough for both the NJ and US courts to deem them a monopoly (yes, they used those words).[1] And since a monopoly is just “certain business practices” that unfairly constrain competition, your definition seems to be a difference without a distinction. [1] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)
lostdog 5y ago
Blackrock bought the 3 houses because they believe they will make money on them. If that's true, then even if you remove Blackrock, then someone will fight to buy the house because of the positive return on investment. Any solution requires that buying an existing house is no longer directly profitable. However, as originally posted, that goes against the goal of having houses increase in value, a goal which too many voters share. Put simply, to make houses affordable, you have to drop (or stabilize) prices. If prices are now stable, then your Blackrock problem just goes away. There are a few ideas that preference individuals over Blackrock (rules about how many houses you can own, tax rules that preference primary residences, etc...). Some of these can help, but still, if prices keep going up, then new residents won't be able to buy, and you still have the same disaster. EDIT: I am partial to a ludicrous capital gains tax on property (like 70%). However, it's possible that will harm liquidity, so who knows!

throwaway6734 5y ago

Blackrock isn't the only player in the market. If their rental prices are "too high" other rental properties will be listed for less.

brendoelfrendo 5y ago
The problem is single-family homes being bought by investors to rent in the first place. People want to buy, but even low interest rates allowing my bank to offer me cheap money can't out-compete a large investor that has more more assets that allow them access to even more cheap money. I get that no one has a God given right to home ownership, but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it.
- WalterBright 5y ago
  Lots of people prefer renting. They may be in the area for only a short term. They may be unwilling to make the financial commitment necessary. They may be uninterested in the work and hassle of owning (like mowing the lawn, cleaning the roof, etc.). They may not want to deal with all the hassles and stress when selling.
  - brendoelfrendo 5y ago
    Yeah, that's great and all, but there aren't enough houses for the people who want to buy. The fact that some people like to rent doesn't change anything about what I said.
    - WalterBright 5y ago
      > there aren't enough houses for the people who want to buy. That's true of every item on the free market. It's why markets exist. Note that air is essential to life, but nobody is selling air. There's no marketplace for free software, either.
      - maxerickson 5y ago
        Lots of markets are well supplied and have prices that more or less follow costs. And then there's businesses that do sell bottled air and people that do contract work or paid support on free software.
        WalterBright 5y ago
        > then there's businesses that do sell bottled air They're selling compressed air. That's added value. > and people that do contract work or paid support on free software They're being paid for a service, not the software. But hey, I'm an enterprising man. Send me $100 and I'll send you a package with air in it and instructions for downloading free software.
      - silisili 5y ago
        Sorry, I'm dipping out of this conversation because I don't like arguing...but this is a troll position. Would you feel the same way if you or your SO had some awful disease, and someone was buying all the medication and selling it at a price out of your reach? 'Sorry honey, we can't afford medicine, that's the market working lol.' And before the argument starts 'well, someone else would just make more...' that takes a lot of lead time, like houses do. And by then, aforementioned medicine buyer has made enough profit to buy even more. I mean, it happened with TP or all things. There was enough for everyone, until people got greedy with it. Happens with gasoline yearly. Seems people with houses don't care because it's good for them. Hell, I made a lot of money in all of this even. Please understand I'm not arguing from a position of need. I don't need a house, and if I did, I'd just buy one. I'm arguing for people like my brother, who worked hard their whole life and keep getting priced out by asshole investors. In summary, I only ask you attempt to look at problems from a lens different than the one people like you and I currently look at things. It's easier when you know and love people affected, admittedly.
- throwaway6734 5y ago
  Then we need to build more housing to meet demand. > but we've made a deal with the devil where home equity and housing appreciation are major stores of wealth for the middle class. Letting the investor class corner this market feels like kicking out the ladder for anyone not already on it. But it's not the "investor class" that's cornering the market, it's current homeowners. Housing prices are going up due to a limited supply, something that many current homeowners actively fight for
  - brendoelfrendo 5y ago
    > But it's not the "investor class" that's cornering the market, it's current homeowners. It can be both. One keeps supply from entering the market, the other buys out the supply that does enter the market. Long term, yes, we need to build more houses. Americans should also probably adjust their expectations and zoning laws to expect less detached single-family houses. We also probably need to stop treating residential property as an investment, however we go about doing that.

WalterBright 5y ago

Your scenario is that of a monopoly. Monopolies don't happen in a free market. They happen when the government outlaws competition. The usual way the government accomplishes this in the housing market is by making it difficult or impossible to build more housing.

bumby 5y ago
>Monopolies don't happen in a free market. They happen when the government outlaws competition. This is true for a subset of regulated monopolies, but there is also the concept of a natural monopoly which does not require any governmental intervention
- WalterBright 5y ago
  Name one!
  - bumby 5y ago
    The most obvious historical example is Standard Oil, but many would consider social media companies to be natural monopolies in the current context. Here, read up for yourself. https://www.investopedia.com/terms/n/natural_monopoly.asp https://www.investopedia.com/terms/n/natural_monopoly.asp
    - WalterBright 5y ago
      SO never had a monopoly. Ironically, throughout the long anti-trust trial, SO's market share kept sliding. SO was never convicted of having a monopoly, it was convicted of certain business practices. > many would consider I don't. Many of the current top ones replaced the previous top ones. Not many even remember AOL.
      - bumby 5y ago
        I mean, they essentially operated 9 of every 10 refineries. That was enough for both the NJ and US courts to deem them a monopoly (yes, they used those words).[1] And since a monopoly is just “certain business practices” that unfairly constrain competition, your definition seems to be a difference without a distinction. [1] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911)

lostdog 5y ago

Blackrock bought the 3 houses because they believe they will make money on them. If that's true, then even if you remove Blackrock, then someone will fight to buy the house because of the positive return on investment. Any solution requires that buying an existing house is no longer directly profitable. However, as originally posted, that goes against the goal of having houses increase in value, a goal which too many voters share. Put simply, to make houses affordable, you have to drop (or stabilize) prices. If prices are now stable, then your Blackrock problem just goes away. There are a few ideas that preference individuals over Blackrock (rules about how many houses you can own, tax rules that preference primary residences, etc...). Some of these can help, but still, if prices keep going up, then new residents won't be able to buy, and you still have the same disaster. EDIT: I am partial to a ludicrous capital gains tax on property (like 70%). However, it's possible that will harm liquidity, so who knows!