7 ms·

If the US wants meaningful housing reform they need to severely limit corporate real estate investment.

rhino369 5y ago
First we need to realize that rising home "value" just means rising prices. Our policy is to essentially make housing more expensive since pre-existing home owners benefit.
- rootusrootus 5y ago
  It's also probably too late to really do anything about it, other than try to slow it down. A price crash would help people who want to buy their first home, but it would bring also fair amount of economic devastation along for the ride.
  - chordalkeyboard 5y ago
    not really, a price correction would just reset prices to where they belong.
    - adamsmith143 5y ago
      And put countless people into upside down mortgages as well as give investors/corporations an even bigger incentive to grab properties at a premium discount.
  - brink 5y ago
    Unaffordable homes _is_ economic devastation. How are new generations supposed to prosper when they cannot afford a place to live?
    - swagasaurus-rex 5y ago
      It's like saying affordable healthcare is economic devastation because insurance companies and hospitals will lose profits. It's completely ignoring the massive wealth drain on the average American. There's an enormous opportunity cost.
      - fancifalmanima 5y ago
        Don't something like 65% of Americans own their homes? https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... Realistically, we're in a place where significant prices increases (which has happened, obviously ) and a significant price drop would both have a significant economic impact. Both groups (home owners, and renters) are large. And while a chunk of people that own homes are investors, there are a ton of people that own their home and pretty much depend on selling and capturing the equity in the future for either their next house or retirement. Many of those people are just middle class folks, well into the fat part of the bell curve. Obviously on the flip side, more expensive homes makes it more difficult for new homeowners to buy in, and break out of the renting cycle, build equity, build wealth, etc, etc, and that's also bad. Just wanted to point out the flip side of it.
      - rootusrootus 5y ago
        Are you going to reset the mortgages for all the Americans who already own their home? Give them rebates if they've already paid it off? I get that this seems like an unpopular observation on HN. But still, any significant price reset on real estate in the US would cause a LOT of people to lose a huge amount of their net worth. And if they recently bought their first home, they will then be massively underwater with all of the negatives that brings. It's pretty easy to say that only investors are going to lose, without appreciating that you're advocating for destroying more than half the population in order to provide a better future for the remainder. Think of a better plan.
  - onion2k 5y ago
    A price crash would help people who want to buy their first home... It absolutely wouldn't because first time buyers would still be competing with investors, except the investors would be able to buy properties in cash with no need to spend time arranging mortgages, and with guarantees that they won't need to drop out of the sale because it'd happen so fast, which would be very appealing to sellers. Plus, investors would still be able to outbid private buyers no matter even if prices are lower. Everything about selling a house favors selling to an investor (apart from morality maybe). At this point a house price crash without legislation to block corporate investment in housing stock would likely see a massive shift of ownership from individuals to corporations.
- micromacrofoot 5y ago
  Sure, I don't think individual homeowners are the enemy... it's the large investors that treat housing stock like gold to lock away in a safe. Some large investors don't even operate as landlords (which is another industry that could use a cap), they'll buy new units in managed buildings and keep them vacant.
- chrisseaton 5y ago
  > First we need to realize that rising home "value" just means rising prices. Genuine value of a property often raises. For example access to a new train station. Access to a school that starts performing better. Features that people want where the supply is going down.
ethagknight 5y ago
Homestead tax abatements are common. Owner-occupant's primary residence gets a big RE tax break, second homes and investment properties pay full freight. That works pretty well.
- gregwebs 5y ago
  My homestead deduction is a few hundred dollars a year while I pay thousands on property taxes every month. Rental properties are still eligible for all kinds of tax write-offs. I think the bigger issue is that the government is there to support the mortgage of those buying multiple properties. The low mortgage rate relative to high inflation rate is the underlying financial that makes the housing market a very attractive investment right now. Taking away government subsidies for low mortgage rates for investors would radically alter the market.
  - abofh 5y ago
    This, when I lived in my apartment, I'd save 300$/year on 10k of property taxes. When I rented it, I got a 30k/yr deduction for depreciation - between that and rent, it basically pays for itself right out of the gate as long as I have the income to use the deductions.
    - wing-_-nuts 5y ago
      Don't you have to pay back that depreciation when you sell unless you enter some kind of complicated 1030 agreement?
      - _rtld_global_ro 5y ago
        You can use 1031 exchange to avoid that.
- micromacrofoot 5y ago
  I live in one of these areas and I can tell you that it's not working well enough. Investment properties still dominate the market. New buildings go up with vacant investment units. Investors pay cash over asking price for existing housing.
bpodgursky 5y ago
No, we just need to build more housing.
- colpabar 5y ago
  We do need more housing, but what’s stopping these same investors from buying it all up?
  - zwieback 5y ago
    They are only buying it up because prices are rising so fast. More housing would mean more stable home prices, which makes the sector less attractive to investors.
    - mikeg8 5y ago
      No, they’re buying them up because rates are so low it costs them little to borrow/buy.
      - bpodgursky 5y ago
        They wouldn't be buying houses if houses weren't an appreciating asset. Let's change that.
        cannonpalms 5y ago
        Just to be clear, we shouldn't throw the baby out with the bathwater. Houses can and should be appreciating assets. However, their rate of return shouldn't be as astronomical as they are at present. In inflationary environments, money will always flock to real estate. That shouldn't change. The goal of increasing supply is to lower returns to such a point that they remain attractive to first-time buyers but are suboptimal for the institutional investor.
        oldsecondhand 5y ago
iancmceachern 5y ago
And I've heard this on HN before - we cannot simultaneously have affordable housing and look at housing as an investment.
- micromacrofoot 5y ago
  Can't housing still be an investment for owner-occupants while investment companies are disincentivized from buying every available property in competitive housing markets? By limiting investors you'd likely slow down an individual's appreciation on housing as an investment, but I can't imagine it would disappear entirely.
  - ska 5y ago
    > Can't housing still be an investment for owner-occupants while investment companies are disincentivized from buying every available property in competitive housing markets? Not really effectively. There are two big problems. The most fundamental is: If you have a good return on your house (outstrips inflation by a decent amount) and wages stay flat (actually it's been worse than that recently) - who do you think is going to be your buyer 20,30 years on? The other: You can't effectively keep rich people and institutions out if the ROI is good enough. If their money doesn't have a better place to go, it will end up here some how.

First we need to realize that rising home "value" just means rising prices. Our policy is to essentially make housing more expensive since pre-existing home owners benefit.

rootusrootus 5y ago
It's also probably too late to really do anything about it, other than try to slow it down. A price crash would help people who want to buy their first home, but it would bring also fair amount of economic devastation along for the ride.
- chordalkeyboard 5y ago
  not really, a price correction would just reset prices to where they belong.
  - adamsmith143 5y ago
    And put countless people into upside down mortgages as well as give investors/corporations an even bigger incentive to grab properties at a premium discount.
- brink 5y ago
  Unaffordable homes _is_ economic devastation. How are new generations supposed to prosper when they cannot afford a place to live?
  - swagasaurus-rex 5y ago
    It's like saying affordable healthcare is economic devastation because insurance companies and hospitals will lose profits. It's completely ignoring the massive wealth drain on the average American. There's an enormous opportunity cost.
    - fancifalmanima 5y ago
      Don't something like 65% of Americans own their homes? https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... Realistically, we're in a place where significant prices increases (which has happened, obviously ) and a significant price drop would both have a significant economic impact. Both groups (home owners, and renters) are large. And while a chunk of people that own homes are investors, there are a ton of people that own their home and pretty much depend on selling and capturing the equity in the future for either their next house or retirement. Many of those people are just middle class folks, well into the fat part of the bell curve. Obviously on the flip side, more expensive homes makes it more difficult for new homeowners to buy in, and break out of the renting cycle, build equity, build wealth, etc, etc, and that's also bad. Just wanted to point out the flip side of it.
    - rootusrootus 5y ago
      Are you going to reset the mortgages for all the Americans who already own their home? Give them rebates if they've already paid it off? I get that this seems like an unpopular observation on HN. But still, any significant price reset on real estate in the US would cause a LOT of people to lose a huge amount of their net worth. And if they recently bought their first home, they will then be massively underwater with all of the negatives that brings. It's pretty easy to say that only investors are going to lose, without appreciating that you're advocating for destroying more than half the population in order to provide a better future for the remainder. Think of a better plan.
- onion2k 5y ago
  A price crash would help people who want to buy their first home... It absolutely wouldn't because first time buyers would still be competing with investors, except the investors would be able to buy properties in cash with no need to spend time arranging mortgages, and with guarantees that they won't need to drop out of the sale because it'd happen so fast, which would be very appealing to sellers. Plus, investors would still be able to outbid private buyers no matter even if prices are lower. Everything about selling a house favors selling to an investor (apart from morality maybe). At this point a house price crash without legislation to block corporate investment in housing stock would likely see a massive shift of ownership from individuals to corporations.
micromacrofoot 5y ago
Sure, I don't think individual homeowners are the enemy... it's the large investors that treat housing stock like gold to lock away in a safe. Some large investors don't even operate as landlords (which is another industry that could use a cap), they'll buy new units in managed buildings and keep them vacant.
chrisseaton 5y ago
> First we need to realize that rising home "value" just means rising prices. Genuine value of a property often raises. For example access to a new train station. Access to a school that starts performing better. Features that people want where the supply is going down.

ethagknight 5y ago

Homestead tax abatements are common. Owner-occupant's primary residence gets a big RE tax break, second homes and investment properties pay full freight. That works pretty well.

gregwebs 5y ago
My homestead deduction is a few hundred dollars a year while I pay thousands on property taxes every month. Rental properties are still eligible for all kinds of tax write-offs. I think the bigger issue is that the government is there to support the mortgage of those buying multiple properties. The low mortgage rate relative to high inflation rate is the underlying financial that makes the housing market a very attractive investment right now. Taking away government subsidies for low mortgage rates for investors would radically alter the market.
- abofh 5y ago
  This, when I lived in my apartment, I'd save 300$/year on 10k of property taxes. When I rented it, I got a 30k/yr deduction for depreciation - between that and rent, it basically pays for itself right out of the gate as long as I have the income to use the deductions.
  - wing-_-nuts 5y ago
    Don't you have to pay back that depreciation when you sell unless you enter some kind of complicated 1030 agreement?
    - _rtld_global_ro 5y ago
      You can use 1031 exchange to avoid that.
micromacrofoot 5y ago
I live in one of these areas and I can tell you that it's not working well enough. Investment properties still dominate the market. New buildings go up with vacant investment units. Investors pay cash over asking price for existing housing.

bpodgursky 5y ago

No, we just need to build more housing.

colpabar 5y ago
We do need more housing, but what’s stopping these same investors from buying it all up?
- zwieback 5y ago
  They are only buying it up because prices are rising so fast. More housing would mean more stable home prices, which makes the sector less attractive to investors.
  - mikeg8 5y ago
    No, they’re buying them up because rates are so low it costs them little to borrow/buy.
    - bpodgursky 5y ago
      They wouldn't be buying houses if houses weren't an appreciating asset. Let's change that.
      - cannonpalms 5y ago
        Just to be clear, we shouldn't throw the baby out with the bathwater. Houses can and should be appreciating assets. However, their rate of return shouldn't be as astronomical as they are at present. In inflationary environments, money will always flock to real estate. That shouldn't change. The goal of increasing supply is to lower returns to such a point that they remain attractive to first-time buyers but are suboptimal for the institutional investor.
        oldsecondhand 5y ago

iancmceachern 5y ago

And I've heard this on HN before - we cannot simultaneously have affordable housing and look at housing as an investment.

micromacrofoot 5y ago
Can't housing still be an investment for owner-occupants while investment companies are disincentivized from buying every available property in competitive housing markets? By limiting investors you'd likely slow down an individual's appreciation on housing as an investment, but I can't imagine it would disappear entirely.
- ska 5y ago
  > Can't housing still be an investment for owner-occupants while investment companies are disincentivized from buying every available property in competitive housing markets? Not really effectively. There are two big problems. The most fundamental is: If you have a good return on your house (outstrips inflation by a decent amount) and wages stay flat (actually it's been worse than that recently) - who do you think is going to be your buyer 20,30 years on? The other: You can't effectively keep rich people and institutions out if the ROI is good enough. If their money doesn't have a better place to go, it will end up here some how.