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This is not caused by companies. This is caused by individual homeowners exerting local control over the amount of housing in their small local area. The few c

This is not caused by companies. This is caused by individual homeowners exerting local control over the amount of housing in their small local area. The few companies making money off this are just piggy-backing on the homeowners who drive the political process. Private equity saw what homeowners have done in the US and thought "hey we can benefit from this regulatory capture without even having to do any of the work of capture," and even with that they are a tiny minority of housing. Let's correctly place the blame so that we can fix the problem. Even banning all corporate ownership of homes does nothing to house these homeless folks, only building more home will get people into them and break the sell-side power.

thfuran 3y ago
Private equity may own a fairly small amount of the total housing stock, but there are metros where 20+% of home sales over the last year or two were to investors. That's surely enough to distort the market.
- epistasis 3y ago
  Not really, it's only a tiny fraction of purchasers. Their market power during purchase time is not enough to drive down prices and benefit them, and post purchase they do not own enough fraction of existing homes to help drive up sale prices. Unless they are systematically paying above market, which is what Zillow did (for a tiny tiny number of homes, relative to supply). Which would be a transfer of wealth from Private Equity to individual home buyers. Housing is one of the least centralized markets that we have, and even when ownership is highly concentrated in a market, it's very rare that pricing can be controlled by an entity. Even the widely publicized "pricing software" for rentals was just better at showing comparable apartments with less work, enabling price discovery. It didn't enable price collusion. The shortage of housing and resulting high prices are best understood (IMHO) through class politics, where class is defined as already owning a housing asset or not.
  - someguydave 3y ago
    The centralisation in real estate is on the gov-backed mortgage side. We should end the thirty year mortgage and require home owners to purchase debt in the private market.
    - epistasis 3y ago
      I am so glad to hear somebody proposing this! I support these ideas 100%, though I had not been bold enough to say it before. Ending the mortgage interest tax deduction would also be a good move. It does nothing but subsidize larger mortgages and asset price inflation.
      - thfuran 3y ago
        I think these are probably good ideas but terrible first moves. We need to build a lot more housing before doing things that'll make a lot of people a lot less able to afford the houses they already own or purchase other housing.

thfuran 3y ago

Private equity may own a fairly small amount of the total housing stock, but there are metros where 20+% of home sales over the last year or two were to investors. That's surely enough to distort the market.

epistasis 3y ago
Not really, it's only a tiny fraction of purchasers. Their market power during purchase time is not enough to drive down prices and benefit them, and post purchase they do not own enough fraction of existing homes to help drive up sale prices. Unless they are systematically paying above market, which is what Zillow did (for a tiny tiny number of homes, relative to supply). Which would be a transfer of wealth from Private Equity to individual home buyers. Housing is one of the least centralized markets that we have, and even when ownership is highly concentrated in a market, it's very rare that pricing can be controlled by an entity. Even the widely publicized "pricing software" for rentals was just better at showing comparable apartments with less work, enabling price discovery. It didn't enable price collusion. The shortage of housing and resulting high prices are best understood (IMHO) through class politics, where class is defined as already owning a housing asset or not.
- someguydave 3y ago
  The centralisation in real estate is on the gov-backed mortgage side. We should end the thirty year mortgage and require home owners to purchase debt in the private market.
  - epistasis 3y ago
    I am so glad to hear somebody proposing this! I support these ideas 100%, though I had not been bold enough to say it before. Ending the mortgage interest tax deduction would also be a good move. It does nothing but subsidize larger mortgages and asset price inflation.
    - thfuran 3y ago
      I think these are probably good ideas but terrible first moves. We need to build a lot more housing before doing things that'll make a lot of people a lot less able to afford the houses they already own or purchase other housing.