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I disagree strongly with this sentiment. Clearly Zillow is not going to buy all the houses in America and turn us into serfs overnight - that is an absurd straw

I disagree strongly with this sentiment. Clearly Zillow is not going to buy all the houses in America and turn us into serfs overnight - that is an absurd strawman. What? Zillow is far from the only actor here trying to enter this space. It's quite ridiculous to claim, as you are, that industrial-scale home speculation is doomed to fail since there are boom and bust cycles and therefore we don't need to worry. That's ridiculous. We really don't have any direct, past precedent for this type of situation. It is rational to be concerned here. The fact that Zillow failed on their initial attempt does not imply that this can't work - it just means they're one of the first making a serious attempt and, unsurprisingly, they got overzealous and it didn't work on the first try! Quant firms for the stock market in the early 90s did not work overnight even though the market was much more inefficient than it is now. It takes time for groups of highly qualified and very smart people to figure this stuff out - but, they will.

secondaryacct 5y ago
Let them buy overpriced useless houses, if they buy too many we'll vote them out or we'll take the homes back by force. Everything is a balance and the only way to make money long term is to be undeniably useful to a majority of people. Anything below that bar will die down in shame, infamy or violence.
- sokoloff 5y ago
  What does “vote them out” mean in this context?
  - tablespoon 5y ago
    > What does “vote them out” mean in this context? I suppose it could mean voting in people to write a law that makes it exceedingly unattractive for institutional investors to buy single family homes. You could probably even do such a thing "neutrally" since people really only need one home and if you own more than two you're almost certainly investing in some way. Apply some onerous tax on each unit owned above 100, and all these investors will flee the market. Edit: IIRC, the companies that buy up all these single family homes are large corporations. I'm pretty sure you could write a law like I described that they wouldn't try to use some cheeky corporate shell game to try to bypass (e.g. in their tax filings require them to declare how many single family homes they're the beneficiary owner of, regardless of any intermediary shell companies/special purpose entities, and tax them for that). Require the auditors to sign off of on the number. If they lie, everyone's subject to even more onerous civil and criminal penalties (e.g. blow them up like Enron). Large corporations will stretch the law as far as they can, but it's rare for them to deliberately venture into fraud and other kinds of illegality (for the pedants out there, note I said rare not never). The systemic issues can be solved if they're made to comply, even if some relatively small fish still don't
    - darig 5y ago
      I suppose all the billionaire investors would just retire and not start 70 shell companies to own 100 units each. /s
- wonderwonder 5y ago
  "we'll take the ... back by force" Why are so many people so quick to suggest that a nationwide situation will be resolved by force. No one is going to take back hundreds of homes by force. That amount of force would be absolutely crushed by state sanctioned violence. Even if you could, what are you going to do with the thousands of homes you have now claimed? Who decides who gets to live there? What about the renters already living there? America is in an awkward position right now and the constant larping of using force to resolve issues is not helping.
cletus 5y ago
> We really don't have any direct, past precedent for this type of situation Yeah, we do. Massive housing speculation in the mid-2000s. > The fact that Zillow failed on their initial attempt does not imply that this can't work I'm reminded of Gamestop here. Around the time $GME first spiked and then fell you saw lots of people trying to encourage everyone to hold. What this ignored is that someone would be left holding the bag and the long interest holders knew it so it was a question of not being left holding the bag. This is classic Prisoner's Dilemma, basic human nature (ie to act in self interest) and exactly why markets work long term. The boom and bust cycle reflects basic human psychology of fear and greed. Asset bubbles aren't new. Attempting to corner or even just manipulating markets isn't new. Ultimately these things always revert to mean. Sometimes you can predict the reason. Often you can't. I personally favour fairly radical and progressive real estate reform. This includes (much) higher property taxes for non-resident owners, treating owners as tax residents and thus taxing their income, ending special treatment for real estate assets in asset reporting and withholding taxes at source on real estate income. Cities should be for those that live in them, first and foremost. Having landlords is fine as long as those landlords themselves are residents of the same city. Residential property shouldn't be for investment funds or oligarchs hiding money from governments. Concentrating on the likes of Zillow however is largely unnecessary and a diversion. The focus should be on the game not the players. But I also firmly believe that the prisoner's dilemma and human psychology will limit the impact of institutional real estate buying just as in any other market.
- drnonsense42 5y ago
  Real estate speculation has likely been around for thousands of years; it’s certainly not new. But, do you see any difference between A. individuals in the mid-2000s speculating on real estate based on individual whims and taking out mortgages they should not and B. large corporations with access to massive datasets previously unavailable, teams of PhDs trained to work on this, equipped with game-changing modeling capabilities that were computationally infeasible until the past decade, along with access to massive amounts of capital? In my opinion, the former case seems less of a concern than the latter. Also, maybe I’m dense but I’m not able to see any relevancy to GME at all.
8ytecoder 5y ago
https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801 https://www.wsj.com/articles/if-you-sell-a-house-these-days-... Zillow is far from they only one. PE emerged as one of the largest buyers of foreclosed houses and distressed sales.
xibalba 5y ago
> Quant firms for the stock market in the early 90s False equivalence. The real estate business which Zillow failed is massively capital intensive, whereas figuring out a quant strategy is not necessarily so. In other words, it is very possible to go out of business before a business model is worked out (assuming there is an undiscovered, workable business model). Investors will not endlessly fund money losers, and Zillow is a huge money loser from both a income and cash flow perspective–a trend that predated their entry into the iBuyer space. Now you might say, the investor appetite for money losing Zillow is bottomless, just look at asset class X, which is totally unproven and yet has insane valuations. To which I would reply, "That is true until it isn't." One common characteristic of all financial bubbles is that its participants claim "this time is different." Supposing iBuyers do become a significant force in the SFH market, so what? Large companies already participate directly in housing in a massive way. Who do you think built all of these apartments? Also, don't YIMBY's want to eliminate SFH anyway?
- davidw 5y ago
  > Also, don't YIMBY's want to eliminate SFH anyway? No, only the zoning designation, meaning that if you want, you can build a SFH. Or a 4-plex. Or maybe a corner store.
  - seanmcdirmid 5y ago
    Like they have in Houston. So you get scenes like the ones in this article: https://www.chron.com/news/houston-texas/houston/article/Weirdest-images-from-Houston-s-lack-of-zoning-laws-9171688.php https://www.chron.com/news/houston-texas/houston/article/Wei...
    - davidw 5y ago
      Yes, and housing is massively more affordable than elsewhere. And there's less homelessness, because people can more easily afford homes. Not to say that it's necessarily a model to follow: there's a lot of sprawl involved. Just saying that "abundant housing has some real benefits".
olalonde 5y ago
> Quant firms for the stock market in the early 90s did not work overnight even though the market was much more inefficient than it is now. It takes time for groups of highly qualified and very smart people to figure this stuff out - but, they will. This example works against you. Quant firms did succeed but they did not corner the stock market nor are they cause for concern. There is a long history of firms that failed to corner a market or become a monopoly. True natural monopolies are extremely rare and don't typically last very long.
TomMckenny 5y ago
> We really don't have any direct, past precedent for this type of situation. Unfortunately we do have precedent. Through all of history almost no one owed their own home. It was by extraordinary government intervention in the 20th century through loan programs, incentives and building, and impediments to speculation, that made it uniquely happen in our era. As the government steps back from continuous intervention favoring individual home ownership and low to nonprofit housing, the more profitable rental economy will re assert itself: it is always more profitable to own a property to rent out then to live in it and the market will reflect that if left to itself. Price fluctuations (eg 2008) do not change the fact that land price increases have far outpaced wages for decades. So yes, it is rational to be very concerned. And note that Zillow is not selling these 7k properties to would be homeowners but to investors.
Aunche 5y ago
You can't squeeze more money than the market is willing to pay. If private equity tries to corner the housing market, more people would decide to live with their roommates and family while developers will happily sell them overpriced homes and they pay property taxes.
- HarryHirsch 5y ago
  more people would decide to live with their roommates and family And we made fun of Soviet Russia, where people would live with roommates and family because their government was so dysfunctional that it couldn't even arrange shelter for its citizens, a basic necessity for life.
  - rsj_hn 5y ago
    U.S. has a 65% home ownership rate. Not everyone can afford a Bentley or a condo in Manhattan. That is not some terrible injustice that needs to be fixed. Living within your means and buying a place where you can afford to live is also an alternate approach. Or you can moan about capitalism and how unfair life is.
    - HarryHirsch 5y ago
      The price for housing has gone up substantially in the last 20 years, housing takes up a greater share of peoples incomes than it did in the past, and there is no reason for it. We wouldn't tolerate the price of food going up by the same percentage.
      - PaulDavisThe1st 5y ago
        We tolerate it in housing because the asset appreciates. If food costs went up substantially, but you could eat the food and then resell it for more than you paid for it (and sometimes a lot more than just inflation-linked increases), I suspect we'd tolerate that too.
        5y ago

secondaryacct 5y ago

Let them buy overpriced useless houses, if they buy too many we'll vote them out or we'll take the homes back by force. Everything is a balance and the only way to make money long term is to be undeniably useful to a majority of people. Anything below that bar will die down in shame, infamy or violence.

sokoloff 5y ago
What does “vote them out” mean in this context?
- tablespoon 5y ago
  > What does “vote them out” mean in this context? I suppose it could mean voting in people to write a law that makes it exceedingly unattractive for institutional investors to buy single family homes. You could probably even do such a thing "neutrally" since people really only need one home and if you own more than two you're almost certainly investing in some way. Apply some onerous tax on each unit owned above 100, and all these investors will flee the market. Edit: IIRC, the companies that buy up all these single family homes are large corporations. I'm pretty sure you could write a law like I described that they wouldn't try to use some cheeky corporate shell game to try to bypass (e.g. in their tax filings require them to declare how many single family homes they're the beneficiary owner of, regardless of any intermediary shell companies/special purpose entities, and tax them for that). Require the auditors to sign off of on the number. If they lie, everyone's subject to even more onerous civil and criminal penalties (e.g. blow them up like Enron). Large corporations will stretch the law as far as they can, but it's rare for them to deliberately venture into fraud and other kinds of illegality (for the pedants out there, note I said rare not never). The systemic issues can be solved if they're made to comply, even if some relatively small fish still don't
  - darig 5y ago
    I suppose all the billionaire investors would just retire and not start 70 shell companies to own 100 units each. /s
wonderwonder 5y ago
"we'll take the ... back by force" Why are so many people so quick to suggest that a nationwide situation will be resolved by force. No one is going to take back hundreds of homes by force. That amount of force would be absolutely crushed by state sanctioned violence. Even if you could, what are you going to do with the thousands of homes you have now claimed? Who decides who gets to live there? What about the renters already living there? America is in an awkward position right now and the constant larping of using force to resolve issues is not helping.

cletus 5y ago

> We really don't have any direct, past precedent for this type of situation Yeah, we do. Massive housing speculation in the mid-2000s. > The fact that Zillow failed on their initial attempt does not imply that this can't work I'm reminded of Gamestop here. Around the time $GME first spiked and then fell you saw lots of people trying to encourage everyone to hold. What this ignored is that someone would be left holding the bag and the long interest holders knew it so it was a question of not being left holding the bag. This is classic Prisoner's Dilemma, basic human nature (ie to act in self interest) and exactly why markets work long term. The boom and bust cycle reflects basic human psychology of fear and greed. Asset bubbles aren't new. Attempting to corner or even just manipulating markets isn't new. Ultimately these things always revert to mean. Sometimes you can predict the reason. Often you can't. I personally favour fairly radical and progressive real estate reform. This includes (much) higher property taxes for non-resident owners, treating owners as tax residents and thus taxing their income, ending special treatment for real estate assets in asset reporting and withholding taxes at source on real estate income. Cities should be for those that live in them, first and foremost. Having landlords is fine as long as those landlords themselves are residents of the same city. Residential property shouldn't be for investment funds or oligarchs hiding money from governments. Concentrating on the likes of Zillow however is largely unnecessary and a diversion. The focus should be on the game not the players. But I also firmly believe that the prisoner's dilemma and human psychology will limit the impact of institutional real estate buying just as in any other market.

drnonsense42 5y ago
Real estate speculation has likely been around for thousands of years; it’s certainly not new. But, do you see any difference between A. individuals in the mid-2000s speculating on real estate based on individual whims and taking out mortgages they should not and B. large corporations with access to massive datasets previously unavailable, teams of PhDs trained to work on this, equipped with game-changing modeling capabilities that were computationally infeasible until the past decade, along with access to massive amounts of capital? In my opinion, the former case seems less of a concern than the latter. Also, maybe I’m dense but I’m not able to see any relevancy to GME at all.

8ytecoder 5y ago

https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801 https://www.wsj.com/articles/if-you-sell-a-house-these-days-... Zillow is far from they only one. PE emerged as one of the largest buyers of foreclosed houses and distressed sales.

xibalba 5y ago

> Quant firms for the stock market in the early 90s False equivalence. The real estate business which Zillow failed is massively capital intensive, whereas figuring out a quant strategy is not necessarily so. In other words, it is very possible to go out of business before a business model is worked out (assuming there is an undiscovered, workable business model). Investors will not endlessly fund money losers, and Zillow is a huge money loser from both a income and cash flow perspective–a trend that predated their entry into the iBuyer space. Now you might say, the investor appetite for money losing Zillow is bottomless, just look at asset class X, which is totally unproven and yet has insane valuations. To which I would reply, "That is true until it isn't." One common characteristic of all financial bubbles is that its participants claim "this time is different." Supposing iBuyers do become a significant force in the SFH market, so what? Large companies already participate directly in housing in a massive way. Who do you think built all of these apartments? Also, don't YIMBY's want to eliminate SFH anyway?

davidw 5y ago
> Also, don't YIMBY's want to eliminate SFH anyway? No, only the zoning designation, meaning that if you want, you can build a SFH. Or a 4-plex. Or maybe a corner store.
- seanmcdirmid 5y ago
  Like they have in Houston. So you get scenes like the ones in this article: https://www.chron.com/news/houston-texas/houston/article/Weirdest-images-from-Houston-s-lack-of-zoning-laws-9171688.php https://www.chron.com/news/houston-texas/houston/article/Wei...
  - davidw 5y ago
    Yes, and housing is massively more affordable than elsewhere. And there's less homelessness, because people can more easily afford homes. Not to say that it's necessarily a model to follow: there's a lot of sprawl involved. Just saying that "abundant housing has some real benefits".

olalonde 5y ago

> Quant firms for the stock market in the early 90s did not work overnight even though the market was much more inefficient than it is now. It takes time for groups of highly qualified and very smart people to figure this stuff out - but, they will. This example works against you. Quant firms did succeed but they did not corner the stock market nor are they cause for concern. There is a long history of firms that failed to corner a market or become a monopoly. True natural monopolies are extremely rare and don't typically last very long.

TomMckenny 5y ago

> We really don't have any direct, past precedent for this type of situation. Unfortunately we do have precedent. Through all of history almost no one owed their own home. It was by extraordinary government intervention in the 20th century through loan programs, incentives and building, and impediments to speculation, that made it uniquely happen in our era. As the government steps back from continuous intervention favoring individual home ownership and low to nonprofit housing, the more profitable rental economy will re assert itself: it is always more profitable to own a property to rent out then to live in it and the market will reflect that if left to itself. Price fluctuations (eg 2008) do not change the fact that land price increases have far outpaced wages for decades. So yes, it is rational to be very concerned. And note that Zillow is not selling these 7k properties to would be homeowners but to investors.

Aunche 5y ago

You can't squeeze more money than the market is willing to pay. If private equity tries to corner the housing market, more people would decide to live with their roommates and family while developers will happily sell them overpriced homes and they pay property taxes.

HarryHirsch 5y ago
more people would decide to live with their roommates and family And we made fun of Soviet Russia, where people would live with roommates and family because their government was so dysfunctional that it couldn't even arrange shelter for its citizens, a basic necessity for life.
- rsj_hn 5y ago
  U.S. has a 65% home ownership rate. Not everyone can afford a Bentley or a condo in Manhattan. That is not some terrible injustice that needs to be fixed. Living within your means and buying a place where you can afford to live is also an alternate approach. Or you can moan about capitalism and how unfair life is.
  - HarryHirsch 5y ago
    The price for housing has gone up substantially in the last 20 years, housing takes up a greater share of peoples incomes than it did in the past, and there is no reason for it. We wouldn't tolerate the price of food going up by the same percentage.
    - PaulDavisThe1st 5y ago
      We tolerate it in housing because the asset appreciates. If food costs went up substantially, but you could eat the food and then resell it for more than you paid for it (and sometimes a lot more than just inflation-linked increases), I suspect we'd tolerate that too.
      - 5y ago