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maybe one more interesting detail worth noting: c) private equity firms are buying up insane amounts of real estate, being able to outbid regular home buyers a

by alimov 4y ago

maybe one more interesting detail worth noting: c) private equity firms are buying up insane amounts of real estate, being able to outbid regular home buyers and (don’t quote me on this b/c I’m not 100% sure) pay cash for the properties they buy.

vmception 4y ago
Which they only did because they ran out of stuff to invest in (while still attracting so much other capital to invest at all), and the valuations of everything else was already stretched. not suggesting these firms were trying to do anyone favors by allowing people to afford homes the rest of the time, its more so that the math temporarily made sense with that much liquidity in the market so they jumped into real estate (And yeah people would rather pay the government than invest in your startup so lets not pretend investing in main street was a real option)
- IMSAI8080 4y ago
  Too much cash chasing too few decent investment opportunities is exactly the problem. The more cautious end of institutional investors have nowhere to go. Blue chip shares are at incredibly high valuations and bonds are returning next to nothing. Interest rates needs to be at about 3 - 4% to make government bonds broadly attractive, which will then make residential property uninteresting to this kind of investor without putting too much strain on the regular home buyer.
cascom 4y ago
There have been a lot of headlines about this, and in the handful of markets I’m sure this has a price effect, but in the us market as a whole, they are $10b-$100b? of a ~25T market, it just doesn’t move the needle
- yurishimo 4y ago
  It doesn’t need to be spread out to have an effect. If the investments are concentrated in cities, that raises the price of housing in the surrounding areas as there is more demand for rural properties from city residents trying to escape the higher prices. Anecdotally, I’m seeing crazy numbers for “average” houses in the small towns surrounding the DFW metroplex. Hell, the house my parents built in 2006 for $140k is now selling for $350k. 1200 sqft mass produced trac home. But it’s an hour drive to downtown Dallas (less if no traffic) so plenty of people are commuting but making city salaries. It’s the same in every city across America.
  - cascom 4y ago
    There are 950k homes for sale in the us today (down from 1.05m a year ago)…if I sold $50b of homes tomorrow @ $430k median price = 120k that would bring inventory levels back to where they were a year ago and represent 2% increase in annual home sales (on ~5.8m), by your logic national home prices would drop…I don’t think that’s a large enough number for that to happen… maybe if I sold $0.5T?

by alimov 4y ago

vmception 4y ago

Which they only did because they ran out of stuff to invest in (while still attracting so much other capital to invest at all), and the valuations of everything else was already stretched. not suggesting these firms were trying to do anyone favors by allowing people to afford homes the rest of the time, its more so that the math temporarily made sense with that much liquidity in the market so they jumped into real estate (And yeah people would rather pay the government than invest in your startup so lets not pretend investing in main street was a real option)

IMSAI8080 4y ago
Too much cash chasing too few decent investment opportunities is exactly the problem. The more cautious end of institutional investors have nowhere to go. Blue chip shares are at incredibly high valuations and bonds are returning next to nothing. Interest rates needs to be at about 3 - 4% to make government bonds broadly attractive, which will then make residential property uninteresting to this kind of investor without putting too much strain on the regular home buyer.

cascom 4y ago

There have been a lot of headlines about this, and in the handful of markets I’m sure this has a price effect, but in the us market as a whole, they are $10b-$100b? of a ~25T market, it just doesn’t move the needle

yurishimo 4y ago
It doesn’t need to be spread out to have an effect. If the investments are concentrated in cities, that raises the price of housing in the surrounding areas as there is more demand for rural properties from city residents trying to escape the higher prices. Anecdotally, I’m seeing crazy numbers for “average” houses in the small towns surrounding the DFW metroplex. Hell, the house my parents built in 2006 for $140k is now selling for $350k. 1200 sqft mass produced trac home. But it’s an hour drive to downtown Dallas (less if no traffic) so plenty of people are commuting but making city salaries. It’s the same in every city across America.
- cascom 4y ago
  There are 950k homes for sale in the us today (down from 1.05m a year ago)…if I sold $50b of homes tomorrow @ $430k median price = 120k that would bring inventory levels back to where they were a year ago and represent 2% increase in annual home sales (on ~5.8m), by your logic national home prices would drop…I don’t think that’s a large enough number for that to happen… maybe if I sold $0.5T?