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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 tho

• 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.
        • quantified 4y ago
          Renting is always worth 0 as equity, so it's a total loss regardless.
          • notch656a 4y ago
            But renting also guarantees you will never have negative equity.
            • quantified 4y ago
              Negative equity with a roof over your head is better than on the street. Your equity going to zero is still cheaper than raising a family to adulthood in a rented place.
              • notch656a 4y ago
                I agree there are lots of upsides to having a house. I definitely get some used car salesman vibes whenever someone tries to sell up the upsides of negative equity, though. Having no chance to have negative equity is pretty much unequivocally one of the few absolute advantages of renting. The other being (typically) lower transactional costs for short term occupancy.
                • quantified 4y ago
                  Negative equity means little. So what if it's worth less when you sell than when you buy? Compare the net on that with the loss you take from renting. Only a fool treats their dwelling as an appreciating asset anyway. It's subject to market forces.
          • brianwawok 4y ago
            * It guarantees you do not lose money if the home values around you drop * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you. * If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying. Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".
    • xur17 4y ago
      As someone that happily rents (I enjoy the increased optionality that comes with this option), the constant push to get everyone to own a house seems weird to me. Yes, we should make it possible to own a home, but it doesn't need to be the only option. Also, rentals tend to be higher density than houses that are owned. If there is a housing crisis, this seems like a desirable thing. Ex: roommates (yes, possible with a house, but less likely), etc.
      • nunez 4y ago
        same. i rent largely because i haven't prioritized buying. (i.e. the money i could have saved for the down payment went to accelerated student loan payoff, cars and fun stuff) aside from the federal tax breaks and very high amount of leverage ($40k to get a loan on a $200k unit that you _might_ be able to resell at $300k to get into a larger $400k unit that you _might_ be able to resell at $500k to get into a larger $600k unit...), I never saw, and still don't see, the benefit of home ownership. actually, that's not true. for people with families who need (or "need") stability, home ownership makes a lot of sense. you're going to be in the same town until the children reach maturity...might as well get a loan on a house since you're going to stay put for a while. cheaper than hoping that your landlord doesn't bump the rent up. however, we are not having children, have moved three times in the last six years, and spend a lot of time traveling. i very much like emailing my landlord "hey, weird noise" and they bring in their contractor friends to look into it on their dime i do hate how there is this sense that you should feel "bad" for not owning, i.e. renters are always pictured as troubled people in financial distress who don't have a choice but to rent.
    • HideousKojima 4y ago
      When I bought my home 4 years ago my mortgage was ~10% more per month than the apartment I was renting. Looking at the apartment complex's website, it looks like the same apartment is now about 60% more per month than my mortgage.
    • Kalium 4y ago
      I have good news for you! How many rentals are available is closely controlled in most parts of the US. This is one of the things zoning accomplishes. It's possible that the outcome may differ slightly from what you want, however. Rent controls are unfortunately very similar in key ways. They've been tried, and the results may not quite line up with what you might be hoping for.
      • BeetleB 4y ago
        > How many rentals are available is closely controlled in most parts of the US. Technically true, but practically false. Yes, zoning exists in most of the US. And yes, most people have no trouble converting a region to residential zoning. I've known people on both sides, and most of the problems are the opposite - people who want to run businesses in a residential zone. I've yet to meet a single person who couldn't go the other direction. There's a process to getting approval to build a house/apartment complex. You simply follow the process and get approval. Most of the US is not the Bay Area, Seattle or NYC.
        • Kalium 4y ago
          The point I was attempting to make is that we have and use the tools to control the quantity of rental housing available. Using those tools has not made renting as cheap as owning. Those tools generally help accomplish the opposite. With that in mind, there's perhaps cause to question if "controls over how many" that yardstick suggested will accomplish their aim. So yes, you're absolutely right, technically true. In practice, they fundamentally don't do what the user wants them to do because that's not what caps are capable of doing. The tools don't work that way.
    • pishpash 4y ago
      That's never going to be the case because of equity. Of course government-owned housing can be sold for use rights only with no equity, but that's 'socialism' which Americans have been viscerally conditioned against.
    • vel0city 4y ago
      My mortgage + insurance + taxes is a lower monthly payment than what my rent was at the time I bought my house. Compared to that same unit renting today, its several hundred dollars a month cheaper. It has over twice the square footage and a private garage. This is in a pretty big metro area, not the middle of nowhere. One of the biggest benefit of owning is a hedge against housing inflation. Its not a perfect hedge, I do acknowledge. As property values increase my taxes go up, as housing materials increase in cost the cost to repair it goes up. But the amount my taxes will go up in a year is far less than how much I've been seeing rents shoot up.
      • bombcar 4y ago
        You're also shouldering maintenance which is often not calculated well; the depreciation allowance the IRS allows for rental properties is a rough estimate but it's not perfect - it estimates that the property (house, not land) will be worthless in 27.5/30/40 years, depending on if you take GDS, ADS, or it was placed in service before 2018 - you usually want the fastest depreciation possible but there are reasons not to choose such, involving capital gains on sale, etc. They're "small" expenses but if you track out the various things and divide them over the ownership period, they do add up. E.g. - current house, here 5 years, so far: furnace and A/C, $9k, fence, $14k, landscaping and misc, $2k, tools and supplies, $3k, plumber and window repairs, $2k. So about $6k a year, double my taxes and half my mortgage again. And I haven't even hit the big ones (and didn't count appliances as those were "optional" purchases). Owning is still a good idea for many, and has benefits, and renting will almost by definition be more overall, but it's not a given. You note the main advantage - stability. If you're on a fixed loan (whether it be 5, 10, 20 or 30 years) your payments are calculable years in advance and you get to pay much with tomorrow dollars, which are almost always worth less than today dollars. But you do have to want to stay in the area for years.
      • yardstick 4y ago
        How much equity do you have in the house? 5%? More?
        • vel0city 4y ago
    • thatfrenchguy 4y ago
      I mean, in San Francisco or the Bay Area in general, renting is a ton cheaper than owning at current prices. People still buy, because it’s nice knowing your landlord won’t get the cheapest contractor that’ll drill into asbestos in your kid’s room when something happens.
  • ethanbond 4y ago
    There are ways to disincentivize toxic forms of investment (especially speculation) without banning it. A high land value tax, for example, would simultaneously increase investment and decrease speculation.
    • boringg 4y ago
      I don't see how a high land value tax increase investment & decrease speculation? If your talking about flipping homes that's one thing but REIT ownership isn't home flipping for the most part...
      • pwinnski 4y ago
        A very high real estate tax with huge discounts for a single primary homestead makes investment less profitable.
        • idontpost 4y ago
          That's just a less efficient, and less accurate land tax.
        • giantg2 4y ago
          That won't fix the current problem. That would only potentially prevent it from reoccurring to the current levels. Landlords pass tax onto renters. Renters may seek to buy a home, but if supply is locked up by landlords, they may just be stuck.
      • ethanbond 4y ago
        High LVT means you pay a high tax on the land itself and little or no tax on what you do on top of that land. It encourages highly efficient land development which means increased supply of commercial and residential units (thus reducing rents), and it makes lots of speculation prohibitively expensive. Since holding undeveloped land is just as expensive as holding developed land, you’re going to want to put it to productive use sooner rather than later.
  • toomuchtodo 4y ago
    You can crowd out usury private investment (which this specifically is an example of) with government investment. Have the Fed buy treasuries, use federal funds to build and manage affordable housing. Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will. Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.
    • sudden_dystopia 4y ago
      You realize that we are already running trillions of dollars in deficit for the programs we already have in place? The first step, should be to lower the deficit and actually fund the programs we have in place. We cannot just keep printing money without worsening the deficit and worsening the inflation. Yes, consumer sentiment is all hopes and dreams, but monetary policy is not. There are real world implications.
      • toomuchtodo 4y ago
        We’re going to inflate that debt away, like all developed nations with a declining fertility rate will do (Japan leads the way for us). Extend and pretend. Again, it’s not real! It’s just numbers in a database. For those concerned about sovereign debt, that should’ve been thought about before running it up on unnecessary conflicts (which there have been many!) and other unproductive efforts (tax cuts for the wealthy). Real needs coming up, and no excuses because of previously suboptimal governance. Lots of assets and wealth in the US to tax for those who really want the debt line go down, but if debt line doesn’t go down, nbd.
        • ThunderSizzle 4y ago
          If debt doesn't matter, then why do any of us pay any tax? We can just replace all taxes with more debt.
          • 4y ago
  • aprdm 4y ago
    The concept of credit score isn't something that has always existed in humanity. It's something that we can go on without, even more so given the ridiculous profitability of banks
    • JamesBarney 4y ago
      If banks stopped lending based on creditworthiness they'd be doing a lot less lending causing far more people to not be able to afford a house.
      • aprdm 4y ago
        IMO they need to change their model. If someone has been affording rent at 2k for many years, then they can afford a mortgage at 1.5k, that's not the case nowadays.
        • icelancer 4y ago
          Renting on a yearly basis at $24k/year is very different than committing to the deed transfer on land + house at $18k/year on a 30 year term.
          • alexb_ 4y ago
            For one, rent can get more expensive, vs a fixed rate mortgage which doesn't.
    • Test0129 4y ago
      Credit scores are probably the most useful metric for a person in general. The reason isn't because it's an assessment of creditworthiness, but it saves the time interviewing each person for each loan, asking for quite literally thousands of pages of documentation proving they are creditworthy, etc. If you recall how these things were done before credit scores it was not pretty. Without them lending would virtually cease to all but the most obviously creditworthy people. I generally agree the system for credit scores needs to change. In particular it should not be controlled by a veritable monopoly. But this does not discount the utility of it in general.
  • com2kid 4y ago
    IMHO cities need to limit how many large multi-national conglomerates are allowed to build huge rental complexes. A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years. Also large rental complexes don't build communities. Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.
    • JamesBarney 4y ago
      When they don't come in and build out those large rental complexes those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out.
      • deleted 4y ago
        [deleted]
      • com2kid 4y ago
        > those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out. I used to live in a large, over 100 unit, town home complex. Central to the complex was a very large open green space, larger than most suburban yards. Over the years, about 50% of the units are now rented out, typically at a price lower than in the nearby built for rental apartment complexes. Individual landlords prize stability in tenants more than maximizing short term value, also if a person is only renting out 1 unit, that unit being vacant for a month or two is a lot of lost income, raising rent by $200 and then losing out on 4k of rental income due to having to lose then find a new tenant is not something a smart landlord does on a yearly basis. Prior to that I lived in a luxury condo complex in a very nice area that was again, lots of rental units. From what I gather, soon to be retirees had bought in and were renting the units out until they they needed to move into them. They also prized stability and boring tenants over maximizing monthly income. The point here is, within reason, today's fancy high end condos are tomorrows reasonably prized housing. Will the 50 story skyscraper condos ever be reasonably prized? No, of course not, but if someone dropped 150,000 units of medium density housing into Seattle, I bet that in about 5-10 years housing prices would start to come down. The other issue I have is the absurd number of 4 story town homes being built, which should instead be 4 story condo complexes. Insane square footage is wasted on stairs, and no one over 35 can live in those places, and raising a family in them is either impractical or horribly annoying. (Good for baby gate sales though...) If it were up to me I'd remove elevator requirements for 4 and 5 story condo complexes in return for having the bottom floors requiring ADA units.
  • Salgat 4y ago
    Apartment complexes are for more economically efficient compared to single family homes. We need to incentivize these instead of letting them buy up homes meant for a single family.
• nathanyz 4y ago
  They just bought an entire new homes community on the east coast of Florida. Crazy but seems like they are creating locale specific monopolies.
• aeternum 4y ago
  There are so many housing incentives (tax-breaks, etc.) designed to encourage home ownership a very simple solve would be to ensure those only apply to owner-occupied housing and limited to a single home per household.
  • themitigating 4y ago
    Then people would decry socialism, big government, or excessive regulation.
    • safety1st 4y ago
      Who are "people?" Is this where we hate for a few minutes on libertarians? Republicans? The unwashed American majority? Emmanuel Goldstein?
  • deleted 4y ago
    [deleted]
  • sokoloff 4y ago
    Companies are charged taxes on their profits. The interest on money borrowed in furtherance of a business is just like any other business expense: deductible. The owner-occupied mortgage interest deduction serves to put owner-occupants onto the same footing as businesses; it’s not an incentive that gives them preference, but rather (closer to) equal footing.
  • BeetleB 4y ago
    As another commenter pointed out - most tax incentives for living in a home you own do not apply to investors. Investors get those benefits "for free" because they are a business and all the costs of running a business are deductible. The incentives you speak of actually puts regular folks on a more even footing as corporate folks. Stuff like bonus depreciation - yeah, let's get rid of that. Or 1031 exchanges. Regular folks cannot benefit from it.
• ISL 4y ago
  One REIT's margin is another REIT's opportunity.
  • xxpor 4y ago
    This is less true in a world where zoning and other process roadblocks prevent you from building new housing, i.e. competing.
    • djbebs 4y ago
      Sounds like the problem is the roadblocks...
• slg 4y ago
  We have spent decades telling American families that homeownership is the safest investment. We then spent decades enacting policies to ensure this is true. Do we think investors were going to just sit that out and ignore a safe and government protected investment? Of course the more attractive we make home ownership as an investment, the more investors will flock to the market. We need policies specifically benefiting owner occupied homes or we need to stop treating the basic human need for shelter as an avenue for investment. Neither seems likely to happen because we have already waited so long that the moneyed interests now have too much to lose and won't allow what needs to be done to happen.
  • davidw 4y ago
    This article, speaking to your point, is pretty convincing in terms of the data: https://www.vox.com/platform/amp/22524829/wall-street-housing-market-blackrock-bubble https://www.vox.com/platform/amp/22524829/wall-street-housin... > The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach. I'm involved with a local YIMBY group, and what I see over and over again is my neighbors stopping homes from being built. No wonder investors think it's a great place to put some money - other people do the dirty work for them!
    • jaywalk 4y ago
      • davidw 4y ago
        There are reasons for that, but they are generally bad ones involving people not wanting to live near other people who look like the author of the article, even if they won't say that part out loud. Higher density housing is a massive component of building lower carbon footprint cities, as well as making our cities more financially resilient. It's also something that can increase equity a lot by giving people with lower incomes access to nicer areas and schools. https://www.brookings.edu/research/we-cant-beat-the-climate-crisis-without-rethinking-land-use/ https://www.brookings.edu/research/we-cant-beat-the-climate-...
• Finnucane 4y ago
  Apparently some of these operations have become pretty sophisticated in being able to quickly sort and evaluate listings. Individual buyers don't stand much of a chance against buyers who can write a check as soon as a property hits the market.
  • pishpash 4y ago
    You mean Zillow's $880M house-flipping fail? AI isn't smart enough yet.
    • standardUser 4y ago
      They mean skilled professionals who make boatloads of money spotting and leaping on every decent property that hits the market, or is about to, while the rest of us - those seeking a home to actually live in - get to fight over the remains.
    • Finnucane 4y ago
      Zillow wasn't investing for the rental market. It was trying to automate house flipping, a much riskier proposition.
• criddell 4y ago
  > We need legislation that discourages housing as investment if we are to maintain housing as shelter. I'm looking forward to hearing how Vancouver's vacant house tax affects their market the next few years. It sounds like a good idea and I'm glad they're running that experiment. It's hard to predict how these things go over time.
  • nikanj 4y ago
    They’ve had it for a few years. It hasn’t done squat. Turns out having 10 people and 9 homes remains a problem, even if you enact more policies. They’ve tried everything, except build enough homes. I’m under the impression this is the popular modern across North America
    • criddell 4y ago
      > It hasn't done squat. You made me go look and I think you're wrong. It wasn't a silver bullet (shocker!) but it did add 18,000 units to the rental market in 2019 and 2020 and raised $231 million in tax revenue that was used to support affordable housing developments. https://news.gov.bc.ca/files/SVT_Annual_Mayors_Consultation_Technical_Briefing_2020.pdf https://news.gov.bc.ca/files/SVT_Annual_Mayors_Consultation_...
    • barbazoo 4y ago
      > It hasn’t done squat. By what metric? I'm not sure that's accurate [0]. It looks like the vacancy rate has seen a steady decline and the money raised ($86.6m) helped Community Housing Incentive Program (CHIP) and Land Acquisition/Development opportunities. [0] https://vancouver.ca/files/cov/vancouver-2021-empty-homes-tax-annual-report.pdf https://vancouver.ca/files/cov/vancouver-2021-empty-homes-ta...
      • hahaxdxd123 4y ago
        If I am reading the chart correctly, it says a total of (13 + 130 - 7) homes are no longer vacant? That's not a lot
• JumpCrisscross 4y ago
  > 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 Is there antitrust statute for housing stock?
• RappingBoomer 4y ago
  the worst aspect of this is that these landlord corporations are of course going to be paying off politicians to create laws, regs etc that will further restrict and make more costly the building of new housing... it's a vicious circle
• kasey_junk 4y ago
  How did they back up that assertion? If I ran an onion fund I’d put a slide deck in my pitch that suggested I controlled the onion prices too.
• jwarden 4y ago
  But housing is an investment, and a shelter. Discouraging housing as an investment discourages investment in housing. What I think you are trying to say is that it is preferable that the investment in housing be made by the people who are going to live in the house (or by the government) and not by entrepreneurs.
  • alexb_ 4y ago
    The conventional way to get a ROI is to actually improve what you invested in. Forcing a low supply is not improvement.
• bennysomething 4y ago
  So should we do the same with food too?
• ineptech 4y ago
  I agree, and I feel like limiting the mortgage interest deduction to owner-occupied homes would get us most of the way there at the stroke of a pen. It's a huge subsidy and I can't think of any good reason to extend it to rentals and investment properties. In fact, we should probably repeal it altogether - in theory it subsidizes home ownership for the poor and middle class, but in practice the only people who take it are those who itemize deductions, which the poor generally don't.
  • iav 4y ago
    Not sure if you are aware, but all forms of interest expense is tax deductible for corporate income tax purposes in the United States, not just mortgage interest. This conforms to codes in other countries. There is no subsidy that is specific enough to rentals or investment properties. And since most of corporate bank lending is secured by all assets (including real estate), mortgage debt is somewhat fungible with other secured corporate debt, so it would be pointless to try to tax one but not the other.
    • ineptech 4y ago
      I believe there is a specific subsidy, but in the "other direction" - that's why you can deduct the mortgage interest on your vacation home despite not being a human and not a business. I'm aware that interest is generally deductible for businesses, and I'm suggesting that houses should be an exception to that. We subsidize most business borrowing because we want businesses to borrow and invest in stuff, and we should have exceptions for things we want to discourage investment in. Sure, it's difficult to imagine how to keep a giant corporation from finding a way around this, but we have difficulty getting giant corporations to pay taxes generally. It would still make sense to narrow or end the subsidy to discourage individuals and small businesses from investing in RE so heavily, and consider other approaches to discouraging larger corps.
      • ineptech 4y ago
        Fake edit to add: my only source is other comments in this thread, but I believe it's true that the vast majority of rental properties are owned by individuals or relatively small businesses (LLCs and such) via regular old mortgages, where the bank knows what property is being mortgaged and the debt isn't realistically fungible with other debt.
• bostonsre 4y ago
  Anyone know the ownership percentage for the bay area?
• Ferrotin 4y ago
  What discourages owning housing as an investment is repealing legislation that inhibits construction. Nothing else (besides laws affecting population growth) changes the fundamental supply/demand meeting point, in the long run. Other laws which discourage investment will also discourage construction.
• r00fus 4y ago
  A related anecdote. 15 years ago, an investment advisor was pitching us on investing in water funds. Yes, the move to privatize water was well underway a quarter decade ago because the people with money KNEW we would have a world where rivers in multiple continents running out of water in the future. That it's come sooner than most predicted is likely making those ghouls salivate even more. Needless to say, we turned him down and just plunked our money into index and sustainable funds and chose handpicked stocks instead.
• refurb 4y ago
  I'm not sure I'd believe what a REIT says? They have every incentive to overstate their position. I mean, they're trying to sell you something.
• 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-...
• rolandog 4y ago
  Yeah, this is what has kept me from investing. People in ivory towers whipping black-box abstractions of businesses into needing to produce more profits through wage theft, cost-cutting by skirting regulations, or outsourcing to unregulated places. There's little oversight throughout the process, and filled with the kind of people that want to turn everything into a business... and that have proposed "treating but not curing cancer" [1]. [1] https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patients-a-sustainable-business-model.html https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patie...
• throwoutway 4y ago
  > that discourages housing as investment if we are to maintain housing as shelter. There’s a difference between owning two properties and owning a fund of thousands of homes (PE and REITs). The former is fine, the latter should be banished