8 ms·

Wall Street scooped up a third of Texas single family homes sold last year (2022)

138 points by andrewstuart 3y ago

rektide 3y ago
This is just so fucked a world. This is pillaging America, ruining Americanism. And we can scarcely blame these foes of society for their petty villiany.
- cced 3y ago
  Mind explaining what “Americanism” is? Banks running rampant purchasing assets from distressed sellers seems as American to me as apple pie.
  - pictureofabear 3y ago
    America of the latter 20th century was seen as a place where you can go from rags-to-riches in a generation. It's still like that, but social mobility is falling quickly. Wallstreet buying houses is a continuation of the on-going wealth entrenchment that betrays the ideal of fluid social mobility.
    - mistrial9 3y ago
      you are right and, recent tax analysis on adults in the USA showed more than a million filing adults with financial resources to purchase a house and are not doing so.. complicated dynamics are playing out in real time.
      - JKCalhoun 3y ago
        I'd be curious about that data. Their age, what percentage of their income would be required to purchase a home, what quality of home they could afford, if they have kids, etc.
        SketchySeaBeast 3y ago
        And is it money to afford a home somewhere or where they currently reside? Is this trying to say "New Yorker millenials are too stuck up to buy a home in Nebraska"?
        cloverich 3y ago
        Just anecdotal, but we're perfectly capable of owning in the place we recently moved (Portland), but are renting because of market uncertainty. I'd rather miss out and have homes go 100 up than miss out and have them go 300 down right after purchasing. We're happy to rent for a bit and wait it out. I'd guess more generally people are playing that game purely based on borrowing rates -- if they think they'll be even a bit lower in 12 months, it might make financial sense to wait.
        JKCalhoun 3y ago
        I don’t see home prices coming down - ever, but that’s me. Interest rates? Good point. But I’d jump now, refinance later. I’ve been burned more often waiting than getting in too soon.
    - deleted 3y ago
      [deleted]
  - JKCalhoun 3y ago
    The issues is with Mr. Potter's America vs. George Bailey's America.
- zip1234 3y ago
  People want their home to be an 'investment' and rules get created to protect the investment and keep home prices going up. This is the natural result of those policies. In a world where supply can keep up, home prices are stagnant and extracting rents from land is not as great of a deal.
  - rektide 3y ago
    I am not sure but my gut tells me this is far far too convenient a narrative. I don't think this is such an explicit choice. The free hand steals from us. Without such consent. Easily & readily.
AndrewKemendo 3y ago
I'd love someone in one of the "strategy" arms in one of these funds to explain what they think the end result of this is at it's extent? Do they believe that eventually these will be sold back to single families to build equity? Do they think that, the primary asset which has driven middle class wealth growth for ~100 years is now perfect for liquidating into - what? Is the goal to make everyone a renter forever?
- USB5 3y ago
  Karl Marx answered all of these questions back in the 20th century.
  - pram 3y ago
    19th century my guy
  - AndrewKemendo 3y ago
    I'm more of a Proudhon guy myself
  - option 3y ago
    worked fabulously for those who took his answers to heart!
    - readthenotes1 3y ago
      Like Pol Pot who only seemed to have read the manifesto?
      - option 3y ago
        many others who had read more than that but with similar results
- iscrewyou 3y ago
  I think it's the last one. It's the ultimate subscription.
raincom 3y ago
Just increase interest rates and keep them around 6 percent forever. I'd bet many of these Wall Street funds stop buying SFHs. Federal reserve wants to keep the interest rates around 2 percent, because anything higher than that means that the inflation in the states is rising. Keeping the interest rates low (hence, the appearance of low inflation) is a facade to keep the USD as the reserve currency.
- mindslight 3y ago
  Agreed. As long as we are to have a continually inflating currency, the primary responsibility/expectation for monetary creation needs to be moved to the legislative/executive branches of the government - so the new money can at least be directed to purposeful endeavors. As opposed to the system of the past several decades whereby the Federal Reserve continually decreases interest rates, making most new money flow to the banks who then just use it to continue bidding up the leveraged asset bubble.
- pmulard 3y ago
  Just curious, but what exactly do you mean by the appearance of low inflation?
  - raincom 3y ago
    federal funds rate should be more than the calculated inflation rate. So, both interest rates and the calculated inflation should be 'manipulated' at the same time. So far, we know the federal reserve sets/manipulates the interest rate, but there is a hidden incentive to set/manipulate the inflation rate, as both of them needs to be in sync. Since the USD is the world reserve currency, interest rates in every other countries are based on the federal reserve interest rate. So, there is an incentive to keep the interest rates low in the states, hence the appearance of, or the desire to set, low inflation. Just sanctions regime, military power, NATO are not enough to keep the USD as the reserve currency; low interest rate (low inflation in the states) is also necessary besides sanctions, army, NATO, etc.
- walls 3y ago
  Why would interest rates affect companies that are buying houses with cash?
breckenedge 3y ago
(2022)
krupan 3y ago
Well, the fed ruined stock and bond prices with raising interest rates. You can’t just sit on a pile of dollars because rampant inflation will ruin its value. Real estate is probably all that’s left to invest in?
- dpc050505 3y ago
  There are actually productive sectors of the economy that can and need to be invested in. We have a lot of work to do still with logistics, raw materials and energy. It's problematic when so-called ''safe'' bets like real estate end up eating the vast majority of capital rather than it being invested on things that will actually change our quality of life.
  - theironhammer 3y ago
    Completely agree. The politicians should be tweeking the laws so these sectors become more attractive for investment but alas all they care about is the next election and aggravating homeowners /voters.
coffeebeqn 3y ago
Ah I just figured why rents are rising in every single city in the world. Wall Street is building another real estate bet
deleted 3y ago
[deleted]
deleted 3y ago
[deleted]
paulgb 3y ago
I get that people like blaming Wall St. for prices going up, but isn’t it just as much the other way around? Wall St. invests in homes for the same reason they invest in anything: because they think the price will go up. Housing policy in the US seems designed around the idea that housing prices should only go up, since it’s the largest asset of the majority of voters. If we want to fix the housing crisis, housing will have to become a bad investment, and that will fix the Wall St. problem too.
- aceazzameen 3y ago
  Or it could be regulated too.
  - paulgb 3y ago
    Regulations can only do so much here. By definition, you can either make housing affordable to young people entering the market, or make housing a path to wealth appreciation for homeowners. They are diametrically opposed goals, despite that most politicians will be happy to tell you we can have both.
    - clipsy 3y ago
      > By definition, you can either make housing affordable to young people entering the market, or make housing a path to wealth appreciation for homeowners By whose definition? Certainly the massive suburban expansion in the 60's and 70's resulted in affordable homes to young Baby Boomers entering the market and also to wealth appreciation for the same.
      - paulgb 3y ago
        By definition that every trade has two parties. Those boomers are now sitting on house wealth for the same reason that millennials without family wealth are priced out of home ownership. If we built more housing, prices would go down for millennials, and those boomer’s investments wouldn’t look as good. One way of putting it: pick a number of hours the average person should have to work over time to buy a house. If you want that number to stay the same, housing can only appreciate as quickly as wage inflation.
andrewstuart 3y ago
The corporate mega landlords will own a large chunk of all housing in the future, and never release it back to the market. The idea of houses being owned by people will decline over time until it's only for the mega wealthy - everyone else is a renter. The companies building up their portfolio of residential housing include Blackrock Capital and JP Morgan - say hello to your new landlords. The governments could do something about this but they won't. It's coming to Australia too - the Treasurer Jim Chalmers has met with these corporate mega landlords and he has explicitly stated he is working to "clear away the barriers to investment". The socialists in Berlin are working to stop the corporate megalandlords - filthy socialists - all they think about is "the people" - no-one consider the needs of Blackrock Capital and JP Morgan...
- throwaway5959 3y ago
  I mean, at some point, people will be so broke there won't be anything left to take, so there's that.
- irrational 3y ago
  Developers will still build new homes that won’t be owned by these companies.
  - t-writescode 3y ago
    Where I live, they're building mostly *apartments*, not *condos* and not *houses*.
  - dpc050505 3y ago
    I work on a lot of condo towers as a high rise window cleaner. I'm seeing new builds get picked up by institutional investors all the time.
    - r00fus 3y ago
      There was this story a while back where builders couldn’t find buyers so they sold to Blackrock at a 20% discount so they could get out. High interest rate policy isn’t fighting inflation it’s just transferring wealth upwards even more.
refurb 3y ago
"Wall Street" is a bit disingenuous. From the original study: "We defined institutional buyers as companies, corporations, or limited liability companies (LLCs)." It's very common for mom and pop landlords to buy homes through LLCs for liability protection. It would be more fair to say "up to a third of Texas single family homes were bought as investments", rather than say "Wall Street" which infers some massive PE firm bought them up. If you go to Canada, it's closer to 70% of recent purchased in the lower Niagara region of Ontario. "Investors own 77 per cent of new condos in Waterloo region" https://kitchener.ctvnews.ca/investors-own-77-per-cent-of-new-condos-in-waterloo-region-1.6273766 https://kitchener.ctvnews.ca/investors-own-77-per-cent-of-ne...
- forgetfreeman 3y ago
  But massive PE firms absolutely are buying up homes. So much so that it's getting really hard to operate in this market profitably if you're a small time player.
- nocoiner 3y ago
  Still seems like a reasonably proxy for “financial investors” (as opposed to the accidental investors who bought a starter home at the right time, and now it’s grossly inflated value makes it the checkbook for all four college educations). And though I think you acknowledge this point, but a lot of people with mom and pop landlords don’t realize that mom and pop are definitionally real estate investors.
  - WillPostForFood 3y ago
    Mom and pop are definitionally not "Wall Street" investors which is what the article is labeling the purchasers.
- bombcar 3y ago
  > It's very common for mom and pop landlords to buy homes through LLCs for liability protection. As a side node, for mom and pop landlords this is more of a myth than actual liability protection. It's arguably more useful to keep various properties separate so you can sell them easier than anything else. Maybe some liability protection if the LLC is named such that people don't realize you own it, but any actual liability lawyer will see right through it.
victor9000 3y ago
This is what happens when you put your country up for sale. Money equals speech and corporations are people too, so why wouldn't they buy houses?
stevenjgarner 3y ago
https://archive.ph/33gFu https://archive.ph/33gFu
teeray 3y ago
Everyone has been saving up waiting for the big crash to finally buy a home. Since this is a popular personal finance bet currently being made, it’s no surprise that others are skating towards where the puck is going. Wall Street is eyeballing all these little war chests potential buyers have and deciding they would like to see those as rent payments forever instead. If your plan is total conquest, then it makes sense to overpay—the more hotels you put on the Monopoly board, the sooner you take all the other players’ money anyway. If institutions overpay, the big crash everyone expects doesn’t happen.
- RealityVoid 3y ago
  I feel this basically _guarantees_ a crash in the long term. Sure, they keep the puck going since it's a self-perpetuating feedback loop, untill it's not anymore and the prices have increased to unsustainable levels. And then the crash comes. Eventually, I expect it to happen. No, I did not bet on this though, I bought my apartment in 2021 since... You know, I needed a place to stay and felt at the moment the inflation was bound to hit hard.
Ankaios 3y ago
What sorts of tax policies might preferentially disincentivize home buying by investment funds?
- wardedVibe 3y ago
  A tax on the speculative portion of the home (land).
- WkndTriathlete 3y ago
  Homestead exemption on property tax. In some states, property taxes are set by law to be astonishingly high unless the owning entity lives on the property for more than half the year. That owning entity can then legally claim the homestead exemption on their property taxes which reduces the tax owed by a specific amount. The owning entity can only claim the homestead exemption on (at most) a single property. Property taxes cannot be set too high in some areas, though. For example, it is pretty common in Minnesota for families to own a primary home in the big metro areas and a second vacation property in northern Minnesota on a lake, to the point where it is basically an institution in Minnesota. It also has a very positive effect on the tourist economy in northern Minnesota. Since families cannot claim the homestead exemption on the vacation properties, property taxes cannot be set too high otherwise the tourist economy would collapse, so the city, county, and state administrations need to walk a fine line on non-homestead property tax amounts to prevent institutional investing in homes while still enabling families to own vacation properties.
kubectl_h 3y ago
I live in an area of New England where property values have basically doubled in the last few years (since spring of 2020). Yeah I get that people moved up here in a kind of reactionary moment during covid, but it doesn't completely explain how housing costs increased at such a rate and keep growing even as we are in a quote-unquote lull in the housing market during higher interest rates. You cannot buy a home here without offering cash at over asking price. I hate to be conspiratorial but there are times when I think this market is so irrational that there is some kind of larger force at play. It's not like the pandemic created more demand for homes -- if anything (and I hate to be morbid about this) there should be fewer buyers in the market and yet everything continues too tick up. And on top of that the rental market is completely irrational as well. It's really hard not to give in to the idea that the market for housing isn't being manipulated by larger forces.
- orangepurple 3y ago
  Look at the amount of money that Wall Street has access to since 2020 began and it should tell you everything you need to understand what caused this. Your dollar is suddenly worthless. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
  - Jcowell 3y ago
    WTF happened? how did they get access to so much?
    - orangepurple 3y ago
      The federal reserve divorced the dollar from the gold standard in the 1970s. It can issue as many dollars as it wants at will. There is nothing to stop it except the destruction of the global economy if it becomes too reckless. See Zimbabwe Hyperinflation to see what happens when the central bank becomes unhinged. My friend still has a 100 trillion dollar note on his fridge from that period.
  - statop 3y ago
    "In May 2020, the Federal Reserve changed the official formula for calculating the M1 money supply. Prior to May 2020, M1 included currency in circulation, demand deposits at commercial banks, and other checkable deposits. After May 2020, the definition was expanded to include other liquid deposits, including savings accounts. This change was accompanied by a sharp spike in the reported value of the M1 money supply."
ftxbro 3y ago
My conspiracy theory is that this is part of a broader "medical-device-ification" of every service or product that is specific to natural persons and our ceremonies and culture. Wedding cakes are 10x cost of other cakes. Coffins are 10x cost of other boxes. Medical devices are 10x cost of the same devices that aren't for medical care. It's spreading. Next is probably houses. Then maybe every food and maybe later clothes. Meanwhile the corporations are ruthlessly and competently and incessantly negotiating among themselves, keeping the B2B non-natural-persons goods at normal prices while the ones for actual humans skyrocket. This causes a different amount of inflation observed by people compared to the ones observed by corporations. Thanks for coming to my tedx talk.
taylodl 3y ago
Oh, so the vaunted religion of the "free market" doesn't solve all of society's ills? It creates social ills? Say it ain't so! People have been saying this for next to forever and their concerns are always pooh-pooh'ed. Seriously, if the free market doesn't work for the housing market, one of the most transparent and elastic markets that exist, then what does it work for? I find it hard to believe Americans are seriously proposing limiting the property one can buy. After all, "Wall Street" is a useful fiction - at the end of the day it's just people.
- danaris 3y ago
  First of all, I want to be clear that I completely agree that the "free market" doesn't work. It doesn't work because it's a thought experiment—an abstraction, like the infamous "spherical cow in a vacuum". ...But to refer to the housing market as "elastic" just strikes me as patently absurd. Unless I'm deeply misunderstanding what you're referring to, elasticity requires that the product be fungible and the demand be non-urgent. Every single person needs a place to live, which means that in many, many cases, the demand is extremely urgent. Furthermore, a house in Houston is not at all interchangeable with a house in Wink, TX (a random town an hour west of Odessa I just picked out on a map). Even two dwellings of comparable price within the same city may not be at all interchangeable due to different locations, amenities, etc. All of this just goes, however, to prove your broader point: that the free market doesn't work, because there isn't one.
  - taylodl 3y ago
    You're correct. The housing market is transparent, but it's mostly inelastic. Which is actually a more important point: the free market doesn't even work in theory in inelastic markets. Oh well. I guess the beatings will continue until morale improves.
- HDThoreaun 3y ago
  The reason these houses are being bought is the exclusionary zoning which makes it impossible to build new ones. The housing market is not free, the government has set up extremely onerous regulations to ensure that housing always increases in value, of course investors will see that and want in. The solution here is obvious, stop writing zoning laws that ensure housing always gets more expensive.
FuckTheFED 3y ago
[flagged]

138 points by andrewstuart 3y ago

This is just so fucked a world. This is pillaging America, ruining Americanism. And we can scarcely blame these foes of society for their petty villiany.

cced 3y ago
Mind explaining what “Americanism” is? Banks running rampant purchasing assets from distressed sellers seems as American to me as apple pie.
- pictureofabear 3y ago
  America of the latter 20th century was seen as a place where you can go from rags-to-riches in a generation. It's still like that, but social mobility is falling quickly. Wallstreet buying houses is a continuation of the on-going wealth entrenchment that betrays the ideal of fluid social mobility.
  - mistrial9 3y ago
    you are right and, recent tax analysis on adults in the USA showed more than a million filing adults with financial resources to purchase a house and are not doing so.. complicated dynamics are playing out in real time.
    - JKCalhoun 3y ago
      I'd be curious about that data. Their age, what percentage of their income would be required to purchase a home, what quality of home they could afford, if they have kids, etc.
      - SketchySeaBeast 3y ago
        And is it money to afford a home somewhere or where they currently reside? Is this trying to say "New Yorker millenials are too stuck up to buy a home in Nebraska"?
        cloverich 3y ago
        Just anecdotal, but we're perfectly capable of owning in the place we recently moved (Portland), but are renting because of market uncertainty. I'd rather miss out and have homes go 100 up than miss out and have them go 300 down right after purchasing. We're happy to rent for a bit and wait it out. I'd guess more generally people are playing that game purely based on borrowing rates -- if they think they'll be even a bit lower in 12 months, it might make financial sense to wait.
        JKCalhoun 3y ago
        I don’t see home prices coming down - ever, but that’s me. Interest rates? Good point. But I’d jump now, refinance later. I’ve been burned more often waiting than getting in too soon.
  - deleted 3y ago
    [deleted]
- JKCalhoun 3y ago
  The issues is with Mr. Potter's America vs. George Bailey's America.
zip1234 3y ago
People want their home to be an 'investment' and rules get created to protect the investment and keep home prices going up. This is the natural result of those policies. In a world where supply can keep up, home prices are stagnant and extracting rents from land is not as great of a deal.
- rektide 3y ago
  I am not sure but my gut tells me this is far far too convenient a narrative. I don't think this is such an explicit choice. The free hand steals from us. Without such consent. Easily & readily.

AndrewKemendo 3y ago

I'd love someone in one of the "strategy" arms in one of these funds to explain what they think the end result of this is at it's extent? Do they believe that eventually these will be sold back to single families to build equity? Do they think that, the primary asset which has driven middle class wealth growth for ~100 years is now perfect for liquidating into - what? Is the goal to make everyone a renter forever?

USB5 3y ago
Karl Marx answered all of these questions back in the 20th century.
- pram 3y ago
  19th century my guy
- AndrewKemendo 3y ago
  I'm more of a Proudhon guy myself
- option 3y ago
  worked fabulously for those who took his answers to heart!
  - readthenotes1 3y ago
    Like Pol Pot who only seemed to have read the manifesto?
    - option 3y ago
      many others who had read more than that but with similar results
iscrewyou 3y ago
I think it's the last one. It's the ultimate subscription.

raincom 3y ago

Just increase interest rates and keep them around 6 percent forever. I'd bet many of these Wall Street funds stop buying SFHs. Federal reserve wants to keep the interest rates around 2 percent, because anything higher than that means that the inflation in the states is rising. Keeping the interest rates low (hence, the appearance of low inflation) is a facade to keep the USD as the reserve currency.

mindslight 3y ago
Agreed. As long as we are to have a continually inflating currency, the primary responsibility/expectation for monetary creation needs to be moved to the legislative/executive branches of the government - so the new money can at least be directed to purposeful endeavors. As opposed to the system of the past several decades whereby the Federal Reserve continually decreases interest rates, making most new money flow to the banks who then just use it to continue bidding up the leveraged asset bubble.
pmulard 3y ago
Just curious, but what exactly do you mean by the appearance of low inflation?
- raincom 3y ago
  federal funds rate should be more than the calculated inflation rate. So, both interest rates and the calculated inflation should be 'manipulated' at the same time. So far, we know the federal reserve sets/manipulates the interest rate, but there is a hidden incentive to set/manipulate the inflation rate, as both of them needs to be in sync. Since the USD is the world reserve currency, interest rates in every other countries are based on the federal reserve interest rate. So, there is an incentive to keep the interest rates low in the states, hence the appearance of, or the desire to set, low inflation. Just sanctions regime, military power, NATO are not enough to keep the USD as the reserve currency; low interest rate (low inflation in the states) is also necessary besides sanctions, army, NATO, etc.
walls 3y ago
Why would interest rates affect companies that are buying houses with cash?

breckenedge 3y ago

(2022)

krupan 3y ago

Well, the fed ruined stock and bond prices with raising interest rates. You can’t just sit on a pile of dollars because rampant inflation will ruin its value. Real estate is probably all that’s left to invest in?

dpc050505 3y ago
There are actually productive sectors of the economy that can and need to be invested in. We have a lot of work to do still with logistics, raw materials and energy. It's problematic when so-called ''safe'' bets like real estate end up eating the vast majority of capital rather than it being invested on things that will actually change our quality of life.
- theironhammer 3y ago
  Completely agree. The politicians should be tweeking the laws so these sectors become more attractive for investment but alas all they care about is the next election and aggravating homeowners /voters.

coffeebeqn 3y ago

Ah I just figured why rents are rising in every single city in the world. Wall Street is building another real estate bet

deleted 3y ago

[deleted]

deleted 3y ago

[deleted]

paulgb 3y ago

I get that people like blaming Wall St. for prices going up, but isn’t it just as much the other way around? Wall St. invests in homes for the same reason they invest in anything: because they think the price will go up. Housing policy in the US seems designed around the idea that housing prices should only go up, since it’s the largest asset of the majority of voters. If we want to fix the housing crisis, housing will have to become a bad investment, and that will fix the Wall St. problem too.

aceazzameen 3y ago
Or it could be regulated too.
- paulgb 3y ago
  Regulations can only do so much here. By definition, you can either make housing affordable to young people entering the market, or make housing a path to wealth appreciation for homeowners. They are diametrically opposed goals, despite that most politicians will be happy to tell you we can have both.
  - clipsy 3y ago
    > By definition, you can either make housing affordable to young people entering the market, or make housing a path to wealth appreciation for homeowners By whose definition? Certainly the massive suburban expansion in the 60's and 70's resulted in affordable homes to young Baby Boomers entering the market and also to wealth appreciation for the same.
    - paulgb 3y ago
      By definition that every trade has two parties. Those boomers are now sitting on house wealth for the same reason that millennials without family wealth are priced out of home ownership. If we built more housing, prices would go down for millennials, and those boomer’s investments wouldn’t look as good. One way of putting it: pick a number of hours the average person should have to work over time to buy a house. If you want that number to stay the same, housing can only appreciate as quickly as wage inflation.

andrewstuart 3y ago

The corporate mega landlords will own a large chunk of all housing in the future, and never release it back to the market. The idea of houses being owned by people will decline over time until it's only for the mega wealthy - everyone else is a renter. The companies building up their portfolio of residential housing include Blackrock Capital and JP Morgan - say hello to your new landlords. The governments could do something about this but they won't. It's coming to Australia too - the Treasurer Jim Chalmers has met with these corporate mega landlords and he has explicitly stated he is working to "clear away the barriers to investment". The socialists in Berlin are working to stop the corporate megalandlords - filthy socialists - all they think about is "the people" - no-one consider the needs of Blackrock Capital and JP Morgan...

throwaway5959 3y ago
I mean, at some point, people will be so broke there won't be anything left to take, so there's that.
irrational 3y ago
Developers will still build new homes that won’t be owned by these companies.
- t-writescode 3y ago
  Where I live, they're building mostly *apartments*, not *condos* and not *houses*.
- dpc050505 3y ago
  I work on a lot of condo towers as a high rise window cleaner. I'm seeing new builds get picked up by institutional investors all the time.
  - r00fus 3y ago
    There was this story a while back where builders couldn’t find buyers so they sold to Blackrock at a 20% discount so they could get out. High interest rate policy isn’t fighting inflation it’s just transferring wealth upwards even more.

refurb 3y ago

"Wall Street" is a bit disingenuous. From the original study: "We defined institutional buyers as companies, corporations, or limited liability companies (LLCs)." It's very common for mom and pop landlords to buy homes through LLCs for liability protection. It would be more fair to say "up to a third of Texas single family homes were bought as investments", rather than say "Wall Street" which infers some massive PE firm bought them up. If you go to Canada, it's closer to 70% of recent purchased in the lower Niagara region of Ontario. "Investors own 77 per cent of new condos in Waterloo region" https://kitchener.ctvnews.ca/investors-own-77-per-cent-of-new-condos-in-waterloo-region-1.6273766 https://kitchener.ctvnews.ca/investors-own-77-per-cent-of-ne...

forgetfreeman 3y ago
But massive PE firms absolutely are buying up homes. So much so that it's getting really hard to operate in this market profitably if you're a small time player.
nocoiner 3y ago
Still seems like a reasonably proxy for “financial investors” (as opposed to the accidental investors who bought a starter home at the right time, and now it’s grossly inflated value makes it the checkbook for all four college educations). And though I think you acknowledge this point, but a lot of people with mom and pop landlords don’t realize that mom and pop are definitionally real estate investors.
- WillPostForFood 3y ago
  Mom and pop are definitionally not "Wall Street" investors which is what the article is labeling the purchasers.
bombcar 3y ago
> It's very common for mom and pop landlords to buy homes through LLCs for liability protection. As a side node, for mom and pop landlords this is more of a myth than actual liability protection. It's arguably more useful to keep various properties separate so you can sell them easier than anything else. Maybe some liability protection if the LLC is named such that people don't realize you own it, but any actual liability lawyer will see right through it.

victor9000 3y ago

This is what happens when you put your country up for sale. Money equals speech and corporations are people too, so why wouldn't they buy houses?

stevenjgarner 3y ago

https://archive.ph/33gFu https://archive.ph/33gFu

teeray 3y ago

Everyone has been saving up waiting for the big crash to finally buy a home. Since this is a popular personal finance bet currently being made, it’s no surprise that others are skating towards where the puck is going. Wall Street is eyeballing all these little war chests potential buyers have and deciding they would like to see those as rent payments forever instead. If your plan is total conquest, then it makes sense to overpay—the more hotels you put on the Monopoly board, the sooner you take all the other players’ money anyway. If institutions overpay, the big crash everyone expects doesn’t happen.

RealityVoid 3y ago
I feel this basically _guarantees_ a crash in the long term. Sure, they keep the puck going since it's a self-perpetuating feedback loop, untill it's not anymore and the prices have increased to unsustainable levels. And then the crash comes. Eventually, I expect it to happen. No, I did not bet on this though, I bought my apartment in 2021 since... You know, I needed a place to stay and felt at the moment the inflation was bound to hit hard.

Ankaios 3y ago

What sorts of tax policies might preferentially disincentivize home buying by investment funds?

wardedVibe 3y ago
A tax on the speculative portion of the home (land).
WkndTriathlete 3y ago
Homestead exemption on property tax. In some states, property taxes are set by law to be astonishingly high unless the owning entity lives on the property for more than half the year. That owning entity can then legally claim the homestead exemption on their property taxes which reduces the tax owed by a specific amount. The owning entity can only claim the homestead exemption on (at most) a single property. Property taxes cannot be set too high in some areas, though. For example, it is pretty common in Minnesota for families to own a primary home in the big metro areas and a second vacation property in northern Minnesota on a lake, to the point where it is basically an institution in Minnesota. It also has a very positive effect on the tourist economy in northern Minnesota. Since families cannot claim the homestead exemption on the vacation properties, property taxes cannot be set too high otherwise the tourist economy would collapse, so the city, county, and state administrations need to walk a fine line on non-homestead property tax amounts to prevent institutional investing in homes while still enabling families to own vacation properties.

kubectl_h 3y ago

I live in an area of New England where property values have basically doubled in the last few years (since spring of 2020). Yeah I get that people moved up here in a kind of reactionary moment during covid, but it doesn't completely explain how housing costs increased at such a rate and keep growing even as we are in a quote-unquote lull in the housing market during higher interest rates. You cannot buy a home here without offering cash at over asking price. I hate to be conspiratorial but there are times when I think this market is so irrational that there is some kind of larger force at play. It's not like the pandemic created more demand for homes -- if anything (and I hate to be morbid about this) there should be fewer buyers in the market and yet everything continues too tick up. And on top of that the rental market is completely irrational as well. It's really hard not to give in to the idea that the market for housing isn't being manipulated by larger forces.

orangepurple 3y ago
Look at the amount of money that Wall Street has access to since 2020 began and it should tell you everything you need to understand what caused this. Your dollar is suddenly worthless. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- Jcowell 3y ago
  WTF happened? how did they get access to so much?
  - orangepurple 3y ago
    The federal reserve divorced the dollar from the gold standard in the 1970s. It can issue as many dollars as it wants at will. There is nothing to stop it except the destruction of the global economy if it becomes too reckless. See Zimbabwe Hyperinflation to see what happens when the central bank becomes unhinged. My friend still has a 100 trillion dollar note on his fridge from that period.
- statop 3y ago
  "In May 2020, the Federal Reserve changed the official formula for calculating the M1 money supply. Prior to May 2020, M1 included currency in circulation, demand deposits at commercial banks, and other checkable deposits. After May 2020, the definition was expanded to include other liquid deposits, including savings accounts. This change was accompanied by a sharp spike in the reported value of the M1 money supply."

ftxbro 3y ago

My conspiracy theory is that this is part of a broader "medical-device-ification" of every service or product that is specific to natural persons and our ceremonies and culture. Wedding cakes are 10x cost of other cakes. Coffins are 10x cost of other boxes. Medical devices are 10x cost of the same devices that aren't for medical care. It's spreading. Next is probably houses. Then maybe every food and maybe later clothes. Meanwhile the corporations are ruthlessly and competently and incessantly negotiating among themselves, keeping the B2B non-natural-persons goods at normal prices while the ones for actual humans skyrocket. This causes a different amount of inflation observed by people compared to the ones observed by corporations. Thanks for coming to my tedx talk.

taylodl 3y ago

Oh, so the vaunted religion of the "free market" doesn't solve all of society's ills? It creates social ills? Say it ain't so! People have been saying this for next to forever and their concerns are always pooh-pooh'ed. Seriously, if the free market doesn't work for the housing market, one of the most transparent and elastic markets that exist, then what does it work for? I find it hard to believe Americans are seriously proposing limiting the property one can buy. After all, "Wall Street" is a useful fiction - at the end of the day it's just people.

danaris 3y ago
First of all, I want to be clear that I completely agree that the "free market" doesn't work. It doesn't work because it's a thought experiment—an abstraction, like the infamous "spherical cow in a vacuum". ...But to refer to the housing market as "elastic" just strikes me as patently absurd. Unless I'm deeply misunderstanding what you're referring to, elasticity requires that the product be fungible and the demand be non-urgent. Every single person needs a place to live, which means that in many, many cases, the demand is extremely urgent. Furthermore, a house in Houston is not at all interchangeable with a house in Wink, TX (a random town an hour west of Odessa I just picked out on a map). Even two dwellings of comparable price within the same city may not be at all interchangeable due to different locations, amenities, etc. All of this just goes, however, to prove your broader point: that the free market doesn't work, because there isn't one.
- taylodl 3y ago
  You're correct. The housing market is transparent, but it's mostly inelastic. Which is actually a more important point: the free market doesn't even work in theory in inelastic markets. Oh well. I guess the beatings will continue until morale improves.
HDThoreaun 3y ago
The reason these houses are being bought is the exclusionary zoning which makes it impossible to build new ones. The housing market is not free, the government has set up extremely onerous regulations to ensure that housing always increases in value, of course investors will see that and want in. The solution here is obvious, stop writing zoning laws that ensure housing always gets more expensive.

FuckTheFED 3y ago

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