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The total demand from investors is a drop in the bucket compared to aggregate demand. Additionally, investors don’t actually consume housing, so they aren’t inc
by qeternity 4y ago
The total demand from investors is a drop in the bucket compared to aggregate demand. Additionally, investors don’t actually consume housing, so they aren’t increasing demand. What you’re suggesting is that investors purchase housing and then somehow charge tenants more than they otherwise would be charged, which is of course absurd. Tenants will be charged as much as the landlord can charge.
I agree about making housing uninvestable, but the issue is supply, not demand.
- joxel 4y agoIt’s both and local factors are huge. Over 30% of the single family homes bought in the last two years where I live have been from investors that are turning them into short term rentals. It’s completely fucked the market.
- qeternity 4y agoHow has this fucked the market? Who is living in those rentals?
- sokoloff 4y agoI read short-term rentals as AirBnB and similar. That does remove supply from the year-long lease market.
- jonfw 4y agoUnless you live right on the beach or another heavy tourist destination, I don’t think 30% vacation/short term rentals is remotely realistic
- sokoloff 4y agoThe figure cited was 30% of 2 years’ worth of sales of a segment of the market (SFRs) going to investors. That might be a net total of a mid-single digit percentage of the total market.
- deleted 4y ago[deleted]
- worik 4y agoThe problem is not availability, but price. The "investors" are profit maximisers. Housing suppliers do not have to be like that.
- theknocker 4y ago
- chiefalchemist 4y agoI did res real estate about 10 yrs ago for a very brief period. Housing prices are driven by comps. That is, what did similar-ish properties in the same area sell for. In other words, one sale today can drive the price of multiple other properties tomorrow. If investors are more able and willing to bid up, those effects will be felt elsewhere in that area whether investors are involved in those other properties or not. I do agree, the solution is to address supply. But I wanted to address your point about investors not impacting all sales. The fact is, they can and I presume do.
- qeternity 4y agoNo, this is not how markets function. The increase in "comps" is merely the reflection of changing underlying supply/demand imbalance. These types of liquidity shocks are mean reverting if not fundamentally sound. Again, I didn't say investors don't impact pricing...I said they are a symptom.
- chiefalchemist 4y agoOne home is not a market. My point is, an able and willing investor(s) can be more willing to "go big". That in turn alters perception - as nudged by agents - and prices "naturally" creep up. One sale is not impacting supply/demand that significantly. Investors have different motives, and those motives are often self-fulfilling.
- qeternity 4y agoPeople say things like this without actually tying it to a conclusion or walking it to its logical endpoint. Ok, an investor can be more willing to "go big"...whatever that means, but presuming it means to bid more aggressively, so what? Self-fulfilling motives? What does this even mean? You've said a lot of hand-wavy things without actually arguing how any of this results in mispricing.
- ashwagary 4y agohttps://news.ycombinator.com/context?id=33298446 https://news.ycombinator.com/context?id=33298446
- fny 4y agoThe article mentions that investors are sitting on empty properties which directly removes supply. I'm certain these properties were refinanced when ZIRP hit. Now interest rates are so damn high, they can pay off their refinancing without doing anything. The property is now essentially free even without a tenant. Yay!
- deleted 4y ago[deleted]
- qeternity 4y ago> You didn't read the article. Investors are sitting on empty properties which directly removes supply. I did. This is a specific microcosm in one city. My comment was in reply to many other commenters here speaking more generally. But see my other comment re: govt intervention. This dynamic exists because of price controls. Price controls do not work, and will never work...they always results in supply shortages which is what you're seeing here.
- deleted 4y ago[deleted]
- erik_seaberg 4y agoThey might have a long runway now, but there's still an opportunity cost for not having a good tenant.
- worik 4y agoTrue. I used to have this analysis: It must be untrue that many rich people own unoccupied houses. They are forgoing tremendous cash flow. Why would they do that? Then I encountered a senior lawyer. They earned in a month what a person on an average wage gets in a year. They were running out of places to put money and some of it went into property, as a "stash". They had not much thought of "return". The high pressure hose pipe of cash they were receiving swamped that. Being a lawyer they would have no illusions about the morality and ethics of the "financial advisor" system, so would not use it. Hence leaving money lying around, in houses. Tenants were just another bother and the financial return of tenants when compared to the cash income.... It happens. Rich people by housing ad leave it empty. Astonishingly high land taxes on empty houses in shortage areas is the only solution I can see