8 ms·

This is not really guaranteed to solve the problem. It will only be a part of the solution. In many countries, including Europe, new properties are quickly sna

by dsnr 5y ago

This is not really guaranteed to solve the problem. It will only be a part of the solution. In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.

hemreldop 5y ago
Well investment companies buy to resell. If there is a glut of new houses prices will definitely go down in the medium term.
- dsnr 5y ago
  In Germany they mostly buy to rent out and I’m sure it’s happening in other places as well.
- ClumsyPilot 5y ago
  > If there is a glut of new houses prices will definitely go down Given the billion of investment dollars and cheap loans avaliable, it might be physically impossible to build enough homes fast enougg for the prices to go down
______-_-______ 5y ago
I mean... it has to eventually. If my country has a population of 50 million and I build 800 million homes, will investors keep buying them all at above market rates (read: more than I spent building them)? Then I can build 100 million more and keep collecting infinite money?
- b3morales 5y ago
  Yes, because they can keep shifting their imaginary money around and hedging their risk on paper until someone notices the music has stopped and the govt/rest of us are left holding the bag of turds again. (Cf. 2008)
  - ryan93 5y ago
    Are you claiming Blackstone would continue to buy houses at current prices even with a 16fold increase in supply? In 2008 the government artificially backstopped loans not a free market fwiw
- boplicity 5y ago
  This can go on longer than you think; it leads to "ghost cities" -- huge areas full of empty housing bought by speculators. https://allthatsinteresting.com/chinese-ghost-cities https://allthatsinteresting.com/chinese-ghost-cities
  - joshlemer 5y ago
    But I bet rent is pretty cheap in those cities no?
  - rwmj 5y ago
    The other part should be a supertax on properties which are empty for more than 6 months.
  - toast0 5y ago
    It's a lot easier to build housing in the middle of nowhere USA; but there's not a large problem of ghost cities. There's certainly a lot of sprawl, but not large new construction ghost cities; although there was some overbuilding in some areas into the 2008 housing crash, and some areas where construction stalled or stopped mid-build as a result, since either the builder could no longer finance finishing or it didn't make economic sense to do so at that time. China has a lot of disconnected incentives that help it make economic sense for the participants to build and buy into a ghost city that I don't think are present in the US and Canada. If ghost cities are a real concern, you could punitively tax vacant housing that's not offered for lease or sale, and limit housing starts when housing offered for sale or lease was above some threshold price. Or you could do something like a deposit per housing start, paid back over time to the owner or occupant while occupied.
  - crooked-v 5y ago
    Those "ghost cities" have been fairly consistently been filling in over time. Some of the originally-reported ones are by now more or less completely populated and are now just... cities.
    - a_shovel 5y ago
      That sounds interesting. Do you have an article or something about that?
thrwy_ywrht 5y ago
>In many countries, including Europe, new properties are quickly snatched by investment Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
- tablespoon 5y ago
  >> In many countries, including Europe, new properties are quickly snatched by investment > Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms. I think it's kind of pointless to argue over which one policy to pursue to fix this problem, why not try a multi-pronged approach? 1. Implement some policy to ban large investors from home-ownership (say no corporate ownership and a small cap on how many an individual/family can own). There are more reasons to do this than just supply. 2. Put an onerous tax on housing that is not occupied full-time. 3. Build more housing. 1 & 2 would help ease some (but not all) pressure that makes 3 less desirable.
  - after_care 5y ago
    1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society.
    - tablespoon 5y ago
      > 1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society. Not if the rule is scoped to single-family homes and individual units in multi-owner buildings. Purpose-built rental housing (e.g. apartment buildings) would be exempted for obvious reasons. The intent is to keep large investors out of markets where owner-occupancy is typical. Even in my original comment I did make allowances for single-family home rentals, but they'd have to be from small-scale landlords. Also suggestion 2 wouldn't prevent a rental market anywhere there's demand for housing, it would just force landlords to drop rents aggressively to get units occupied. And obviously, as is true for any internet comment suggestion of regulatory changes, actual implementation will be more complicated than can be expressed in a pithy comment that lays out the gist.
CPLX 5y ago
It shouldn't matter all that much. Rented homes are an excellent (not perfect but very close) substitute for purchased homes. People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine. You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
- wnolens 5y ago
  I like the conclusion, but I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500). And so have a few very intelligent friends. It almost NEVER works out in favor of buying except for some crazy flukes like pandemic accelerating prices in Toronto. I think it's largely cultural? Canadian's (more than any of my American friends) are fed the idea that owning a home is the best financial decision and the holy grail of life. It may happen to be the best financial decision for them, but because they lack the information that it's not and wouldn't otherwise invest very well. Even in spite of that information, I still want to spend money and buy a house. I've been asked for vacate my apt for property sale more than once, and faced +800/mo rent spike (NYC...), and I'm over it.
  - paconbork 5y ago
    Yeah that's basically where I'm at. The ability to not have to move and the ability to improve the place and keep the value of my improvements are worth a large premium to me.
  - Sohcahtoa82 5y ago
    > I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500) [...] It almost NEVER works out in favor of buying I can't see how that's possible. Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot. For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month. Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be. I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.
JoshTriplett 5y ago
Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.
- tempestn 5y ago
  Right. Every new property bought by an investor is another rental property. As these are added, it will reduce rents, which makes renting more attractive compared to owning, as well as making rental properties less attractive to investors. On the margin these will reduce demand for properties to purchase, bringing down prices.
givemeethekeys 5y ago
> This is not really guaranteed to solve the problem. In Europe, new properties are not readily snatched up. Just look at Italy. A growing supply that outpaces demand is literally the only solution. Every other solution will cause a black market.
graeme 5y ago
Show me a country you’re talking about, and show me their housing starts per capita relative to Japan, a country which allows building If well below, you haven’t an argument.

by dsnr 5y ago

hemreldop 5y ago

Well investment companies buy to resell. If there is a glut of new houses prices will definitely go down in the medium term.

dsnr 5y ago
In Germany they mostly buy to rent out and I’m sure it’s happening in other places as well.
ClumsyPilot 5y ago
> If there is a glut of new houses prices will definitely go down Given the billion of investment dollars and cheap loans avaliable, it might be physically impossible to build enough homes fast enougg for the prices to go down

______-_-______ 5y ago

I mean... it has to eventually. If my country has a population of 50 million and I build 800 million homes, will investors keep buying them all at above market rates (read: more than I spent building them)? Then I can build 100 million more and keep collecting infinite money?

b3morales 5y ago
Yes, because they can keep shifting their imaginary money around and hedging their risk on paper until someone notices the music has stopped and the govt/rest of us are left holding the bag of turds again. (Cf. 2008)
- ryan93 5y ago
  Are you claiming Blackstone would continue to buy houses at current prices even with a 16fold increase in supply? In 2008 the government artificially backstopped loans not a free market fwiw
boplicity 5y ago
This can go on longer than you think; it leads to "ghost cities" -- huge areas full of empty housing bought by speculators. https://allthatsinteresting.com/chinese-ghost-cities https://allthatsinteresting.com/chinese-ghost-cities
- joshlemer 5y ago
  But I bet rent is pretty cheap in those cities no?
- rwmj 5y ago
  The other part should be a supertax on properties which are empty for more than 6 months.
- toast0 5y ago
  It's a lot easier to build housing in the middle of nowhere USA; but there's not a large problem of ghost cities. There's certainly a lot of sprawl, but not large new construction ghost cities; although there was some overbuilding in some areas into the 2008 housing crash, and some areas where construction stalled or stopped mid-build as a result, since either the builder could no longer finance finishing or it didn't make economic sense to do so at that time. China has a lot of disconnected incentives that help it make economic sense for the participants to build and buy into a ghost city that I don't think are present in the US and Canada. If ghost cities are a real concern, you could punitively tax vacant housing that's not offered for lease or sale, and limit housing starts when housing offered for sale or lease was above some threshold price. Or you could do something like a deposit per housing start, paid back over time to the owner or occupant while occupied.
- crooked-v 5y ago
  Those "ghost cities" have been fairly consistently been filling in over time. Some of the originally-reported ones are by now more or less completely populated and are now just... cities.
  - a_shovel 5y ago
    That sounds interesting. Do you have an article or something about that?

thrwy_ywrht 5y ago

>In many countries, including Europe, new properties are quickly snatched by investment Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.

tablespoon 5y ago
>> In many countries, including Europe, new properties are quickly snatched by investment > Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms. I think it's kind of pointless to argue over which one policy to pursue to fix this problem, why not try a multi-pronged approach? 1. Implement some policy to ban large investors from home-ownership (say no corporate ownership and a small cap on how many an individual/family can own). There are more reasons to do this than just supply. 2. Put an onerous tax on housing that is not occupied full-time. 3. Build more housing. 1 & 2 would help ease some (but not all) pressure that makes 3 less desirable.
- after_care 5y ago
  1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society.
  - tablespoon 5y ago
    > 1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society. Not if the rule is scoped to single-family homes and individual units in multi-owner buildings. Purpose-built rental housing (e.g. apartment buildings) would be exempted for obvious reasons. The intent is to keep large investors out of markets where owner-occupancy is typical. Even in my original comment I did make allowances for single-family home rentals, but they'd have to be from small-scale landlords. Also suggestion 2 wouldn't prevent a rental market anywhere there's demand for housing, it would just force landlords to drop rents aggressively to get units occupied. And obviously, as is true for any internet comment suggestion of regulatory changes, actual implementation will be more complicated than can be expressed in a pithy comment that lays out the gist.

CPLX 5y ago

It shouldn't matter all that much. Rented homes are an excellent (not perfect but very close) substitute for purchased homes. People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine. You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.

wnolens 5y ago
I like the conclusion, but I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500). And so have a few very intelligent friends. It almost NEVER works out in favor of buying except for some crazy flukes like pandemic accelerating prices in Toronto. I think it's largely cultural? Canadian's (more than any of my American friends) are fed the idea that owning a home is the best financial decision and the holy grail of life. It may happen to be the best financial decision for them, but because they lack the information that it's not and wouldn't otherwise invest very well. Even in spite of that information, I still want to spend money and buy a house. I've been asked for vacate my apt for property sale more than once, and faced +800/mo rent spike (NYC...), and I'm over it.
- paconbork 5y ago
  Yeah that's basically where I'm at. The ability to not have to move and the ability to improve the place and keep the value of my improvements are worth a large premium to me.
- Sohcahtoa82 5y ago
  > I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500) [...] It almost NEVER works out in favor of buying I can't see how that's possible. Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot. For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month. Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be. I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.

JoshTriplett 5y ago

Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.

tempestn 5y ago
Right. Every new property bought by an investor is another rental property. As these are added, it will reduce rents, which makes renting more attractive compared to owning, as well as making rental properties less attractive to investors. On the margin these will reduce demand for properties to purchase, bringing down prices.

givemeethekeys 5y ago

> This is not really guaranteed to solve the problem. In Europe, new properties are not readily snatched up. Just look at Italy. A growing supply that outpaces demand is literally the only solution. Every other solution will cause a black market.

graeme 5y ago

Show me a country you’re talking about, and show me their housing starts per capita relative to Japan, a country which allows building If well below, you haven’t an argument.