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Demand for homes may exceed supply but ask what that demand really is. A big chunk of that demand is for 2nd or 3rd or even 4th properties as investment rental

by mint2 4y ago

Demand for homes may exceed supply but ask what that demand really is. A big chunk of that demand is for 2nd or 3rd or even 4th properties as investment rental properties. Can’t afford a house in the sf Bay Area, no problem, go buy 4 investment properties in the Midwest! I know people who’ve done that. Also look what houses are built, they aren’t starter homes in many areas. They are “luxury” (luxury per home marketers, sq ft, and price, I won’t go down the rabbit hole of what I personally think).

FredPret 4y ago
That makes zero sense. Do you think those rental units disappear off the market? There isnone unified housing market, rent and buy. People can still rent if they can’t buy. Building more will inevitably fix the housing market, even if one investor owns every single new house.
- 411111111111111 4y ago
  > Do you think those rental units disappear off the market? There have been reports on this which observed the properties being removed from the housing market, so yes. Its supposedly not worth the risk/effort to find renters which could potentially wreak your property, never pay and need to be evicted. That makes it more cost -effective to just hold onto the property while paying someone to occasionally check up on it until it's resold for profit
  - pas 4y ago
    Vacancy rates are historically low. It's entirely possible that some units are left empty by investors, but that's not the general trend. It makes a lot of money, there are companies managing them, the owners don't have to.
- mint2 4y ago
  Question: Adding out of state investors to the demand pool ( that additionally can out bid locals) will likely A. Increase house prices B. Decrease house prices Question 2: adding rent seeking middlemen between people and housing is likely going to a. reduce costs for housing B. Increase cost for housing So there’s a finite supply of house, investors from out of state are now competing, increasing demand but also have deeper pockets. Now the locals who would hav bought are forced to rent, increasing demand for rentals. They investors aren’t going to take a loss so they’ll rent at the rate that gives them the expected return, which they get because of the high demand they helped create, with rental prices justified relative to the sales price that they themselves jacked up
  - cloverich 4y ago
    When investors build with the intention of renting, they typically build at higher density. The only real barrier producing artificially high demand are policies preventing high density building. This is also the thing which makes housing an attractive investment option in the first place. Improved policy will fix both of these problems.

by mint2 4y ago

FredPret 4y ago

That makes zero sense. Do you think those rental units disappear off the market? There isnone unified housing market, rent and buy. People can still rent if they can’t buy. Building more will inevitably fix the housing market, even if one investor owns every single new house.

411111111111111 4y ago
> Do you think those rental units disappear off the market? There have been reports on this which observed the properties being removed from the housing market, so yes. Its supposedly not worth the risk/effort to find renters which could potentially wreak your property, never pay and need to be evicted. That makes it more cost -effective to just hold onto the property while paying someone to occasionally check up on it until it's resold for profit
- pas 4y ago
  Vacancy rates are historically low. It's entirely possible that some units are left empty by investors, but that's not the general trend. It makes a lot of money, there are companies managing them, the owners don't have to.
mint2 4y ago
Question: Adding out of state investors to the demand pool ( that additionally can out bid locals) will likely A. Increase house prices B. Decrease house prices Question 2: adding rent seeking middlemen between people and housing is likely going to a. reduce costs for housing B. Increase cost for housing So there’s a finite supply of house, investors from out of state are now competing, increasing demand but also have deeper pockets. Now the locals who would hav bought are forced to rent, increasing demand for rentals. They investors aren’t going to take a loss so they’ll rent at the rate that gives them the expected return, which they get because of the high demand they helped create, with rental prices justified relative to the sales price that they themselves jacked up
- cloverich 4y ago
  When investors build with the intention of renting, they typically build at higher density. The only real barrier producing artificially high demand are policies preventing high density building. This is also the thing which makes housing an attractive investment option in the first place. Improved policy will fix both of these problems.