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Investors bought a quarter of US homes sold last year

503 points by ParksNet 4y ago

sebhook 4y ago
It would be interesting to see the "investors" segmented by assets under management (AUM). I'm sure some "investors" are mom and pop rental situations while other institutions, such as BlackRock, are purchasing single-family homes at scale. I'll also be curious to see what happens when remodels need to happen. Many trade labor markets are hyper localized and difficult to scale across a property portfolio, this is where RedFin and Zillow struggled to "flip" effectively.
- acchow 4y ago
  Aren't most mom-and-pop investors getting real estate exposure via their Blackrock holdings?
  - BeetleB 4y ago
    I believe GP is referring to "regular folks with jobs" who buy houses on the side to supplement their income (as opposed to investing in funds).
    - acchow 4y ago
      I understood this. But there's been a general backlash on the internet the past few years about giant pools of money like Blackrock buying up housing supply. I don't think it's that different from your typical "mom and pop" real estate investor buying up homes to rent out. Ultimately, much of Blackrock's funds are held by regular mom-and-pop investors.
- __derek__ 4y ago
  > The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups. Re: Zillow, it actually did well in the flipping business when relying on its models to make the buy decision. It got into trouble after tweaking the model to say "buy" on more (and more expensive) homes.
  - duxup 4y ago
    IIRC Zillow did "too well" to the point that they felt their model wasn't gauging the market correctly and was going to inevitably fail them spectacularly. The fact that it did well, better than it should have was just good luck... but also a bad sign because the model predicted a different outcome.
- anon291 4y ago
  BlackRock, for all the flack it gets, ultimately is purchasing these homes on behalf of large institutional investors, like retirement plans, pensions, social security programs etc.
cammikebrown 4y ago
Pretty hilarious to see “Why is Rent Skyrocketing?” as the article directly under this one on the front page.
- staindk 4y ago
  Hilarious sure, but also sad and concerning. I'm tentatively alright with the idea of renting forever and never owning property... but with rent increasing and investors buying up more and more property, it looks like things will get uglier and uglier. I am not alright with paying absurdly high rent.
  - onlyrealcuzzo 4y ago
    > I am not alright with paying absurd rent. Then you should either: 1) Buy a house to live in 2) Buy a house to hedge against rents going bananas The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
    - idiotsecant 4y ago
      the insane mortgage rates we saw in the last few years really are going to be a generational redistribution of wealth that we'll talk about for the next century, I think. That might have been the last train out of town for the middle class to widely own housing in a lot of cases.
      - onlyrealcuzzo 4y ago
        People have been making this argument since 1990. The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be there - waiting - to pump them up. Prices will rarely ever go down substantially for a long period of time unless the Fed completely changes (I doubt it). You can either: 1) try to time the market (difficult in housing, I'd argue not as impossible as equitities) 2) buy into the bubble 3) hope that the US basically turns into a different country 4) be ruined financially by missing out on the biggest handout in the history of the world (the 30-year fixed negative real interest rate mortgage) Pick your poison.
didgetmaster 4y ago
What constitutes an 'Investor' in this article? If I see a distressed home for sale in my neighborhood and decide to buy it, fix it up, and rent it out; this article seems to put me in the same category as institutional investors who come in and buy or build entire communities of homes.
- thatguy0900 4y ago
  Are you not an investor in that situation? The person who wants to own a house to actually live in is the only one not being an investor.
  - itake 4y ago
    I think the concern is local investors keep the money in the local economy, whereas 'foreign' investors are extracting value from the local community.
    - forthiscommen 4y ago
      And the small investor can’t usually impact the housing or rental market on their own
    - nickff 4y ago
      How are foreigners giving money to local construction companies and others in the community "extracting value"? Those foreign investors are capitalizing the community.
      - metamet 4y ago
        And they're taking out much more via rent. If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely. Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.
rngname22 4y ago
I really hope that battery technology, EV technology, and self-driving technology lead to a tremendous boom in full-time RV / vanlife popularity and make it a better quality of life than traditional fixed housing and all the people who bought up housing as an investment vehicle see their money go poof. It's like using potable water or the air we breathe as an investment vehicle.
- jollyllama 4y ago
  You'd be surprised at how powerful squatters' rights are in most states.
- idiotsecant 4y ago
  Living in a van is only possible if a small percentage of people do it. The infrastructure for sewage, parking, trash disposal, utilities, etc are all designed to handle a bunch of houses that stay in one place.
  - rngname22 4y ago
    These are all solvable problems.
- dogman144 4y ago
  I think it’s a legitimate counterpoint that could force some changes, but other aspects would have to go into it like intentional communities around this technology such that kids can go to schools, taxes are tenable, etc. interesting to consider. I think tax status assumptions and making van life work for a 2-child family are the main blockers. Starts sounding a lot like a high-end trailer park idea too.
  - rngname22 4y ago
    The self-driving bit is what makes it tenable. All it takes is some people to offer parking a couple hours outside the city and for your home to drive itself out there when you go to sleep and drive you back to the city as you are getting close to waking up. Government prevents parking like that? Then just have the vehicle drive around aimlessly while you sleep or hang out, like a limousine. If energy were cheap enough, there'd be almost nothin you could to do stop it.
sillystuff 4y ago
In 2012 I was looking at investing in REITs. One REIT's pitch was that they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa. Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it. We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.
- JamesBarney 4y ago
  We just need to remember that banning housing investment means banning rentals which is problematic for people who don't have good credit and a down payment.
  - yardstick 4y ago
    Imagine if housing was cheap enough that paying the mortgage was around the same as what it now costs to rent. There definitely needs to be some rentals, but I believe that there needs to be controls over how many and the rental price.
    - brianwawok 4y ago
      In much of the US (read, in the Midwest where I am right now).. mortage monthly payment is indeed cheaper, sometimes a lot. And this is after taxes / repair issues. Renting is very much a poverty trap where the poor with bad credit get poorer and worse credit.
      - boringg 4y ago
        Depends on where you live - this "renting is a poverty trap" only applies to certain places and depends on home values constantly increasing. If home values crash where you live then you spent years putting money towards a worthless asset.
gbasin 4y ago
The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
- BeetleB 4y ago
  1000 is too high a threshold. I wonder what it would look like if you dropped to 50 or 100. I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough. But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
  - aprdm 4y ago
    IMO extra properties should be heavily taxed. Say you have more than 3, it should basically not be profitable anymore. No one wins if people are hoarding houses
    - logisticseh 4y ago
      Totally agreed. Petite landlordism is causing is a LOT of economic damage to Gen Z and even younger millenials. It's a much larger problem than REITs, IMO.
    - BeetleB 4y ago
      Would a duplex count as one property or two? How about a 4-plex? Would this apply to apartment complexes as well? As in, it won't be profitable to own more than 3 complexes? Would that result in most capital going into megacomplexes and fewer people wanting to buy small apartment complexes with only, say, 10 units? Not disagreeing with you, but there are nuances involved.
      - 4y ago
tpmx 4y ago
Is this really a change for the worse compared to the status quo? Compare this with the home-ownership rate graph here: https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... Remarkably steady at around two thirds over the past ~50 years which of course is less than three quarters. (Not an american, so I may be confused by some terminology.)
freitasm 4y ago
See https://news.ycombinator.com/item?id=32568638 https://news.ycombinator.com/item?id=32568638
epistasis 4y ago
I'm sure the percentage is much much higher in supply constrained cities, because those cities are where there's much more opportunity for speculative real estate growth, and the local political structures are dedicated to keeping the supply constrained, and the speculative real estate asset price growth unchecked. At the core of a lot of this is the NIMBY behavior and downzoning that started in the 1970s. It's hyper-commodified housing, while decommoditizing out places to live. (Please note that the difference between commodify and commoditize, here.)
- DoneWithAllThat 4y ago
  And it’s just as much the fault of people who demand we don’t build for SFHs, only high density housing that’s highly undesirable to a large fraction of the home buying population. You don’t get to just blame NIMBYism for constraining the supply of the most desirable homes.
  - epistasis 4y ago
    In supply constrained areas, more SFHs are physically impossible. And the more people who are allowed to live in their preferred multi family units, the more SFHs available to those who prefer them. We don't block SFHs anywhere, there's no minimum density. However we block higher densities nearly everywhere. So blaming the people wanting higher density makes zero sense.
jimbob45 4y ago
This is why I can't take the "we just need more supply!" crowd seriously. Building more supply is just sacrificing more stock to the investor class.
- pwinnski 4y ago
  Is anybody saying "just" in that sentence? We do need more supply. We also need changes to existing policy to prevent what this article describes. Both and, not either or.
  - carom 4y ago
    I'll take the supply position. So much of LA is zoned for SFHs. Now they can have an ADU but that doesn't do much. We need density. We need to make it easier to build. That slows down climbing rents. LA housing is at a massive deficit.
- haroldl 4y ago
  A large enough increase in supply could cause property values to level off while also increasing the vacancy rate for rental properties. I think the idea is that those circumstances would make real estate no longer attractive as an investment.
causi 4y ago
Owning homes you can't live in is as perverse as claiming domain over a patch of the ocean or a chunk of the sky. The very concept ought to be attacked with every legal method.
- welder 4y ago
  Do you own the home you live in or are you renting? Renting is enabled by doing just that, someone owning a home they don't live in. So you want to outlaw renting?
  - pwinnski 4y ago
    There is a large and growing number of people who support the idea of outlawing renting from anyone other than the government (public housing). I don't think I agree, at least under current conditions, but then, I own my house.
    - buscoquadnary 4y ago
      > There is a large and growing number of people who support the idea of outlawing renting from anyone other than the government (public housing). Yes I love the idea, the only thing that will be more efficient and effective than the mega corp, property management companies that cause most of the problems, due to size and bureaucracy will be the federal government. I love this idea, they are always a paragon of efficiency of virtue, they never succumb to politicians and bureaucrats selling out those they serve for political reasons, and of course who could object to the government having ownership of every non-occupied home in America, I see no problem with that. Especially giving the government the implicit right to then dictate all future housing that will be built. I can see it now optimized for efficiency, compactness, and equality everyone lives in "the pod". Of course since you may move pods and it would be difficult to move your stuff you can't really have anything, but the American Housing Bureau would love to lease you everything you need for a much better price because they don't have to worry about "profit". It will be great we'll own nothing, we'll live in a pod, and of course at that point meat is going to be untenable so we can get protein from alternative sources like insects. I can't wait for it, I'll live in a wonderful pod, I'll own absolutely nothing, I'll eat bugs and I am going to be so HAPPY!
aprdm 4y ago
This has to stop yesterday... worldwide.
honkycat 4y ago
So glad I bought a house when I did. I was unsure b/c the value seemed inflated, but rent has gone up, up, UP! A lot of my friends are now paying rent that is $100-$200 within my mortgage payment. And that is for an apartment without AC or a yard.
- sevenf0ur 4y ago
  Same, I thought that 2019 prices were insane. Since then it's appreciated an additional $150k. My house made more money than I did one year. I'm expecting things to level out for awhile.
book_mike 4y ago
I fully support developing newer cheaper alternatives to housing and cut open the jugular vein of this rotten market. Let the investors and creditors burn.
- mildweed 4y ago
  What are these alternatives you speak of? Genuinely curious.
cardosof 4y ago
There and back again, a Georgism tale.
mercy_dude 4y ago
Don’t forget also the anticipation of inflation - many use housing as a hedge of high inflationary environment. If there is more damage the Fed could have done to GenZ since the bailout, that was reckless Covid spending. I sincerely wish these agencies are shut down someday. But alas we are going the other way.
thepasswordis 4y ago
I'm so frustrated by some of the conversations people get in around housing. They want to live in the most desirable places on planet earth, and seem to think that we should just abolish the concept of property ownership to accomplish this. What do you guys think happens when you get what you want, and nobody can "own" property anymore? Do you think there is an unlimited amount of single family 3000 square foot homes in San Francisco and that you will all be able to live in them? Go on zillow and look at cities you've never heard of in that awful "flyover" part of the country. There are scores of homes for less than $200k, and plenty of homes around $100k. Go look at Parkersberg, ~~OH~~ WV. Here's a house in Indiana for $125k. The payment on that is going to be like $450/mo. https://www.zillow.com/homedetails/51-S-Main-St-Laketon-IN-46943/94618467_zpid/ https://www.zillow.com/homedetails/51-S-Main-St-Laketon-IN-4... It's just absolutely insane to me the places that peoples minds go when this topic comes up.
- nikanj 4y ago
  Abolish propery ownership? I’d settle for ”let the newcomers also build homes, the same way the previous generations did”.
  - notch656a 4y ago
    Every single time I've posted allowing newcomers to build houses the same way their great-great-grandaddy built a shack I've gotten an army of people up in arms complaining they're afraid the lack of safety regulations will result in their town burning down. Where I live zoning laws are decent and land cost next to nothing. But you still have to contend with the universal housing codes, which means you're absolutely fucked because grand-daddy built a house that is basically irreplaceable (you can't permit that anymore) that grandson can live in, but fuck you if you want a house like that for yourself because that's all you can afford to build.
- anoonmoose 4y ago
  > Here's a house in Indiana for $125K Laketon, IN, population 606, had its post office closed in 2010 and, from a quick perusal of Google Maps, probably doesn't have a single traffic light. Doubt there's much public transit out that way. Only 30 miles to a town I might be able to get a job in, though...
infogulch 4y ago
Housing is at the root of many of the rich world’s problems (2020) | 379 points | 6 days ago | 794 comments | https://news.ycombinator.com/item?id=32493549 https://news.ycombinator.com/item?id=32493549 On this post I wrote: > A couple ideas for how to fix some real estate problems: > 1. A zoning rule that requires home owners to live in the owned home. ... And the general response? > The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors. > None of this would have much impact. > This would reduce the housing stock.
- crisdux 4y ago
  The high rate of rentals owned by individual investors is bad too if our goal is to maximize the number of home owners. I know a lot of people in my cohort who bought and moved into a new home, but kept their previous home as a rental. IMO this option is only accessible to large amount of people during this unique time because of government policy, ultra low interests rates, and societal trends. I think a large part of it is a government incentivized system that rewards incumbents in a disproportional manner. I think this disparity is contributing to overall feelings of resentment and will contribute to social issues and political turmoil.
  - buscoquadnary 4y ago
    It will be interesting to see how that plays out now that interest rates are rising. Honestly it feels a lot like 08 all over again. Somebody decided to go and get another home as an investment property, they leveraged themselves but took advantage of the low interest rates and a 20 year mortgage, it was a smart idea at the time, prices kept going up, they could just keep bumping rent because where would anyone else go, everywhere was getting more expensive. Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.
i1856511 4y ago
It should be illegal to own more than two homes.
- jjcm 4y ago
  Nearly impossible to regulate, and too rigid to boot. Does a duplex count as two? If so that means triplexs higher MUDs are illegal, which will harm low income housing options. Can companies own property? If so then the problem is easily escapable with a simple LLC. If not, then either existing ones have to be grandfathered, or the housing market is going to be flooded with corporate housing. The better approach is to increase taxes for non-primary residences. Address the root of the problem rather than legislating it away - if mass-investment of housing is unprofitable, the problem addresses itself.
  - NSMutableSet 4y ago
    >Nearly impossible to regulate, and too rigid to boot. No it isn't. >Does a duplex count as two? If so that means triplexs higher MUDs are illegal.. Why would it count as more than one? You can own a duplex or triplex or whatever as your primary home, and then you have the option of renting out portions to generate additional income, or fully occupying the entire thing. If you have no plans to rent out units, it would make more sense to convert it. >which will harm low income housing options. It will harm landlords who depend on the current system. Low income housing won't be necessary when homes are affordable for everyone. >Can companies own property? Not homes. >or the housing market is going to be flooded with corporate housing. Good.
datavirtue 4y ago
Houston, we have a problem.
s800 4y ago
Should be illegal.
swamp40 4y ago
There are Billions of dollars in cash just sitting around at companies like Blackstone Group waiting for the housing market to crash - which of course it will. https://twitter.com/zerohedge/status/1562080678652641280 https://twitter.com/zerohedge/status/1562080678652641280
ctoth 4y ago
One insidious bit here is that as lower-income people are priced out by increasing rents , they can't even go downmarket because of things like this: Investors Are Buying Mobile Home Parks. Residents Are Paying a Price https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner...
- bamboozled 4y ago
  This is true, similar to what's going on in Australia. It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD. So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
- vwoolf 4y ago
  The major problem is the artificial limiting of the housing supply; let people build and this problem will be ameliorated. https://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html https://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html
wiradikusuma 4y ago
"but many Republican lawmakers oppose such controls." — I'm not American and not in in the US, so I'm wondering, why in many articles I read, "Doing Good Things For People™" tend to be opposed by Republicans? 1. Are there a scheme to vilify them? Bcoz it's not even mentioned why they oppose (maybe they see Bad Things™ far ahead). 2. Are they not elected by the people?
- idontpost 4y ago
- triyambakam 4y ago
  Both sides oppose good things for people. It's a false dichotomy and meant to divide.
- robk 4y ago
  Media is mostly run by the left so easy to vilify the other side.
  - asdff 4y ago
    The media is centrist. There is no left represented in political discourse in the U.S. The democratic party is the centrist party.
- stevenwoo 4y ago
  In Capital and Ideology, Piketty does a review of modern democracies, there's a two party system of left and right in every one except Poland where there was at the time of writing a far right and right wing party competing for dominance. Conservative parties typically rely on rural voting bloc, less educated and much older people, it's almost universal somehow, that doesn't make their opinion wrong off the bat, it's just demographics of voting. There's also actually a component of "harming these people I disagree with" that drives the vote for reactionary groups and is an active part of Murdoch sponsored media, there's not really a thoughtful process about how it could harm themselves. For example, there was the irony of multiple cases of people voting for Trump because immigrants are bad, and then having their spouse deported for some visa violation. Or one can look at the people who have opposition to abortion voting for Republicans. Then someone who cannot consent is raped or someone has a non viable pregnancy and neither is eligible for an abortion, which has happened since Roe v Wade was re decided. In the USA, the Senate is decidedly unrepresentative of the people of the United States as a whole, the House less so with the limit to 435 members, but not as bad in some ways. You can also look to Brexit post vote interviews where people who voted in favor of it said they didn't care if it hurt the UK, they wanted it to happen. An older example in the USA, the Reagan administration characterized AIDs as the "gay plague" and played down the effects and had no official response to the health crisis other than to joke about it, delaying an effective national strategy. Today there is still a gay faction of the the GOP called the Log Cabin Republicans that is barred from some party events but still back the GOP, Peter Thiel has become a big GOP backer in spite of most state party platforms calling gay people abnormal and most subsequent federal GOP administrations sending and supporting people in Africa to criminalize gay sex.
anon291 4y ago
How about we just make 20% down the minimum on home loans? That'll pull the price down pretty fast. We can slowly increase the minimum until we're at a reasonable point above 50%. And also reduce the maximum allowable term to below 30 years (should be 10-15). If done over a long enough time period, we can still give some appreciation to home owners (at least to match inflation), while also making the market saner in the long term. Otherwise, we're just encouraging rampant price growth and making homeownership exceedingly difficult for normal people. Soon, banks will prefer to give a 100 year loan for $3 million for a modest home to an investor than the same loan to an individual (because who can pay a 100 year loan, or make the monthly payment on so high a principal).
jfengel 4y ago
I wonder how those investors are doing, what with the bubble appearing to be somewhat deflating.
nine_zeros 4y ago
I will be perfectly ok if the high interest rates drive these companies bankrupt. They chose to speculate. Speculation comes with risk. Let them bear the burden. For owner occupancy protections, the real answer was to never to give tax breaks to investors in the first place. Only owner occupants should have any tax breaks. But this is not going to happen. So let the speculators burn and go bankrupt.
- chrismarlow9 4y ago
  They won't. They will get a bailout because they have intentionally woven themselves into the fabric of everything so that it's mutually assured destruction if they go under. If they go bankrupt it will wipe out 401k, retirement plans, and cause massive layoffs due to businesses going under as their primary sources of funding (debt) dry up. They already did it in 2008 and called the governments bluff. Now that they know they can do it there's no way they're turning back. Edit: bringing back the glass steagall act would be a good start. But it will take decades to unwind the standoff.
jmyeet 4y ago
Let me summarize all the problems here: 1. In most of the US it is quite literally illegal to build anything other than single-family homes ("SFHs"). This is a form of NIMBYism and reduces housing supply; 2. Part of (1) is that absolute necessity of car ownership in the US. This is by design to keep the riffraff (ie poor people) out; 3. We need robust public transit infrastructure to give people the option of living somewhere where they don't need a car to survive; 4. Pretty much anywhere you can build SFHs, you should be able to build multi-family dwellings ("MFDs"). Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals; 5. More states need to follow California's model of blocking a lot of NIMBYism at the state level. This requires towns to have an housing plan for affordable housing; 6. Ultra-luxury housing needs to be taxed punitively; 7. Cities and states need to be in the business in providing social housing as a significant supplier of housing. Americans in particularly have a kneejerk reaction against this as "socialism" or it'll be propagandized as slum housing. Vienna is about 60% social housing. Use that as a model; 8. Certain classes of housing should be illegal for corporations to buy. I'm fine with a corporation owning and running an apartment building with 200+ units with a management office onsite where they handle all the maintenance. I'm not OK with corporations constricting supply by buying up all the SFHs in a state. 9. We need to remove a lot of the tax benefits for investment property ownership (eg 1031 exchanges); 10. We need to remove a lot of beneficial tax treatment for home ownership period (eg Prop 13 in California caps property tax increases, inheriting property on a stepped up basis for CGT purposes); 11. AirBnB for anything other than a room in your house or a unit on your property (so you too have to live with the consequences) should be illegal. This isn't a demand side problem. It's a supply side problem but we also need to restrict certain types of demand (eg REITs buying residential housing en masse).
- nineplay 4y ago
  > Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals I'd never build or buy a MFD at least partly because I don't trust that the current vilification of landlords wouldn't eventually expand to MFD owners. MFD owners will still raise rents, they will still evict, they will still have disputes with tenants over maintenance and common-area rules. The righteous anger will still bubble up. Only an idiot would risk it.
wellthisisgreat 4y ago
We (people) must recognize that housing is a finite resource and is a variable in a major humanitarian crisis. Owning a second house for rent-seeking behavior should require a license like using any other scarce natural resource. Like occupying a river for selling bottled water or digging ground oil. It should not be a no-barrier free-for-all speculative endeavor.
jeffbee 4y ago
If this bothers you there is an extremely simple way to kick these guys in the teeth: approve new housing developments in your town! Housing investors fear nothing more greatly than they fear competition.
- bamboozled 4y ago
  Why wouldn't they just buy the new houses as investments ?
  - jeffbee 4y ago
    In an environment where they have a depreciating asset on their books and their rental incomes are falling, these REITs will fold suddenly. They aren't able to just throw money into an incinerator.
pickovven 4y ago
Individual owners are also investors. Do people think they're just reselling their houses for the price they bought them at?
VirusNewbie 4y ago
What's nuts is not just that investors get to buy homes, but that its tax advantaged to do so. Between prop 13 in California, to 1031 exchanges, there are plenty of reasons to invest in RE over even say the stock market. I don't get to do a 1031 exchange for my Meta stock into AAPL or something...
- paxys 4y ago
  You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.
  - thehappypm 4y ago
    Investors don’t get the same rates that homeowners do, but they are still quite low.
    - reverend_gonzo 4y ago
      Of the two additional properties I own, marked as investment and vacation, they are 3.5% and 3%, refinanced, and bought during the pandemic. The former, five years prior, was marked as non warrantable, as in no bank would even give a loan for it. So, while investors don’t get the same rates as homeowners, they still got very good rates. If I had had capital, I would have bought a dozen more units at that time. <5% == Free money.
      - nsv 4y ago
        Anything under the inflation rate, which was 10% annual during that period, is free money.
  - bamboozled 4y ago
    This is what I find concerning though, we're now seeing the damage of the endless money printing, through inflation. Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown. Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.
driggs 4y ago
I have considerable experience in the Real Estate backend software industry, and so am occasionally contacted by headhunters hiring for Real Estate Investment startups. Here's a typical reply that I give to them: I am philosophically opposed to "investing" in real estate, as your industry exists entirely to snatch up affordable housing from actual homeowners as a get-rich-quick scheme, benefiting those who are already rich at the expense of those who would otherwise be rising up out of their own financial situation. Nothing personal, but I wish you - and everyone in your predatory industry - swift failure in your endeavor, for the benefit of the average homeowner. Have a good day!
- fourstar 4y ago
  Where did your "considerable experience" in the RE industry come from?
  - driggs 4y ago
    I worked for several years at a small company whose primary products/services involved aggregating/normalizing/warehousing/publishing listing data, which grew to handle a large percentage of all listings in the country. I knew every quirk and metadata mis-feature of every MLS software in use, and was on the technical standards board of the National Association of Relators. Our company was bought out by one of the big user-facing Real Estate websites, and our team was responsible for the listing collection/normalization pipeline.
- ravivooda 4y ago
  I do something similar for Amazon Recruiters. Hi there!! You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again! Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
- bilsbie 4y ago
  Seems naive though. Wouldn’t that argument apply to investing in almost any product people need?
shmerl 4y ago
This should be illegal.
marsven_422 4y ago
You will own nothing and you will be happy...
game_the0ry 4y ago
Now, it's about 25%. In the future it will be 50%, the 100% - the trend is going in that direction. Millennials and the generations after will look at era of home ownership like the "good old days" while coughing up 75% of their income for rent. There is so much to be said for this problem, but...its exhausting. I give up.
- pickovven 4y ago
  If only there was a way to reduce the return to landlords...
  - game_the0ry 4y ago
    The landlords pay congress in order to not worry about that.
keewee7 4y ago
In Denmark housing built before 1992 cannot be rented out for profit. The owner can only demand enough rent to cover for upkeep and maintenance. However it's still a lucrative business to invest in old housing in the bigger towns and cities because the price is only trending upwards.
- wil421 4y ago
  What if someone or some company just bought a lot of property, kept it empty, and then waited for the price to go up? Or bought housing to rebuild it?
  - keewee7 4y ago
    Real estate investors are legally required to rent out their units.
Handmadegold 4y ago
charlescearl 4y ago
References to the racialization of property in the united states. The issue is not simply who has a right to a own home, but who has a right to housing. - The History Wars and Property Law: Conquest and Slavery as Foundational to the Field, K-Sue Park, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793972 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793972 - Racialized geographies of housing financialization, Desiree Fields, Elora Lee Raymond, https://escholarship.org/content/qt5gd214jn/qt5gd214jn.pdf https://escholarship.org/content/qt5gd214jn/qt5gd214jn.pdf - Race and uneven recovery: neighborhood home value trajectories in Atlanta before and after the housing crisis, Elora Raymond, Kyungsoon Wang & Dan Immergluck, https://www.researchgate.net/profile/Elora-Raymond/publication/282412773_Race_and_uneven_recovery_neighborhood_home_value_trajectories_in_Atlanta_before_and_after_the_housing_crisis/links/59a6bbd5a6fdcc61fcfbb3cb/Race-and-uneven-recovery-neighborhood-home-value-trajectories-in-Atlanta-before-and-after-the-housing-crisis.pdf https://www.researchgate.net/profile/Elora-Raymond/publicati... - Race for Profit: The Political Economy of Black Urban Housing in the 1970s, Keeanga-Yamahtta Taylor
twawaaay 4y ago
Except the problem isn't investors buying property. Investors are buying up property for rental because it is profitable because there is huge demand for it because a lot of people simply are unable to own their own house and that is because housing is getting expensive faster than salaries. The problem is government tied in stupid games while important problems like encouraging new, more affordable housing is set aside as some kind of communist agenda. A house does not need to cost the equivalent of your entire life's savings. Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics.
- daoist_shaman 4y ago
  > Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics. Seems intentional at this point. Keep 99% of the population as useful, financially-illiterate workers who don't realize they are being exploited by the 1% ruling class to whom laws don't apply.
Dig1t 4y ago
This should be illegal. Plain and simple. Just make it illegal for a corporation to own residential property. Or heck, even just make it illegal for one to own > 5 properties or some number of acreage. That would put a damper on this shit.
- daoist_shaman 4y ago
  Private property needs limits when you have an unbounded population.
coryfklein 4y ago
Key piece of information from the article: > The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups. So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is: * flippers * middle class individuals buying a second property as an investment * small time property management firms run by local businesses Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up. [0] https://moodys-talks-inside-economics.simplecast.com/episodes/cooling-inflation-and-confounding-housing-riddles-4YNptV9z https://moodys-talks-inside-economics.simplecast.com/episode...
- ssalka 4y ago
  Don't forget the "kilo" investors, who may only own a few dozen or hundreds of homes ;) Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states: > Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases. So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors. [1] https://www.corelogic.com/intelligence/single-family-investor-activity-bounces-back-in-the-first-quarter-of-2022/ https://www.corelogic.com/intelligence/single-family-investo...
gbronner 4y ago
We've inadvertently created substantial cost advantages for REITS: * Assuming that they never sell, they never pay capital gains taxes. Meanwhile, if I move and sell, I get hit now. * Ability to cross-collateralize a bunch of houses lets you tap into institutional capital. No pesky appraisal fees, no payoff for a mortgage broker, etc. Result is that their cost of capital is way below an individual's. * Better management -- ability to hire a bunch of actual skilled handymen to work across multiple properties means that they have specialization/ gains from scale. Typical homeowner is a jack of all trades who has to hire specialized talent which is vastly more expensive. * lots of pricing data with which to price as optimistically as possible. * ability to write off expenses So basically, tax regime changes have created the rise of the REIT.
3qz 4y ago
Isn’t this completely reasonable? I would expect that at least 1/4 homes is a rental and every rental home is owned by an investor.
BurningFrog 4y ago
Cause and effect are often hard to disentangle. In this case I'm convinced that constantly rising housing values is the reason investors buy up housing, not the other way around. Surely it makes sense that investors buy assets that continue to appreciate more than other investment types?
JoshTko 4y ago
Financial speculation in necessities need to become illegal.
CapitalistCartr 4y ago
I live in Tampa. Investment groups with bottomless pockets are buying up whole neighborhoods.
siliconc0w 4y ago
It's interesting to play armchair city planner and think what kind of tax structure to encourage more equitable housing. I imagine you'd want something like: Owner occupier < owner landlord < owner vacation home < owner investor(vacant) But I think you should also encourage density, like if you have a 5000 sqft house for two people, that should come with a sort of extra property tax than a 5000 sqft house for a large extended family or multifamily building.
leafmeal 4y ago
A great solution is a land value tax as per Henry George https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
chmorgan 4y ago
This isn't caused by investors, they simply see the value in owning and renting to those that aren't interested or capable of outright ownership. The price increases seen in the market are driven by the rising cost of energy, materials, and the lowering value of the dollar through inflation. If governments, state and local, were receptive to construction, you'd see the market compensate for higher prices with increased supply. With building heavily regulated in many areas you've got government driving prices up through their limits on supply.
deleted 4y ago
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footlose_3815 4y ago
[dead]
_HMCB_ 4y ago
These same people are the ones that will want bailed out when the economy crashes and their tenants can’t afford their ridiculously high rent. It’s greed. A buddy of mine wants to rent his home because then he can afford to buy a new home off what his renters are paying. Watch things crumble and he’s stuck with two mortgages.
stakkur 4y ago
Every conversation about “NIMBYs” and “we don’t have enough affordable housing” needs to account for this. Building doesn’t lower prices, it creates a fat investment opportunity.
cosmojg 4y ago
A land value tax would solve this: https://astralcodexten.substack.com/p/does-georgism-work-is-land-really https://astralcodexten.substack.com/p/does-georgism-work-is-...

503 points by ParksNet 4y ago

It would be interesting to see the "investors" segmented by assets under management (AUM). I'm sure some "investors" are mom and pop rental situations while other institutions, such as BlackRock, are purchasing single-family homes at scale. I'll also be curious to see what happens when remodels need to happen. Many trade labor markets are hyper localized and difficult to scale across a property portfolio, this is where RedFin and Zillow struggled to "flip" effectively.

acchow 4y ago
Aren't most mom-and-pop investors getting real estate exposure via their Blackrock holdings?
- BeetleB 4y ago
  I believe GP is referring to "regular folks with jobs" who buy houses on the side to supplement their income (as opposed to investing in funds).
  - acchow 4y ago
    I understood this. But there's been a general backlash on the internet the past few years about giant pools of money like Blackrock buying up housing supply. I don't think it's that different from your typical "mom and pop" real estate investor buying up homes to rent out. Ultimately, much of Blackrock's funds are held by regular mom-and-pop investors.
__derek__ 4y ago
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups. Re: Zillow, it actually did well in the flipping business when relying on its models to make the buy decision. It got into trouble after tweaking the model to say "buy" on more (and more expensive) homes.
- duxup 4y ago
  IIRC Zillow did "too well" to the point that they felt their model wasn't gauging the market correctly and was going to inevitably fail them spectacularly. The fact that it did well, better than it should have was just good luck... but also a bad sign because the model predicted a different outcome.
anon291 4y ago
BlackRock, for all the flack it gets, ultimately is purchasing these homes on behalf of large institutional investors, like retirement plans, pensions, social security programs etc.

cammikebrown 4y ago

Pretty hilarious to see “Why is Rent Skyrocketing?” as the article directly under this one on the front page.

staindk 4y ago
Hilarious sure, but also sad and concerning. I'm tentatively alright with the idea of renting forever and never owning property... but with rent increasing and investors buying up more and more property, it looks like things will get uglier and uglier. I am not alright with paying absurdly high rent.
- onlyrealcuzzo 4y ago
  > I am not alright with paying absurd rent. Then you should either: 1) Buy a house to live in 2) Buy a house to hedge against rents going bananas The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
  - idiotsecant 4y ago
    the insane mortgage rates we saw in the last few years really are going to be a generational redistribution of wealth that we'll talk about for the next century, I think. That might have been the last train out of town for the middle class to widely own housing in a lot of cases.
    - onlyrealcuzzo 4y ago
      People have been making this argument since 1990. The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be there - waiting - to pump them up. Prices will rarely ever go down substantially for a long period of time unless the Fed completely changes (I doubt it). You can either: 1) try to time the market (difficult in housing, I'd argue not as impossible as equitities) 2) buy into the bubble 3) hope that the US basically turns into a different country 4) be ruined financially by missing out on the biggest handout in the history of the world (the 30-year fixed negative real interest rate mortgage) Pick your poison.

didgetmaster 4y ago

What constitutes an 'Investor' in this article? If I see a distressed home for sale in my neighborhood and decide to buy it, fix it up, and rent it out; this article seems to put me in the same category as institutional investors who come in and buy or build entire communities of homes.

thatguy0900 4y ago
Are you not an investor in that situation? The person who wants to own a house to actually live in is the only one not being an investor.
- itake 4y ago
  I think the concern is local investors keep the money in the local economy, whereas 'foreign' investors are extracting value from the local community.
  - forthiscommen 4y ago
    And the small investor can’t usually impact the housing or rental market on their own
  - nickff 4y ago
    How are foreigners giving money to local construction companies and others in the community "extracting value"? Those foreign investors are capitalizing the community.
    - metamet 4y ago
      And they're taking out much more via rent. If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely. Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.

rngname22 4y ago

I really hope that battery technology, EV technology, and self-driving technology lead to a tremendous boom in full-time RV / vanlife popularity and make it a better quality of life than traditional fixed housing and all the people who bought up housing as an investment vehicle see their money go poof. It's like using potable water or the air we breathe as an investment vehicle.

jollyllama 4y ago
You'd be surprised at how powerful squatters' rights are in most states.
idiotsecant 4y ago
Living in a van is only possible if a small percentage of people do it. The infrastructure for sewage, parking, trash disposal, utilities, etc are all designed to handle a bunch of houses that stay in one place.
- rngname22 4y ago
  These are all solvable problems.
dogman144 4y ago
I think it’s a legitimate counterpoint that could force some changes, but other aspects would have to go into it like intentional communities around this technology such that kids can go to schools, taxes are tenable, etc. interesting to consider. I think tax status assumptions and making van life work for a 2-child family are the main blockers. Starts sounding a lot like a high-end trailer park idea too.
- rngname22 4y ago
  The self-driving bit is what makes it tenable. All it takes is some people to offer parking a couple hours outside the city and for your home to drive itself out there when you go to sleep and drive you back to the city as you are getting close to waking up. Government prevents parking like that? Then just have the vehicle drive around aimlessly while you sleep or hang out, like a limousine. If energy were cheap enough, there'd be almost nothin you could to do stop it.

sillystuff 4y ago

In 2012 I was looking at investing in REITs. One REIT's pitch was that they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa. Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it. We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.

JamesBarney 4y ago
We just need to remember that banning housing investment means banning rentals which is problematic for people who don't have good credit and a down payment.
- yardstick 4y ago
  Imagine if housing was cheap enough that paying the mortgage was around the same as what it now costs to rent. There definitely needs to be some rentals, but I believe that there needs to be controls over how many and the rental price.
  - brianwawok 4y ago
    In much of the US (read, in the Midwest where I am right now).. mortage monthly payment is indeed cheaper, sometimes a lot. And this is after taxes / repair issues. Renting is very much a poverty trap where the poor with bad credit get poorer and worse credit.
    - boringg 4y ago
      Depends on where you live - this "renting is a poverty trap" only applies to certain places and depends on home values constantly increasing. If home values crash where you live then you spent years putting money towards a worthless asset.

gbasin 4y ago

The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.

BeetleB 4y ago
1000 is too high a threshold. I wonder what it would look like if you dropped to 50 or 100. I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough. But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
- aprdm 4y ago
  IMO extra properties should be heavily taxed. Say you have more than 3, it should basically not be profitable anymore. No one wins if people are hoarding houses
  - logisticseh 4y ago
    Totally agreed. Petite landlordism is causing is a LOT of economic damage to Gen Z and even younger millenials. It's a much larger problem than REITs, IMO.
  - BeetleB 4y ago
    Would a duplex count as one property or two? How about a 4-plex? Would this apply to apartment complexes as well? As in, it won't be profitable to own more than 3 complexes? Would that result in most capital going into megacomplexes and fewer people wanting to buy small apartment complexes with only, say, 10 units? Not disagreeing with you, but there are nuances involved.
    - 4y ago

tpmx 4y ago

Is this really a change for the worse compared to the status quo? Compare this with the home-ownership rate graph here: https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... Remarkably steady at around two thirds over the past ~50 years which of course is less than three quarters. (Not an american, so I may be confused by some terminology.)

freitasm 4y ago

See https://news.ycombinator.com/item?id=32568638 https://news.ycombinator.com/item?id=32568638

epistasis 4y ago

I'm sure the percentage is much much higher in supply constrained cities, because those cities are where there's much more opportunity for speculative real estate growth, and the local political structures are dedicated to keeping the supply constrained, and the speculative real estate asset price growth unchecked. At the core of a lot of this is the NIMBY behavior and downzoning that started in the 1970s. It's hyper-commodified housing, while decommoditizing out places to live. (Please note that the difference between commodify and commoditize, here.)

DoneWithAllThat 4y ago
And it’s just as much the fault of people who demand we don’t build for SFHs, only high density housing that’s highly undesirable to a large fraction of the home buying population. You don’t get to just blame NIMBYism for constraining the supply of the most desirable homes.
- epistasis 4y ago
  In supply constrained areas, more SFHs are physically impossible. And the more people who are allowed to live in their preferred multi family units, the more SFHs available to those who prefer them. We don't block SFHs anywhere, there's no minimum density. However we block higher densities nearly everywhere. So blaming the people wanting higher density makes zero sense.

jimbob45 4y ago

This is why I can't take the "we just need more supply!" crowd seriously. Building more supply is just sacrificing more stock to the investor class.

pwinnski 4y ago
Is anybody saying "just" in that sentence? We do need more supply. We also need changes to existing policy to prevent what this article describes. Both and, not either or.
- carom 4y ago
  I'll take the supply position. So much of LA is zoned for SFHs. Now they can have an ADU but that doesn't do much. We need density. We need to make it easier to build. That slows down climbing rents. LA housing is at a massive deficit.
haroldl 4y ago
A large enough increase in supply could cause property values to level off while also increasing the vacancy rate for rental properties. I think the idea is that those circumstances would make real estate no longer attractive as an investment.

causi 4y ago

Owning homes you can't live in is as perverse as claiming domain over a patch of the ocean or a chunk of the sky. The very concept ought to be attacked with every legal method.

welder 4y ago
Do you own the home you live in or are you renting? Renting is enabled by doing just that, someone owning a home they don't live in. So you want to outlaw renting?
- pwinnski 4y ago
  There is a large and growing number of people who support the idea of outlawing renting from anyone other than the government (public housing). I don't think I agree, at least under current conditions, but then, I own my house.
  - buscoquadnary 4y ago
    > There is a large and growing number of people who support the idea of outlawing renting from anyone other than the government (public housing). Yes I love the idea, the only thing that will be more efficient and effective than the mega corp, property management companies that cause most of the problems, due to size and bureaucracy will be the federal government. I love this idea, they are always a paragon of efficiency of virtue, they never succumb to politicians and bureaucrats selling out those they serve for political reasons, and of course who could object to the government having ownership of every non-occupied home in America, I see no problem with that. Especially giving the government the implicit right to then dictate all future housing that will be built. I can see it now optimized for efficiency, compactness, and equality everyone lives in "the pod". Of course since you may move pods and it would be difficult to move your stuff you can't really have anything, but the American Housing Bureau would love to lease you everything you need for a much better price because they don't have to worry about "profit". It will be great we'll own nothing, we'll live in a pod, and of course at that point meat is going to be untenable so we can get protein from alternative sources like insects. I can't wait for it, I'll live in a wonderful pod, I'll own absolutely nothing, I'll eat bugs and I am going to be so HAPPY!

aprdm 4y ago

This has to stop yesterday... worldwide.

honkycat 4y ago

So glad I bought a house when I did. I was unsure b/c the value seemed inflated, but rent has gone up, up, UP! A lot of my friends are now paying rent that is $100-$200 within my mortgage payment. And that is for an apartment without AC or a yard.

sevenf0ur 4y ago
Same, I thought that 2019 prices were insane. Since then it's appreciated an additional $150k. My house made more money than I did one year. I'm expecting things to level out for awhile.

book_mike 4y ago

I fully support developing newer cheaper alternatives to housing and cut open the jugular vein of this rotten market. Let the investors and creditors burn.

mildweed 4y ago
What are these alternatives you speak of? Genuinely curious.

cardosof 4y ago

There and back again, a Georgism tale.

mercy_dude 4y ago

Don’t forget also the anticipation of inflation - many use housing as a hedge of high inflationary environment. If there is more damage the Fed could have done to GenZ since the bailout, that was reckless Covid spending. I sincerely wish these agencies are shut down someday. But alas we are going the other way.

thepasswordis 4y ago

I'm so frustrated by some of the conversations people get in around housing. They want to live in the most desirable places on planet earth, and seem to think that we should just abolish the concept of property ownership to accomplish this. What do you guys think happens when you get what you want, and nobody can "own" property anymore? Do you think there is an unlimited amount of single family 3000 square foot homes in San Francisco and that you will all be able to live in them? Go on zillow and look at cities you've never heard of in that awful "flyover" part of the country. There are scores of homes for less than $200k, and plenty of homes around $100k. Go look at Parkersberg, ~~OH~~ WV. Here's a house in Indiana for $125k. The payment on that is going to be like $450/mo. https://www.zillow.com/homedetails/51-S-Main-St-Laketon-IN-46943/94618467_zpid/ https://www.zillow.com/homedetails/51-S-Main-St-Laketon-IN-4... It's just absolutely insane to me the places that peoples minds go when this topic comes up.

nikanj 4y ago
Abolish propery ownership? I’d settle for ”let the newcomers also build homes, the same way the previous generations did”.
- notch656a 4y ago
  Every single time I've posted allowing newcomers to build houses the same way their great-great-grandaddy built a shack I've gotten an army of people up in arms complaining they're afraid the lack of safety regulations will result in their town burning down. Where I live zoning laws are decent and land cost next to nothing. But you still have to contend with the universal housing codes, which means you're absolutely fucked because grand-daddy built a house that is basically irreplaceable (you can't permit that anymore) that grandson can live in, but fuck you if you want a house like that for yourself because that's all you can afford to build.
anoonmoose 4y ago
> Here's a house in Indiana for $125K Laketon, IN, population 606, had its post office closed in 2010 and, from a quick perusal of Google Maps, probably doesn't have a single traffic light. Doubt there's much public transit out that way. Only 30 miles to a town I might be able to get a job in, though...

infogulch 4y ago

Housing is at the root of many of the rich world’s problems (2020) | 379 points | 6 days ago | 794 comments | https://news.ycombinator.com/item?id=32493549 https://news.ycombinator.com/item?id=32493549 On this post I wrote: > A couple ideas for how to fix some real estate problems: > 1. A zoning rule that requires home owners to live in the owned home. ... And the general response? > The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors. > None of this would have much impact. > This would reduce the housing stock.

crisdux 4y ago
The high rate of rentals owned by individual investors is bad too if our goal is to maximize the number of home owners. I know a lot of people in my cohort who bought and moved into a new home, but kept their previous home as a rental. IMO this option is only accessible to large amount of people during this unique time because of government policy, ultra low interests rates, and societal trends. I think a large part of it is a government incentivized system that rewards incumbents in a disproportional manner. I think this disparity is contributing to overall feelings of resentment and will contribute to social issues and political turmoil.
- buscoquadnary 4y ago
  It will be interesting to see how that plays out now that interest rates are rising. Honestly it feels a lot like 08 all over again. Somebody decided to go and get another home as an investment property, they leveraged themselves but took advantage of the low interest rates and a 20 year mortgage, it was a smart idea at the time, prices kept going up, they could just keep bumping rent because where would anyone else go, everywhere was getting more expensive. Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.

i1856511 4y ago

It should be illegal to own more than two homes.

jjcm 4y ago
Nearly impossible to regulate, and too rigid to boot. Does a duplex count as two? If so that means triplexs higher MUDs are illegal, which will harm low income housing options. Can companies own property? If so then the problem is easily escapable with a simple LLC. If not, then either existing ones have to be grandfathered, or the housing market is going to be flooded with corporate housing. The better approach is to increase taxes for non-primary residences. Address the root of the problem rather than legislating it away - if mass-investment of housing is unprofitable, the problem addresses itself.
- NSMutableSet 4y ago
  >Nearly impossible to regulate, and too rigid to boot. No it isn't. >Does a duplex count as two? If so that means triplexs higher MUDs are illegal.. Why would it count as more than one? You can own a duplex or triplex or whatever as your primary home, and then you have the option of renting out portions to generate additional income, or fully occupying the entire thing. If you have no plans to rent out units, it would make more sense to convert it. >which will harm low income housing options. It will harm landlords who depend on the current system. Low income housing won't be necessary when homes are affordable for everyone. >Can companies own property? Not homes. >or the housing market is going to be flooded with corporate housing. Good.

datavirtue 4y ago

Houston, we have a problem.

s800 4y ago

Should be illegal.

swamp40 4y ago

There are Billions of dollars in cash just sitting around at companies like Blackstone Group waiting for the housing market to crash - which of course it will. https://twitter.com/zerohedge/status/1562080678652641280 https://twitter.com/zerohedge/status/1562080678652641280

ctoth 4y ago

One insidious bit here is that as lower-income people are priced out by increasing rents , they can't even go downmarket because of things like this: Investors Are Buying Mobile Home Parks. Residents Are Paying a Price https://www.nytimes.com/2022/03/27/us/mobile-home-park-ownership-costs.html https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner...

bamboozled 4y ago
This is true, similar to what's going on in Australia. It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD. So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
vwoolf 4y ago
The major problem is the artificial limiting of the housing supply; let people build and this problem will be ameliorated. https://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html https://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html

wiradikusuma 4y ago

"but many Republican lawmakers oppose such controls." — I'm not American and not in in the US, so I'm wondering, why in many articles I read, "Doing Good Things For People™" tend to be opposed by Republicans? 1. Are there a scheme to vilify them? Bcoz it's not even mentioned why they oppose (maybe they see Bad Things™ far ahead). 2. Are they not elected by the people?

idontpost 4y ago
triyambakam 4y ago
Both sides oppose good things for people. It's a false dichotomy and meant to divide.
robk 4y ago
Media is mostly run by the left so easy to vilify the other side.
- asdff 4y ago
  The media is centrist. There is no left represented in political discourse in the U.S. The democratic party is the centrist party.
stevenwoo 4y ago
In Capital and Ideology, Piketty does a review of modern democracies, there's a two party system of left and right in every one except Poland where there was at the time of writing a far right and right wing party competing for dominance. Conservative parties typically rely on rural voting bloc, less educated and much older people, it's almost universal somehow, that doesn't make their opinion wrong off the bat, it's just demographics of voting. There's also actually a component of "harming these people I disagree with" that drives the vote for reactionary groups and is an active part of Murdoch sponsored media, there's not really a thoughtful process about how it could harm themselves. For example, there was the irony of multiple cases of people voting for Trump because immigrants are bad, and then having their spouse deported for some visa violation. Or one can look at the people who have opposition to abortion voting for Republicans. Then someone who cannot consent is raped or someone has a non viable pregnancy and neither is eligible for an abortion, which has happened since Roe v Wade was re decided. In the USA, the Senate is decidedly unrepresentative of the people of the United States as a whole, the House less so with the limit to 435 members, but not as bad in some ways. You can also look to Brexit post vote interviews where people who voted in favor of it said they didn't care if it hurt the UK, they wanted it to happen. An older example in the USA, the Reagan administration characterized AIDs as the "gay plague" and played down the effects and had no official response to the health crisis other than to joke about it, delaying an effective national strategy. Today there is still a gay faction of the the GOP called the Log Cabin Republicans that is barred from some party events but still back the GOP, Peter Thiel has become a big GOP backer in spite of most state party platforms calling gay people abnormal and most subsequent federal GOP administrations sending and supporting people in Africa to criminalize gay sex.

anon291 4y ago

How about we just make 20% down the minimum on home loans? That'll pull the price down pretty fast. We can slowly increase the minimum until we're at a reasonable point above 50%. And also reduce the maximum allowable term to below 30 years (should be 10-15). If done over a long enough time period, we can still give some appreciation to home owners (at least to match inflation), while also making the market saner in the long term. Otherwise, we're just encouraging rampant price growth and making homeownership exceedingly difficult for normal people. Soon, banks will prefer to give a 100 year loan for $3 million for a modest home to an investor than the same loan to an individual (because who can pay a 100 year loan, or make the monthly payment on so high a principal).

jfengel 4y ago

I wonder how those investors are doing, what with the bubble appearing to be somewhat deflating.

nine_zeros 4y ago

I will be perfectly ok if the high interest rates drive these companies bankrupt. They chose to speculate. Speculation comes with risk. Let them bear the burden. For owner occupancy protections, the real answer was to never to give tax breaks to investors in the first place. Only owner occupants should have any tax breaks. But this is not going to happen. So let the speculators burn and go bankrupt.

chrismarlow9 4y ago
They won't. They will get a bailout because they have intentionally woven themselves into the fabric of everything so that it's mutually assured destruction if they go under. If they go bankrupt it will wipe out 401k, retirement plans, and cause massive layoffs due to businesses going under as their primary sources of funding (debt) dry up. They already did it in 2008 and called the governments bluff. Now that they know they can do it there's no way they're turning back. Edit: bringing back the glass steagall act would be a good start. But it will take decades to unwind the standoff.

jmyeet 4y ago

Let me summarize all the problems here: 1. In most of the US it is quite literally illegal to build anything other than single-family homes ("SFHs"). This is a form of NIMBYism and reduces housing supply; 2. Part of (1) is that absolute necessity of car ownership in the US. This is by design to keep the riffraff (ie poor people) out; 3. We need robust public transit infrastructure to give people the option of living somewhere where they don't need a car to survive; 4. Pretty much anywhere you can build SFHs, you should be able to build multi-family dwellings ("MFDs"). Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals; 5. More states need to follow California's model of blocking a lot of NIMBYism at the state level. This requires towns to have an housing plan for affordable housing; 6. Ultra-luxury housing needs to be taxed punitively; 7. Cities and states need to be in the business in providing social housing as a significant supplier of housing. Americans in particularly have a kneejerk reaction against this as "socialism" or it'll be propagandized as slum housing. Vienna is about 60% social housing. Use that as a model; 8. Certain classes of housing should be illegal for corporations to buy. I'm fine with a corporation owning and running an apartment building with 200+ units with a management office onsite where they handle all the maintenance. I'm not OK with corporations constricting supply by buying up all the SFHs in a state. 9. We need to remove a lot of the tax benefits for investment property ownership (eg 1031 exchanges); 10. We need to remove a lot of beneficial tax treatment for home ownership period (eg Prop 13 in California caps property tax increases, inheriting property on a stepped up basis for CGT purposes); 11. AirBnB for anything other than a room in your house or a unit on your property (so you too have to live with the consequences) should be illegal. This isn't a demand side problem. It's a supply side problem but we also need to restrict certain types of demand (eg REITs buying residential housing en masse).

nineplay 4y ago
> Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals I'd never build or buy a MFD at least partly because I don't trust that the current vilification of landlords wouldn't eventually expand to MFD owners. MFD owners will still raise rents, they will still evict, they will still have disputes with tenants over maintenance and common-area rules. The righteous anger will still bubble up. Only an idiot would risk it.

wellthisisgreat 4y ago

We (people) must recognize that housing is a finite resource and is a variable in a major humanitarian crisis. Owning a second house for rent-seeking behavior should require a license like using any other scarce natural resource. Like occupying a river for selling bottled water or digging ground oil. It should not be a no-barrier free-for-all speculative endeavor.

jeffbee 4y ago

If this bothers you there is an extremely simple way to kick these guys in the teeth: approve new housing developments in your town! Housing investors fear nothing more greatly than they fear competition.

bamboozled 4y ago
Why wouldn't they just buy the new houses as investments ?
- jeffbee 4y ago
  In an environment where they have a depreciating asset on their books and their rental incomes are falling, these REITs will fold suddenly. They aren't able to just throw money into an incinerator.

pickovven 4y ago

Individual owners are also investors. Do people think they're just reselling their houses for the price they bought them at?

VirusNewbie 4y ago

What's nuts is not just that investors get to buy homes, but that its tax advantaged to do so. Between prop 13 in California, to 1031 exchanges, there are plenty of reasons to invest in RE over even say the stock market. I don't get to do a 1031 exchange for my Meta stock into AAPL or something...

paxys 4y ago
You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.
- thehappypm 4y ago
  Investors don’t get the same rates that homeowners do, but they are still quite low.
  - reverend_gonzo 4y ago
    Of the two additional properties I own, marked as investment and vacation, they are 3.5% and 3%, refinanced, and bought during the pandemic. The former, five years prior, was marked as non warrantable, as in no bank would even give a loan for it. So, while investors don’t get the same rates as homeowners, they still got very good rates. If I had had capital, I would have bought a dozen more units at that time. <5% == Free money.
    - nsv 4y ago
      Anything under the inflation rate, which was 10% annual during that period, is free money.
- bamboozled 4y ago
  This is what I find concerning though, we're now seeing the damage of the endless money printing, through inflation. Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown. Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.

driggs 4y ago

I have considerable experience in the Real Estate backend software industry, and so am occasionally contacted by headhunters hiring for Real Estate Investment startups. Here's a typical reply that I give to them: I am philosophically opposed to "investing" in real estate, as your industry exists entirely to snatch up affordable housing from actual homeowners as a get-rich-quick scheme, benefiting those who are already rich at the expense of those who would otherwise be rising up out of their own financial situation. Nothing personal, but I wish you - and everyone in your predatory industry - swift failure in your endeavor, for the benefit of the average homeowner. Have a good day!

fourstar 4y ago
Where did your "considerable experience" in the RE industry come from?
- driggs 4y ago
  I worked for several years at a small company whose primary products/services involved aggregating/normalizing/warehousing/publishing listing data, which grew to handle a large percentage of all listings in the country. I knew every quirk and metadata mis-feature of every MLS software in use, and was on the technical standards board of the National Association of Relators. Our company was bought out by one of the big user-facing Real Estate websites, and our team was responsible for the listing collection/normalization pipeline.
ravivooda 4y ago
I do something similar for Amazon Recruiters. Hi there!! You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again! Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
bilsbie 4y ago
Seems naive though. Wouldn’t that argument apply to investing in almost any product people need?

shmerl 4y ago

This should be illegal.

marsven_422 4y ago

You will own nothing and you will be happy...

game_the0ry 4y ago

Now, it's about 25%. In the future it will be 50%, the 100% - the trend is going in that direction. Millennials and the generations after will look at era of home ownership like the "good old days" while coughing up 75% of their income for rent. There is so much to be said for this problem, but...its exhausting. I give up.

pickovven 4y ago
If only there was a way to reduce the return to landlords...
- game_the0ry 4y ago
  The landlords pay congress in order to not worry about that.

keewee7 4y ago

In Denmark housing built before 1992 cannot be rented out for profit. The owner can only demand enough rent to cover for upkeep and maintenance. However it's still a lucrative business to invest in old housing in the bigger towns and cities because the price is only trending upwards.

wil421 4y ago
What if someone or some company just bought a lot of property, kept it empty, and then waited for the price to go up? Or bought housing to rebuild it?
- keewee7 4y ago
  Real estate investors are legally required to rent out their units.

Handmadegold 4y ago

charlescearl 4y ago

References to the racialization of property in the united states. The issue is not simply who has a right to a own home, but who has a right to housing. - The History Wars and Property Law: Conquest and Slavery as Foundational to the Field, K-Sue Park, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793972 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793972 - Racialized geographies of housing financialization, Desiree Fields, Elora Lee Raymond, https://escholarship.org/content/qt5gd214jn/qt5gd214jn.pdf https://escholarship.org/content/qt5gd214jn/qt5gd214jn.pdf - Race and uneven recovery: neighborhood home value trajectories in Atlanta before and after the housing crisis, Elora Raymond, Kyungsoon Wang & Dan Immergluck, https://www.researchgate.net/profile/Elora-Raymond/publication/282412773_Race_and_uneven_recovery_neighborhood_home_value_trajectories_in_Atlanta_before_and_after_the_housing_crisis/links/59a6bbd5a6fdcc61fcfbb3cb/Race-and-uneven-recovery-neighborhood-home-value-trajectories-in-Atlanta-before-and-after-the-housing-crisis.pdf https://www.researchgate.net/profile/Elora-Raymond/publicati... - Race for Profit: The Political Economy of Black Urban Housing in the 1970s, Keeanga-Yamahtta Taylor

twawaaay 4y ago

Except the problem isn't investors buying property. Investors are buying up property for rental because it is profitable because there is huge demand for it because a lot of people simply are unable to own their own house and that is because housing is getting expensive faster than salaries. The problem is government tied in stupid games while important problems like encouraging new, more affordable housing is set aside as some kind of communist agenda. A house does not need to cost the equivalent of your entire life's savings. Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics.

daoist_shaman 4y ago
> Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics. Seems intentional at this point. Keep 99% of the population as useful, financially-illiterate workers who don't realize they are being exploited by the 1% ruling class to whom laws don't apply.

Dig1t 4y ago

This should be illegal. Plain and simple. Just make it illegal for a corporation to own residential property. Or heck, even just make it illegal for one to own > 5 properties or some number of acreage. That would put a damper on this shit.

daoist_shaman 4y ago
Private property needs limits when you have an unbounded population.

coryfklein 4y ago

Key piece of information from the article: > The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups. So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is: * flippers * middle class individuals buying a second property as an investment * small time property management firms run by local businesses Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up. [0] https://moodys-talks-inside-economics.simplecast.com/episodes/cooling-inflation-and-confounding-housing-riddles-4YNptV9z https://moodys-talks-inside-economics.simplecast.com/episode...

ssalka 4y ago
Don't forget the "kilo" investors, who may only own a few dozen or hundreds of homes ;) Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states: > Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases. So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors. [1] https://www.corelogic.com/intelligence/single-family-investor-activity-bounces-back-in-the-first-quarter-of-2022/ https://www.corelogic.com/intelligence/single-family-investo...

gbronner 4y ago

We've inadvertently created substantial cost advantages for REITS: * Assuming that they never sell, they never pay capital gains taxes. Meanwhile, if I move and sell, I get hit now. * Ability to cross-collateralize a bunch of houses lets you tap into institutional capital. No pesky appraisal fees, no payoff for a mortgage broker, etc. Result is that their cost of capital is way below an individual's. * Better management -- ability to hire a bunch of actual skilled handymen to work across multiple properties means that they have specialization/ gains from scale. Typical homeowner is a jack of all trades who has to hire specialized talent which is vastly more expensive. * lots of pricing data with which to price as optimistically as possible. * ability to write off expenses So basically, tax regime changes have created the rise of the REIT.

3qz 4y ago

Isn’t this completely reasonable? I would expect that at least 1/4 homes is a rental and every rental home is owned by an investor.

BurningFrog 4y ago

Cause and effect are often hard to disentangle. In this case I'm convinced that constantly rising housing values is the reason investors buy up housing, not the other way around. Surely it makes sense that investors buy assets that continue to appreciate more than other investment types?

JoshTko 4y ago

Financial speculation in necessities need to become illegal.

CapitalistCartr 4y ago

I live in Tampa. Investment groups with bottomless pockets are buying up whole neighborhoods.

siliconc0w 4y ago

It's interesting to play armchair city planner and think what kind of tax structure to encourage more equitable housing. I imagine you'd want something like: Owner occupier < owner landlord < owner vacation home < owner investor(vacant) But I think you should also encourage density, like if you have a 5000 sqft house for two people, that should come with a sort of extra property tax than a 5000 sqft house for a large extended family or multifamily building.

leafmeal 4y ago

A great solution is a land value tax as per Henry George https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

chmorgan 4y ago

This isn't caused by investors, they simply see the value in owning and renting to those that aren't interested or capable of outright ownership. The price increases seen in the market are driven by the rising cost of energy, materials, and the lowering value of the dollar through inflation. If governments, state and local, were receptive to construction, you'd see the market compensate for higher prices with increased supply. With building heavily regulated in many areas you've got government driving prices up through their limits on supply.

deleted 4y ago

[deleted]

footlose_3815 4y ago

[dead]

_HMCB_ 4y ago

These same people are the ones that will want bailed out when the economy crashes and their tenants can’t afford their ridiculously high rent. It’s greed. A buddy of mine wants to rent his home because then he can afford to buy a new home off what his renters are paying. Watch things crumble and he’s stuck with two mortgages.

stakkur 4y ago

Every conversation about “NIMBYs” and “we don’t have enough affordable housing” needs to account for this. Building doesn’t lower prices, it creates a fat investment opportunity.

cosmojg 4y ago

A land value tax would solve this: https://astralcodexten.substack.com/p/does-georgism-work-is-land-really https://astralcodexten.substack.com/p/does-georgism-work-is-...