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Hopefully, this will cause a lot of institutional investors to sell their homes and cause a decline in housing prices.

mywittyname 5y ago
Why would it? Especially cash buyers? I can't see institutional investors selling. If house prices fall, they are going to hold on to houses to prevent the losses from being shown on their books. If rent prices fall, they are going to focus on appreciation to cover the losses (and taking advantage of favorable tax treatment that landlords enjoy). Really, the only way it makes sense for an institutional investor to sell is if the prices reach so high, then plateau, such that even the most optimistic projections show there's not much money to be made in rents+appreciation over the next 10 years.
- chii 5y ago
  > the only way it makes sense for an institutional investor to sell ... they sell if they see another, higher return opportunity.
- harambae 5y ago
  > If house prices fall, they are going to hold on to houses to prevent the losses from being shown on their books. And yet Zillow did the exact opposite of this very recently. Also, after Zillow did so, everyone on real estate forums seemed to explain that it's so so obvious that this would happen ("of course, with carrying costs, they had to sell") It's almost like no one knows the future but backwards rationalizes whatever happens as obvious.
mirceal 5y ago
hahaha. nope. why would they do that when the inventory is so limited? the only solution that I think could work is rezoning + building more. That’s the only thing that could dampen this mad market.
cronix 5y ago
It doesn't really affect them because the tenant is defacto paying the mortgage, and there is no shortage of tenants. It will just further increase rent rates during the next rental contract renewal, but buried in with all of the other regular inflation (increase in building materials for repairs, labor rates, etc).

Why would it? Especially cash buyers? I can't see institutional investors selling. If house prices fall, they are going to hold on to houses to prevent the losses from being shown on their books. If rent prices fall, they are going to focus on appreciation to cover the losses (and taking advantage of favorable tax treatment that landlords enjoy). Really, the only way it makes sense for an institutional investor to sell is if the prices reach so high, then plateau, such that even the most optimistic projections show there's not much money to be made in rents+appreciation over the next 10 years.

chii 5y ago
> the only way it makes sense for an institutional investor to sell ... they sell if they see another, higher return opportunity.
harambae 5y ago
> If house prices fall, they are going to hold on to houses to prevent the losses from being shown on their books. And yet Zillow did the exact opposite of this very recently. Also, after Zillow did so, everyone on real estate forums seemed to explain that it's so so obvious that this would happen ("of course, with carrying costs, they had to sell") It's almost like no one knows the future but backwards rationalizes whatever happens as obvious.

mirceal 5y ago

hahaha. nope. why would they do that when the inventory is so limited? the only solution that I think could work is rezoning + building more. That’s the only thing that could dampen this mad market.

cronix 5y ago

It doesn't really affect them because the tenant is defacto paying the mortgage, and there is no shortage of tenants. It will just further increase rent rates during the next rental contract renewal, but buried in with all of the other regular inflation (increase in building materials for repairs, labor rates, etc).