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LA resident since 2015. I have a proposed solution that no one ever seems to bring up on here but I would love to know the HN response to this: If a big essent

LA resident since 2015. I have a proposed solution that no one ever seems to bring up on here but I would love to know the HN response to this: If a big essential part of the American Dream is home ownership, and we are short on homes, why do we allow corporations to own them all? How about we have a middle ground or cap on size of corporate entity and # of units or something? Some of the argument seems to be stuck on free housing for everyone, and everyone else seems fine allowing faceless corporations to own everything and turn us all into renters. I know I’m leaving out plenty of specifics of how this would work. But the basic concept is same - people (not companies) should own housing. Let me know your thoughts. My first ever HN comment so hopefully this is seen.

HDThoreaun 3y ago
Large corporations don't actually own many homes. It is true that they started buying them during covid, but that is mostly because they realized they are extremely good investments due zoning making it hard to build them. In order for housing to be affordable it can't be an investment. It needs to maintain its real value over time, meaning the wage to price ratio remains constant. If housing wasn't a good investment it wouldn't be owned by corporations. So I'd say your idea is on the right track, but just misses the last step which is just make housing affordable by allowing it to be built.
- Brainfood 3y ago
  Wow thanks everyone for the replies! I hear you on homes but housing overall - apartments included should not be owned by corporations for investment purposes imho. Rough stats I’ve seen are 25% of homes are now owned by institutional investors. And 44% of CA residents are renters. Having a quarter of the inventory taken off the market means the prices are going to go up. Land is expensive. We can build more. We can also stop allowing those who have more than enough already continue to apply downward pressure.
  - _jab 3y ago
    I'd been of the impression that corporate home ownership is mostly surging in places like the South and Sun Belt, where housing prices themselves are surging. Housing prices in California have been pretty stagnant since Covid, at least compared to much of the rest of the country. California real estate isn't actually a great investment for these companies right now.
    - rcpt 3y ago
      Right. Price to rent ratios in California means that when you buy the only thing you get is a bet on real estate. New landlords are cash flow negative by wide margins. Wild speculation with no fundamentals isn't attractive to big firms.
  - philwelch 3y ago
    > I hear you on homes but housing overall - apartments included should not be owned by corporations for investment purposes imho. A single apartment building (or complex) might have around a hundred tenants and a handful of employees. That's a large enough operation that it's straight up irresponsible not to set up an LLC or corporation for it.
ajmurmann 3y ago
Are people homeless because they could afford rent, but rather be homeless if they cannot buy? Further, if the rental market was saturated, it wouldn't pay off anymore to buy rental units. If the demand for rental is just there because there is nothing to buy, it's a clear indicator that there just isn't enough housing (in the desired places). Ultimately the answer will always remain that we need to build more housing. We haven't built enough in decades and it will take a long time to catch up, especially if we don't start on it. We need to relax zoning, remove minimum unit sizes and make it quick and predictable to get approval for new construction. Right now, many of the neighborhoods we love so much would be illegal to build today.
seizethecheese 3y ago
Corporations buy homes to rent them out. This is neutral for housing supply. The real issue is a growth in households but a lack of growth in housing stock. We need to build more housing.
- reillyse 3y ago
  Well one problem is once corporations get involved is money starts flowing to influence Politicians to do the Corps bidding. So, I wouldn't say it's neutral.
  - seizethecheese 3y ago
    the single family home market is rigged in a million ways already, without much past corporate involvement…
  - Brainfood 3y ago
    Thank you
TehShrike 3y ago
My understanding is that most houses in the US are owned by the people who live in them.
- a_wild_dandan 3y ago
  Moreover, it's irrelevant. Demand vastly overshadows supply, hence the insane prices. That's it. There isn't remotely enough of a basic human need. Everything else is window dressing until we address that fundamental, econ. 101 problem.
  - rcpt 3y ago
    Demand would go way down if the government would stop favoring real estate investment with ridiculous tax incentives. Mortgage interest deduction 30 year fixed rate mortgage Opportunity zones 1031 exchanges Deprecation deduction The list goes on forever and none of it helps
    - seanmcdirmid 3y ago
      The mortgage tax deduction is basically dead for most of us since Trump’s tax reform that raised the standard deduction way above what most people would get from tax deductible interest. At least until 2025, unless something changes.
      - rcpt 3y ago
        > basically dead. It should be properly dead.
        seanmcdirmid 3y ago
        Yes, that would be the right decision, not necessarily what middle class voters want, but what they need.
philwelch 3y ago
So a lot of corporate-owned housing is only in that state transitionally. If a corporate developer builds a condo building or a suburban subdivision, they own all those homes because they built them, but their intent is to sell those homes and divest themselves from it entirely. When a bank forecloses on a home, they’re in the same situation. What’s left when you account for all of that is apartment buildings. Individual people can own apartment buildings, but only if they’re significantly wealthy, and even then they’ll want to outsource the actual management of the building. Theoretically you can convert apartment buildings to condo buildings, but there are still a lot of people who want to rent rather than buy at any particular point in time so it might not make sense to do that. Furthermore, I don’t think theres any corporate conspiracy to turn us all into renters in the first place.
- Brainfood 3y ago
  I don’t get into a lot of conspiracy theory scenarios. I also don’t think it’s even much of a conspiracy - when the recession hits and people can’t afford housing they default on mortgages. Corporations buy them and turn back into renters. I’ve seen stats that say that happened to 5% of the population during the last 10-15 years. Also there’s stuff like this: Over Two Thirds of All Los Angeles Rentals Are Now Owned by Speculative Investment Vehicles https://knock-la.com/los-angeles-rental-speculation-4022d16a0d28/ https://knock-la.com/los-angeles-rental-speculation-4022d16a...
carom 3y ago
Large corporations do not buy much real estate. Look how many homes Black Rock owns versus the total housing stock. Many people incorporate to limit liability. It is also very cheap to spin up new corporations. So there is nothing stopping a person from being part of unlimited corporations that own your capped number of homes. The real issue is lack of supply and your enemy there are single family home owners. They do not want density near them. The people and corporations who subdivide their land up for renters are generally very happy to build more units because they like money. Your proposal, if it worked, would make the situation worse.

HDThoreaun 3y ago

Large corporations don't actually own many homes. It is true that they started buying them during covid, but that is mostly because they realized they are extremely good investments due zoning making it hard to build them. In order for housing to be affordable it can't be an investment. It needs to maintain its real value over time, meaning the wage to price ratio remains constant. If housing wasn't a good investment it wouldn't be owned by corporations. So I'd say your idea is on the right track, but just misses the last step which is just make housing affordable by allowing it to be built.

Brainfood 3y ago
Wow thanks everyone for the replies! I hear you on homes but housing overall - apartments included should not be owned by corporations for investment purposes imho. Rough stats I’ve seen are 25% of homes are now owned by institutional investors. And 44% of CA residents are renters. Having a quarter of the inventory taken off the market means the prices are going to go up. Land is expensive. We can build more. We can also stop allowing those who have more than enough already continue to apply downward pressure.
- _jab 3y ago
  I'd been of the impression that corporate home ownership is mostly surging in places like the South and Sun Belt, where housing prices themselves are surging. Housing prices in California have been pretty stagnant since Covid, at least compared to much of the rest of the country. California real estate isn't actually a great investment for these companies right now.
  - rcpt 3y ago
    Right. Price to rent ratios in California means that when you buy the only thing you get is a bet on real estate. New landlords are cash flow negative by wide margins. Wild speculation with no fundamentals isn't attractive to big firms.
- philwelch 3y ago
  > I hear you on homes but housing overall - apartments included should not be owned by corporations for investment purposes imho. A single apartment building (or complex) might have around a hundred tenants and a handful of employees. That's a large enough operation that it's straight up irresponsible not to set up an LLC or corporation for it.

ajmurmann 3y ago

Are people homeless because they could afford rent, but rather be homeless if they cannot buy? Further, if the rental market was saturated, it wouldn't pay off anymore to buy rental units. If the demand for rental is just there because there is nothing to buy, it's a clear indicator that there just isn't enough housing (in the desired places). Ultimately the answer will always remain that we need to build more housing. We haven't built enough in decades and it will take a long time to catch up, especially if we don't start on it. We need to relax zoning, remove minimum unit sizes and make it quick and predictable to get approval for new construction. Right now, many of the neighborhoods we love so much would be illegal to build today.

seizethecheese 3y ago

Corporations buy homes to rent them out. This is neutral for housing supply. The real issue is a growth in households but a lack of growth in housing stock. We need to build more housing.

reillyse 3y ago
Well one problem is once corporations get involved is money starts flowing to influence Politicians to do the Corps bidding. So, I wouldn't say it's neutral.
- seizethecheese 3y ago
  the single family home market is rigged in a million ways already, without much past corporate involvement…
- Brainfood 3y ago
  Thank you

TehShrike 3y ago

My understanding is that most houses in the US are owned by the people who live in them.

a_wild_dandan 3y ago
Moreover, it's irrelevant. Demand vastly overshadows supply, hence the insane prices. That's it. There isn't remotely enough of a basic human need. Everything else is window dressing until we address that fundamental, econ. 101 problem.
- rcpt 3y ago
  Demand would go way down if the government would stop favoring real estate investment with ridiculous tax incentives. Mortgage interest deduction 30 year fixed rate mortgage Opportunity zones 1031 exchanges Deprecation deduction The list goes on forever and none of it helps
  - seanmcdirmid 3y ago
    The mortgage tax deduction is basically dead for most of us since Trump’s tax reform that raised the standard deduction way above what most people would get from tax deductible interest. At least until 2025, unless something changes.
    - rcpt 3y ago
      > basically dead. It should be properly dead.
      - seanmcdirmid 3y ago
        Yes, that would be the right decision, not necessarily what middle class voters want, but what they need.

philwelch 3y ago

So a lot of corporate-owned housing is only in that state transitionally. If a corporate developer builds a condo building or a suburban subdivision, they own all those homes because they built them, but their intent is to sell those homes and divest themselves from it entirely. When a bank forecloses on a home, they’re in the same situation. What’s left when you account for all of that is apartment buildings. Individual people can own apartment buildings, but only if they’re significantly wealthy, and even then they’ll want to outsource the actual management of the building. Theoretically you can convert apartment buildings to condo buildings, but there are still a lot of people who want to rent rather than buy at any particular point in time so it might not make sense to do that. Furthermore, I don’t think theres any corporate conspiracy to turn us all into renters in the first place.

Brainfood 3y ago
I don’t get into a lot of conspiracy theory scenarios. I also don’t think it’s even much of a conspiracy - when the recession hits and people can’t afford housing they default on mortgages. Corporations buy them and turn back into renters. I’ve seen stats that say that happened to 5% of the population during the last 10-15 years. Also there’s stuff like this: Over Two Thirds of All Los Angeles Rentals Are Now Owned by Speculative Investment Vehicles https://knock-la.com/los-angeles-rental-speculation-4022d16a0d28/ https://knock-la.com/los-angeles-rental-speculation-4022d16a...

carom 3y ago

Large corporations do not buy much real estate. Look how many homes Black Rock owns versus the total housing stock. Many people incorporate to limit liability. It is also very cheap to spin up new corporations. So there is nothing stopping a person from being part of unlimited corporations that own your capped number of homes. The real issue is lack of supply and your enemy there are single family home owners. They do not want density near them. The people and corporations who subdivide their land up for renters are generally very happy to build more units because they like money. Your proposal, if it worked, would make the situation worse.