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I feel like both of these things can be problems. If you view housing and ownership of your domicile as something that should be accessible to people, then hou

I feel like both of these things can be problems. If you view housing and ownership of your domicile as something that should be accessible to people, then housing necessarily cannot be viewed as an investment vehicle and large corporations, REITs, wallstreet, etc. need to be excluded so that more supply can be available to "correct" buyers. Limiting these groups does help on the supply-side. While it may not be the root cause, it's far better than showering the demand-side with cash like tax breaks for first-time home buyers. Perfect is the enemy of good.

davidw 5y ago
I don't think many people are really in favor of big investors getting into housing because no, it sure does not help, but the root cause is "not enough homes", and the solution is "build more homes of all shapes and sizes". That's also the solution to keeping big investors out! Big investors aren't piling into used cars despite the recent scarcity because they know that sooner or later the car companies are going to go back to churning out a bunch of new cars. You're quite correct that more money chasing after the same limited number of homes is just going to drive up prices.
dionidium 5y ago
Yes, but one thing causes the other and it's not in the causal direction people intuitively think. Foreign speculators and investment firms like Blackrock are only entering the SFH market because supply constraints mean ever-higher prices. It's not like nobody thought to buy up houses 40 years ago. You don't have to be a genius to think of it. I can remember being a teenager and thinking, why don't big firms buy up all the housing and rent it back? The answer is that in most markets homes aren't naturally a good investment. It's a capital-intensive business and you end up with a depreciating asset, small margins, and lots of hassle. But if supply gets constrained enough that prices complete detach from those fundamentals, then, sure, why not jump in? These investors are only in this market in the first place because of supply constraints, so it's not just that low supply is a more important factor than the investors -- the investors wouldn't even exist if not for the low supply!
- llbeansandrice 5y ago
  I'm not contending that supply isn't the real issue, just that there's no way you're going to be able to change the culture around individual home ownership, nimbyism, and zoning laws on any reasonable time-frame. A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side. Limiting large investors does not solve the problem, but it could help alleviate some acute symptoms.
  - davidw 5y ago
    I'm not so sure it's not possible. There are large numbers of people getting priced out, and YIMBY groups are springing up all over. Here in Oregon, we passed HB2001, which re-legalizes up to 4-plexes in our cities. One of the city councilors where I live is a huge YIMBY. https://www.brookings.edu/blog/the-avenue/2022/03/31/where-pro-housing-groups-are-emerging/ https://www.brookings.edu/blog/the-avenue/2022/03/31/where-p... https://noahpinion.substack.com/p/the-yimbys-are-starting-to-win-a?s=r https://noahpinion.substack.com/p/the-yimbys-are-starting-to...
    - dionidium 5y ago
      Yeah, you'd never get it done on a local level, but when people are forced to think about the issue holistically -- that is, when they can get outside of their immediate neighborhood and think about the fact that it's illegal to build enough housing on a state or even national level -- it looks like they can actually be swayed. These changes have to be made at the state/province level.
  - chii 5y ago
    > A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side. black markets spring up to serve demand when there's law and regulation that tries to prohibit such demand. I don't see how making the real estate market this way is gonna get it better. The only way to make prices drop is to increase supply. trying to tax a fringe group, or to penalize investors etc, is not going to do well at all. And doing so will also dry up investment for growing supply. > help alleviate some acute symptoms. A short term symptom abatement, if it even does abate anything, is not going to make any difference tbh. Concentrate on solving the fundamental issue - lack of supply due to various interest groups resisting supply growth.
ceeplusplus 5y ago
REITs are not buying million dollar homes in Vancouver to rent out. None of the real estate hotspots where you literally can't buy a home on a normal salary are caused by REITs, because those homes have terrible yields. Most REITs focus on either large, 10+ unit apartment buildings, or on cheaper houses in less appealing locations with good yields. The real issue is that there is not enough supply in desirable locations.

davidw 5y ago

I don't think many people are really in favor of big investors getting into housing because no, it sure does not help, but the root cause is "not enough homes", and the solution is "build more homes of all shapes and sizes". That's also the solution to keeping big investors out! Big investors aren't piling into used cars despite the recent scarcity because they know that sooner or later the car companies are going to go back to churning out a bunch of new cars. You're quite correct that more money chasing after the same limited number of homes is just going to drive up prices.

dionidium 5y ago

Yes, but one thing causes the other and it's not in the causal direction people intuitively think. Foreign speculators and investment firms like Blackrock are only entering the SFH market because supply constraints mean ever-higher prices. It's not like nobody thought to buy up houses 40 years ago. You don't have to be a genius to think of it. I can remember being a teenager and thinking, why don't big firms buy up all the housing and rent it back? The answer is that in most markets homes aren't naturally a good investment. It's a capital-intensive business and you end up with a depreciating asset, small margins, and lots of hassle. But if supply gets constrained enough that prices complete detach from those fundamentals, then, sure, why not jump in? These investors are only in this market in the first place because of supply constraints, so it's not just that low supply is a more important factor than the investors -- the investors wouldn't even exist if not for the low supply!

llbeansandrice 5y ago
I'm not contending that supply isn't the real issue, just that there's no way you're going to be able to change the culture around individual home ownership, nimbyism, and zoning laws on any reasonable time-frame. A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side. Limiting large investors does not solve the problem, but it could help alleviate some acute symptoms.
- davidw 5y ago
  I'm not so sure it's not possible. There are large numbers of people getting priced out, and YIMBY groups are springing up all over. Here in Oregon, we passed HB2001, which re-legalizes up to 4-plexes in our cities. One of the city councilors where I live is a huge YIMBY. https://www.brookings.edu/blog/the-avenue/2022/03/31/where-pro-housing-groups-are-emerging/ https://www.brookings.edu/blog/the-avenue/2022/03/31/where-p... https://noahpinion.substack.com/p/the-yimbys-are-starting-to-win-a?s=r https://noahpinion.substack.com/p/the-yimbys-are-starting-to...
  - dionidium 5y ago
    Yeah, you'd never get it done on a local level, but when people are forced to think about the issue holistically -- that is, when they can get outside of their immediate neighborhood and think about the fact that it's illegal to build enough housing on a state or even national level -- it looks like they can actually be swayed. These changes have to be made at the state/province level.
- chii 5y ago
  > A better current solution that likely has wide-spread support would be to limit the demand rather than throw more money into the demand side. black markets spring up to serve demand when there's law and regulation that tries to prohibit such demand. I don't see how making the real estate market this way is gonna get it better. The only way to make prices drop is to increase supply. trying to tax a fringe group, or to penalize investors etc, is not going to do well at all. And doing so will also dry up investment for growing supply. > help alleviate some acute symptoms. A short term symptom abatement, if it even does abate anything, is not going to make any difference tbh. Concentrate on solving the fundamental issue - lack of supply due to various interest groups resisting supply growth.

ceeplusplus 5y ago

REITs are not buying million dollar homes in Vancouver to rent out. None of the real estate hotspots where you literally can't buy a home on a normal salary are caused by REITs, because those homes have terrible yields. Most REITs focus on either large, 10+ unit apartment buildings, or on cheaper houses in less appealing locations with good yields. The real issue is that there is not enough supply in desirable locations.