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Americans need to be richer than ever to buy their first home
- blue039 4y ago[flagged]
- anovikov 4y agoHow do they drive up rent or home prices if they dump houses back on the market then? If neither supply nor demand changed as a result, why would the price change? Also, why does it happen with houses (that provide crappy average returns because they don't capture the effects of productivity growth i.e. do not create real rent, they are more like crypto), not with stocks?
- hourago 4y ago> If neither supply nor demand changed as a result, why would the price change? If I buy all the lithium supply in the world and sell it back, what price do you think that I will charge? Monopolies and cartels make prices go up.
- anovikov 4y agoYou wont change price by buying and selling back. Because neither supply nor demand have changed. You can keep prices up by buying and hoarding over a long time, but it means locking up capital in something that doesn't generate return... And wait, this has been tried in 2008 :) didn't end well especially for investors because no Ponzi scheme can run indefinitely. Eventually the stream of stupid money runs out because there are no bigger fools left, and to generate returns you need to sell, and if you sell, market falls.
- loeg 4y agoBlackRock does not have a monopoly on unoccupied housing stock and acquiring such a position would be extremely expensive.
- xwdv 4y agoWhy would they willing cause a housing crisis? All that will do is flood the market with cheap inventory that will be quickly snapped up by everyone waiting on the sidelines for the next 2008 so they can get rich in the next boom cycle of real estate investing. Then prices will start rising and BlackRock will find itself trying to buy back inventory again or get left out. If houses get very cheap again I know for sure I’ll snatch up a property or two.
- SinjonSuarez 4y agoIt’s almost as if the incentive structures were meant to make the rich richer and the poor poorer. If houses get cheap I know for sure I still won’t be able to afford even 1
- xwdv 4y agoSome people are so trapped in poverty mentalities that they can’t even imagine buying a house when it’s cheap, they’ll just imagine they’ll be even poorer.
- dumpsterlid 4y ago[dead]
- yonran 4y agoBlackRock and other landlords just convert owner occupied units into rentals, making it relatively more affordable to rent. If they are the problem, then prices would be too high but rents would be too cheap. But if both prices and rents are becoming unaffordable, then lack of overall supply is the underlying problem.
- legitster 4y agoThis is such a common misconception that Blackrock has a webpage on their website dedicated to clearing it up: https://www.blackrock.com/corporate/newsroom/setting-the-record-straight/buying-houses-facts https://www.blackrock.com/corporate/newsroom/setting-the-rec...
- emptysongglass 4y agoI don't see how this helps the narrative. You'd expect they would. This is like cigarette companies putting out memos defending cigarettes as less-harmful.
- legitster 4y ago"McDonalds sells cocaine to children!" McDonalds: "No we don't." "Ha! That's just what they would say". The ridiculous thing about this set of accusations is that Blackrock is a passive investment management firm. They don't make any more intentional investment decisions than, like, a typical bank.
- deleted 4y ago[deleted]
- blue039 4y agoTheir ESG score tells me otherwise. They can single handedly destroy a company or industry with this score. They control trillions in investment capital. They have seats in the largest governments. You are either legitimately shilling for your employer or watch/read one of the several DOZEN news organizations they own. You need to wake up. The giant, along with it's daemon Aladdin, control the majority of money flow on the planet.
- Am4TIfIsER0ppos 4y agoOh wow it is another instance of "X has investigated X and found that X has done nothing wrong".
- 4y ago
- ReptileMan 4y agoIsn't the real problem that there are too few desirable places for people to be - state capitals and mega cities urban cores - everybody tries to cram there. So you actually have to fix the demand problem. The phrase "flyover states" is an early precursor of the current problem. I don't know how - all of the solutions I can think about are bad, but you actually have to convince people that there are other places worth living other than thin slivers of land along the coasts, Chicago and Houston/Austin
- lotsoweiners 4y agoOne of the problems is that people from Cali, New York, etc have left those states and started competing and jacking up prices in the “flyover states”. I live in Phoenix which was reasonably affordable before Covid but has now gotten ridiculous. Similar things have happened in Utah, Idaho, Montana, the cheaper parts of Texas etc. At some point this may continue and change pricing in the other still cheap states.
- loeg 4y agoWe could also just add a lot more supply in these desirable places. There's no reason we can't.
- ReptileMan 4y agoAnd yet you couldn't cram 300000000 people in manhattan. You can't solve infinite demand with supply.
- loeg 4y agoDemand, like supply, is not infinite. While demand is not (and likely can not be) constrained by local law, supply often is. This imbalance results in high prices.
- BenFranklin100 4y agoThe reason institutional investors are buying old homes is because supply restrictions on new homes has made old homes an increasingly good investment. Build lots of new homes, and the old homes will cease to be such attractive investments.
- pram 4y agoIt's completely insane. I bought my house in Austin in 2013 for $245k (I thought it was already hilariously overpriced) and last year during Peak Hype a house sold on my street for almost a million. Like I guess I'm staying here until I die?
- hotpotamus 4y agoSpeaking as a fellow Texan (though I don't know about Austin specifics), I'd say you're there until you can no longer afford the wealth/property taxes.
- tayo42 4y agoThis is something I hope the government can step in and help with. Maybe really low/no interest loans for first time home buyers so they can at least get into the market. Maybe that exists? Income limits need to account for up to date salaries. I'm not rich or wealthy just because I had a couple years of making 250k. I still have loans and im still burning up cash on renting. Taxes take away a ton of that income. Some guy making 70k making these rules probably thinks im rubbing shoulders with Leonardo Deicaprio at parties because making more then 200k is so unfathomable to the average person, it seems like wealth. Rent situation needs help to. Were just throwing away cash on low quality rentals. A 2br in my complex over the last year is now listed at 1.5k more then a year and half ago. 3k to 4.5k. "Thats what the market wants" or something stupid is the reason, but these are not 1.5k better then it was before. How is this not price gouging? If i want to move I have to burn even more cash? Rent control keeps give me a rate under market now so there is no reason to move. Even that was some how allowed to be nearly a 10% increase. The only option is to buy to get away from this crazyness. Falling behind no matter what. I don't get how these insane markets are allowed to exist with no regulation on necessary needs for people. IDK what else to do besides take my american cash somewhere where I am extremely ahead settle down there and chill.
- howlin 4y ago> Maybe really low/no interest loans for first time home buyers so they can at least get into the market. One big reason homes are priced so high in places like the USA is because home loans are already government subsidized. When people think of what they can afford, they look at their net monthly mortgage payment less the income tax break. And prices seem to rise to meet whatever monthly payment buyers can afford.
- tayo42 4y ago> because home loans are already government subsidized. Are they? Maybe Im more ignorant then I thought? Im still stuck looking at high intrest loans as a first time buyer who works in tech though?
- 4y ago
- legitster 4y agoI think this is only half of the story. There are still lots of affordable houses - in parts of the country that no one wants to live anymore. The value of my sibling's property in Illinois has barely kept up with inflation. So I think some of the national statistics about house prices vs number of units are a bit misleading. We're increasingly paying a premium because we are increasingly concentrating where we want to/need to live.
- BenFranklin100 4y agoPeople go where the jobs are. That’s increasingly in urban areas. It’s also where amenities like good hospitals and schools are located.
- legitster 4y agoOne of the most eye opening books on this topic was "Order without Design" by Alain Bertaud. Essentially, cities exist entirely as job markets - where individuals make tradeoffs to handle geographic constraints. It will be interesting to see if the WFH shift changes this dynamic.
- BenFranklin100 4y ago‘Order without Design’ is one of my favorite books on the topic.
- linguae 4y agoEven with working from home, some people have certain needs that are easier to fulfill in/near cities. For example, people with chronic medical conditions may have an easier time finding quality health care resources if they are closer to a metro area. Another consideration in America is being a member of an ethnic, religious, or sexual minority and how accepting each community is. It's sad that I have to bring this up in 2023, but it's reality.
- Spartan-S63 4y agoAnecdotally, as a remote worker, I have little interest in leaving the urban core I live in. I rarely drive and walk most places I need to go. That quality of life makes a huge difference. I grew up in a suburban bedroom community where everything involved driving in a car and there were few places you could reasonably walk to. Regardless of my freedom to live where I want, I have little interest to move to low density suburbs or rural areas because the convenience of urban areas is just too nice for me.
- BenFranklin100 4y agoOr they just need to have parents who will help with down payment. Estimates are that over half of first time buyers get family assistance. It’s the new feudalism.
- lotsoweiners 4y agoYeah that’s what I’ve started doing for my kids in addition to college savings. I just haven’t figured out what the best type of account is if I want the money available in 15 years if I’m not 59 1/2 yet.
- Overtonwindow 4y agoYou don't need a down payment anymore to buy a house… If you have decent credit, and can pay the closing costs, you can get a loan back by the federal housing administration. This whole "downpayment" nonsense is a myth to scare people away.
- Overtonwindow 4y agoIt seems the true, deciding factor is good credit and able to pay your bills. You still only need to put down closing cost, and the federal government will cosign your loan. I don't understand this idea that only the wealthy can have homes. Perhaps it is that some people want certain homes, in certain locations, and can't afford them. That's not a problem, indicative of the market, they just can't afford it.