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Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately t

Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental. It’s nearly impossible to compete with a company who will pay $50k over asking price, in cash, for the house you’re trying to get. Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. Zoning law in some places makes building new homes very difficult, so I would like to see less/different local regulation there. But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. Maybe incentivize those companies to increase their ratio of new construction, to help solve this supply issue.

packetlost 3y ago
We, IMO, need a progressive tax system for every home controlled by an entity that isn't their primary residence. You don't want to hurt small individuals trying to build up wealth, but we need to stop allowing large corporations to turn basic necessities into investment vehicles.
- junofan 3y ago
  I don’t think houses should be used by anybody to build up wealth.
  - gaganyaan 3y ago
    As a blanket statement, I don't think that makes much sense. You'd be opposed to someone working hard on their own house over the years to improve it so that they can sell it when they're older?
    - amrocha 3y ago
      Realistically that doesn't really happen. It's all about land, the building itself is a liability not an asset.
  - mgolawala 3y ago
    Thank you for pointing this out. Houses can be cheap, or they can be a good investment. Not both. I think I read that here on hacker news a few years ago, and it has stuck with me.
    - DontchaKnowit 3y ago
      I don't think this is true. The investment value of a house is not its appreciation, but rather its ability to generate income in the form of rent.
      - msm_ 3y ago
        There's no contradiction. If it's easy to generate rent income from a house then houses will appreciate in price. For example, if I can buy a house and pay off the loan just from rent payments then it's a great investment.
    - jjav 3y ago
      > Houses can be cheap, or they can be a good investment. Not both. > I think I read that here on hacker news a few years ago, and it has stuck with me. It's repeated in every HN discussion about housing. Also, it's too simplistic. It's basically impossible (barring a complete market meltdown like Detroit back then) to not increase your net worth owning a house. You have to live somewhere. If you buy a house you (very slowly) end up owning it. A house has nonzero value. Now you have some equity, aka wealth. Even if the price depreciates it's not zero, so you built some wealth (vs renting where you could've rented for 60 years and still own nothing).
  - Ajedi32 3y ago
    So apartments shouldn't exist? Or...? I understand your perspective; there's a reason the term "rent-seeking" has a negative connotation. But I don't really see an alternative that wouldn't be worse. Different tax rates for primary residences sounds like a potentially okay compromise (though it would make renting more expensive, by design).
    - packetlost 3y ago
      No. Build more condos. We generally still need the density.
    - martin_a 3y ago
      > So apartments shouldn't exist? Or...? The state/county/city/whatever entity could provide those and make it a +/-0 thing for their books. They don't need to make money by doing that. "Social housing" is a concept that has been pretty much lost, I think.
      - NoMoreNicksLeft 3y ago
        It hasn't been lost. Some of us are just old enough to remember what the projects were like, and we're glad they're gone.
        digging 3y ago
        Nope, you're just old enough to remember the propaganda. Social housing (in the US) has always been underfunded to make it look bad. It was a worst-of-both-worlds compromise which served to undermine confidence in government and promote racism. There is literally no reason a municipal government can't run high quality social housing. That's why it happens, outside of the US.
        NoMoreNicksLeft 3y ago
        > has always been underfunded to make it look bad. I Yes, the "secret capitalists hiding in the woodpile" theory of why communism sucks. You, of course, are immune to the other side's propaganda, and your own brain is a perfect simulator of the real world so you've run mental experiments that prove to you irrefutably how awesome it would be. If only other people paid for it for you. > That's why it happens, outside of the US. This is shit throughout all of western civilization. Go check out Ireland, or any place in Europe right now. It's shit everywhere.
  - packetlost 3y ago
    Fair.
- shiftpgdn 3y ago
  Singapore does this very well. Almost no property tax or land value tax for primary residence for Singapore citizens. Up to 30% property/LVT for corporations and foreigners.
  - seanmcdirmid 3y ago
    Given how much Singapore relies on foreign labor, this makes housing those foreigners tricky. The non-migrant worker foreigners who aren’t put in dorms face a very expensive housing market, Singapore companies have to pay larger salaries to compensate (and if you are American, you have to lean heavily on your housing exemption to avoid double taxation because Singapore taxes are also low).
alright2565 3y ago
> the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental Homeownership rates haven't changed by more than a couple percentage points since the 1960s: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N
- abathur 3y ago
  I agree it is worth accounting for this, though I'm not sure the nation-wide rate disproves the claim. "Large companies" could be having a significant impact on some number of urban markets without shifting a country-wide statistic in a way that's unambiguous against trends driven by larger forces like population age and economic trends.
invalidOrTaken 3y ago
>Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental. It’s nearly impossible to compete with a company who will pay $50k over asking price, in cash, for the house you’re trying to get. Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. While I bear zero animus towards immigrants, this seems obtuse. Why are those companies willing to pay so much? Because they predict they can charge enough rent to make it profitable anyway. Why would they think that? Because immigrants can compete down at the level of rents. This seems like the same mistake people make about "luxury housing," but on the other end of the market. Building housing at the top of the market does indeed make things cheaper at the bottom of the market, and bringing in people at the bottom of the market does indeed make things more expensive at the top.
- titzer 3y ago
  > Why are those companies willing to pay so much? Because they are buying assets with debt just like everyone else, and they don't actually care about ROI via rents, either due to "appreciation" (really, further inflation), or they're expecting the financial system to collapse.
  - jlmorton 3y ago
    Blackrock doesn't care about the ROI of their housing investments, and they expect the financial system to collapse? Damn. Big if true.
- Workaccount2 3y ago
  These companies hardly exist, "evil corporations" is just super memeable and denizens of the internet will accept it as the answer to anything bad. In reality, the economy has been booming for the "haves" and those people are the ones bidding up homes and pay $50k over asking with a 6.5% mortgage. Corporations don't care much for home rentals when treasuries are paying 5% with zero overhead and zero risk. Sucks to be poor and sad to be poor and still eating the "evil corporations" delusion.
mlinhares 3y ago
Not only building new homes is unnecessarily complicated and expensive, single family homes are an incredible waste of space and money, had the US and it's big cities invested in apartment buildings with better amenities or forced developers to build shared neighborhood amenities Americans in general wouldn't be so incredibly against it. It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities.
- wocka 3y ago
  > It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities. Would you mind sharing what the amenities are that you are referring to--both the in-building and neighborhood amenities? In the US I've seen gyms, swimming pools, shared hosting spaces, and some child-friendly spaces, to name a few.
  - voisin 3y ago
    Just to add on to this, a number of older buildings in my city in Canada (say late 1960s to mid 1970s construction) even had woodworking shops as common amenities! Today there are pet washing stations, EV chargers, outdoor rooftop patios, movie theatres, etc. It’s incredible.
  - mlinhares 3y ago
    Pools, BBQs, gyms, playgrounds, multi sports courts, party rooms, stores and restaurants. In PHL unless you’re paying big money in a new or refurbished building in center city (and there aren’t that many) you’re out of luck. Doesn’t help that schools also suck and are heavily segregated, which ended up forcing us to move to the suburbs into a single family home to raise our kids as we knew we wouldn’t have enough money to send them to private schools and didn’t want them on the public system there.
- unethical_ban 3y ago
  The only problem with apartments in the US is the lack of equity.
flir 3y ago
Are rental prices falling? If not, I suggest that the root problem is still not enough houses.
J_Shelby_J 3y ago
a) Housing is only a viable investment because of a shortage. If housing supply met housing demand, housing would be a depreciating asset. b) Investors turn around and rent/sell those houses, so they aren't actually eating into housing supply. What they are reducing the supply of is the bottom level of the rent seeking pyramid. Property ownership is simply so profitable that the average person now can't afford to buy in.
spir 3y ago
You only perceive corporate landlords as the greater problem because we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located. In pretty much every major city in North America, it is illegal or there is too much red tape to build the affordable housing people actually want. Why is it that living in a tent on the street costs $0/month but the entry-level apartments cost ~$2k/month? Why are there no price points between $0 and $2k? The answer is bad government policy.
- skeeter2020 3y ago
  Maybe? Or how about they are in no-way comparable.Unless you are talking mass subsidization there is an absolute floor for providing housing, not to mention finite capacity for both tent cities and affordable apartments.
  - JumpCrisscross 3y ago
    > Unless you are talking mass subsidization there is an absolute floor for providing housing Sure. We are nowhere close to that floor. Voters who reject supply and demand pay the consequence for their ignorance.
  - Ajedi32 3y ago
    What would you say determines the level of that floor? It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?
  - fatfingerd 3y ago
    The absolute floor is nothing, far less than the cost of tent cities which use a lot of horizontal space compared to high rises of prefab micro apartments. The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school. The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.
ryukafalz 3y ago
> But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. There was a timely video about this yesterday from Oh the Urbanity: https://youtu.be/BRqZBuu_Ers?si=NlavrFpm8sNTUcYp https://youtu.be/BRqZBuu_Ers?si=NlavrFpm8sNTUcYp Summary is that Rotterdam did just this, and the effect was that the price to purchase a house did not measurably decrease, and that rents rose. The neighborhoods regulated in this way had fewer immigrants and skewed wealthier than those that were not. So, not the effect we're looking for.
- unethical_ban 3y ago
  If more people actually owned, that's a positive.
  - ryukafalz 3y ago
    If the result of that is excluding lower-income people from living there, I disagree.
  - gruez 3y ago
    1. Homeowners being a powerful political bloc and using that power to stop development is part of the problem in the first place 2. Buying a house makes sense if you're a starting a family and/or setting down roots, but that's not everyone's situation. Students or young professionals get utterly shafted by lack of rental housing, because they don't have the income or the credit to buy a house, and they don't intend on staying long they'll get eaten by the transaction fees.
    - unethical_ban 3y ago
      You're not entirely wrong. Housing should be seen as more than just a place to live but less than a moneymaking investment - it should be seen as basic housing security for those who want roots as you said. NIMBYs do screw things over sometimes, I agree. And liquidity in mid-term housing supply is important. But I suggest that it would be better for society in the long term if more people had a stake in where they live.
Nifty3929 3y ago
What would happen to the person renting from the landlord, if the corporation hadn’t purchased the house to rent to them? Well, maybe that person would buy the house themselves to live in. But there still wouldn’t be any more houses for YOU to buy. Corporations and landlords aren’t the problem, lack of building is.
- horpolopolil 3y ago
  No, they are too. If you build, blackrock, or evergrand will buy it for a lot more than most can afford. The goal being to limit stock and push the prices of their asset up.
  - max47 3y ago
    As long as they don’t leave it empty, they are not limiting the stock. Changing the name on a piece of paper doesn’t magically creates new houses out of thin air.
    - jessfyi 3y ago
      Well they are leaving them vacant. Both rentals and houses across the country are sitting unfilled. NYC has anywhere from 13-26k rent controlled apartments vacant. As of last year ~16 million homes were estimated to be vacant overall and increasing interest rates have likely increased that. Why? Because these large orgs have purchased them via debt and it's just a line-item on a spreadsheet to them. Just build might work in a world where market actors were wholly rational and the government regulations actually targeted these perverse incentives, but that's not the reality we currently find ourselves in.
      - dublinben 3y ago
        Why "Vacant Homes" Won't Solve the Housing Crisis - https://www.youtube.com/watch?v=3xZXdXxYBGU https://www.youtube.com/watch?v=3xZXdXxYBGU
      - vel0city 3y ago
titzer 3y ago
> the ability of large companies to buy up whatever is on the market, And that has a simple cause: they created too much money to prop up both the housing and stock markets. We're in an inflationary debt spiral that has a very high chance of going the same route as every other one in history; completely devaluing the currency, defaulting on debt, and issuing new currency. The rational play in such a scenario is to take on more debt to buy assets, because the debt will be wiped by inflation. Which is exactly the energy powering the debt spiral. It's nearly impossible to fix.
- mindslight 3y ago
  Raise the government-set lending rates and keep them there, let overextended private parties (like highly leveraged asset owners) actually default en masse, and slowly pay down the government's external debt by moving it to the federal reserve. I'm not saying that the metastasized finance industry will let this happen, but there is a way out of the spiral.
  - titzer 3y ago
    I agree with those things, but we both see how unworkable it is. It hurts the monied class and edifice that holds up the house of cards made of people who produce no real value other than pulling levers in the casino.
Elyra 3y ago
> Comparatively, immigrants don’t have the purchasing power to compete What makes you say that? As someone who's currently dating a Chinese immigrant I have been made aware of an entire world I didn't know existed. They often have much better family support so their parents will send money from home to help them buy a house. From her masters program at university, which was all immigrants because universities here seem to be taking advantage of the fact that this is an easy path for immigration, everyone in her class (80 people) already have a house. From my group of friends at university, only 1 of them has a house, and 1 a condo (out of the ~50 people I loosely keep in touch with, all with good careers). We would too if my parents had been willing to meet her parents partway and give us a 50k loan, but they preferred to buy a 100k luxury car for themselves instead (they also refuse to acknowledge the current housing situation). She also found out from WeChat that there are a number of Chinese landlords in Toronto who own blocks of houses by investing money on behalf of friends and family back home to get around foreign investment regulations, and nothing is being done to stop it. edit: I'm not sure why this was downvoted, it may be anecdotal evidence, but nothing I said here is untrue, nor did I make any claims other than there being immigrants who are able to compete in the current housing market.
- ebiester 3y ago
  It's likely true. It's also relatively small relative to the amount of money being funneled through the REITs.
gniv 3y ago
> it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock My instinct is to disagree. That could create other problems and it's not a given that it would help prices. Encouraging growth by changing zoning seems preferable. We know that it works, since Japan has been doing it forever.
- thedaly 3y ago
  If the policy goal is to have more homeowners, which I think it should be, you have to do something about private equity buying up all the home stock. Blackrock and its ilk of private equity firms buying up single family homes to turn them into rentals stands in direct opposition to the goal of more people owning homes.
  - ryandrake 3y ago
    Where was Blackrock when I was desperately trying to sell my home last year? Reduced price three times, and I can assure you that Mister Blackrock didn't contact my agent even once. For an evil wizard intent on gobbling up homes, he didn't seem interested in mine.
JumpCrisscross 3y ago
> the greater problem is the ability of large companies to buy up whatever is on the market Out of curiosity, where? How do they know this? I bought my house “cash.” It doesn’t mean I filed my car with paper. Just that I didn’t require a financing contingency. (Brokers typically don’t know who they lost a house to until property records are updated.)
- datavirtue 3y ago
  Then all they see is the name of the trust...and they still don't know.
  - JumpCrisscross 3y ago
    > all they see is the name of the trust I’m arguing they don’t. If a client looks likely to be soothed by losing to a corporate landlord, versus anyone else, there is a real estate broker who will sell them that line.
- escapedmoose 3y ago
  You can look up the listings for the rentals after the house has been flipped. And damn, good for you being able to purchase a home without financing! Most of us can’t pull that off
mwbajor 3y ago
"Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw." Does more demand drive up price or does it not? Large swaths of farmland are being bulldozed in my state to build townhouses that are largely populated by 1st generation immigrants. I'm sure this is not the only place.
dukeyukey 3y ago
Rentals are more accessible to poorer people than buying somewhere so I'd be surprised if that led to homelessness.
luxuryballs 3y ago
I have a hunch that companies paying $50k over to turn a house into a rental and governments paying the rent of immigrants are not things happening in a vacuum.
NoMoreNicksLeft 3y ago
> Comparatively, immigrants don’t have the purchasing power to compete, Does that even matter? They don't have to compete on house purchases, they just have to increase demand on rentals, even at the low end. This pushes everyone in an income bracket above them to compete for the higher priced rentals, until those say "screw this, I'll just buy" find out that even that's no longer possible. In this game, it's possible for everyone to lose.
tempsy 3y ago
Is the problem really just boomers who have rented long term and never bought? Even if you own you could be forced to sell your house if you can't afford the property taxes and maintenance costs associated with your home, especially in states where they aren't strict limits on how much your property taxes can increase each year. A $500k house in Texas is more than $10k in property taxes a year. Not cheap especially if you do not work or have limited income.
granshaw 3y ago
The Blackrock issue is overhyped. Saw a post recently showing that the percentages aren’t actually that high, don’t have time to find it now but hope to do so later
gadders 3y ago
>>Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. Who do you think the houses are being rented to? If there is an excess of demand, then it will push up prices or rents or both.
scld 3y ago
The ability for them to do this is only granted to them by the restrictiveness of the regulatory state. You've prescribed a byzantine series of rules in order to free up supply when the quickest step is to just free up supply, which will make "buying up whatever is on the market" a gigantic waste of money because it will not be possible to corner said market.
tempsy 3y ago
Investors cannot magically make rentals profitable at these prices and interest rates.
adasdasdas 3y ago
Yea we desperately need land reform. What Japan did after WW2 should set an example [0]. Also, investment properties should be heavily taxed to disincentivize this behavior. [0]: http://www.crosscurrents.hawaii.edu/content.aspx?lang=eng&site=japan&theme=work&subtheme=AGRIC&unit=JWORK099 http://www.crosscurrents.hawaii.edu/content.aspx?lang=eng&si...
wuliwong 3y ago
I don't understand the math of this? If the company is paying way over asking price, they will be losing money for some number of years while renting the property. I guess the idea is that eventually they will turn cash flow positive? So these companies have a bunch of cash in reserve? My personal experience in recent years, in the city of Atlanta, Atlanta suburbs, and Philadelphia suburbs, is that I do not see companies buying up all the houses to rent. In the Philly burbs in particular, I see traditional home buyers bidding up the prices. Even with the high interest rates, the low supply is still causing a good bit of competition for each new listing that is in good shape. The supply of rentals in this area is pretty low as well. So if there were these large swathes of homes going from family owned to rentals, I would think it would be pretty obvious when I'm looking for a rental.
- BizarroLand 3y ago
  The idea is simple, you burn through money to establish a monopoly, then squeeze the profits out on the back end. Hold on long enough to get your money back plus a hefty profit, and then when it seems like the laws will change to outlaw what you're doing, then sell ahead of the wave for more than you paid to begin with and leave the next sucker holding the check when the bottom falls out. It's worked so many times in the past and barring some sort of major legislation it will happen again.
lp0_on_fire 3y ago
> Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. But they do put downward pressure on salaries as the labor pool gets larger. Legal, or otherwise.
hyuuu 3y ago
i have never heard any investor who is willing to put $50K over asking, they are dictated by their pro-forma, they run the numbers and it has to beat S&P 500, much more stricter in sending offers. Families however..they purchase with emotions or schools for their kids, they are the ones who drive the price up. https://www.freddiemac.com/perspectives/sam-khater/first-time-homebuyers-are-driving-market-forward https://www.freddiemac.com/perspectives/sam-khater/first-tim...
closeparen 3y ago
Why are the needs of prospective renters less legitimate than those of prospective owner-occupiers?

packetlost 3y ago

We, IMO, need a progressive tax system for every home controlled by an entity that isn't their primary residence. You don't want to hurt small individuals trying to build up wealth, but we need to stop allowing large corporations to turn basic necessities into investment vehicles.

junofan 3y ago
I don’t think houses should be used by anybody to build up wealth.
- gaganyaan 3y ago
  As a blanket statement, I don't think that makes much sense. You'd be opposed to someone working hard on their own house over the years to improve it so that they can sell it when they're older?
  - amrocha 3y ago
    Realistically that doesn't really happen. It's all about land, the building itself is a liability not an asset.
- mgolawala 3y ago
  Thank you for pointing this out. Houses can be cheap, or they can be a good investment. Not both. I think I read that here on hacker news a few years ago, and it has stuck with me.
  - DontchaKnowit 3y ago
    I don't think this is true. The investment value of a house is not its appreciation, but rather its ability to generate income in the form of rent.
    - msm_ 3y ago
      There's no contradiction. If it's easy to generate rent income from a house then houses will appreciate in price. For example, if I can buy a house and pay off the loan just from rent payments then it's a great investment.
  - jjav 3y ago
    > Houses can be cheap, or they can be a good investment. Not both. > I think I read that here on hacker news a few years ago, and it has stuck with me. It's repeated in every HN discussion about housing. Also, it's too simplistic. It's basically impossible (barring a complete market meltdown like Detroit back then) to not increase your net worth owning a house. You have to live somewhere. If you buy a house you (very slowly) end up owning it. A house has nonzero value. Now you have some equity, aka wealth. Even if the price depreciates it's not zero, so you built some wealth (vs renting where you could've rented for 60 years and still own nothing).
- Ajedi32 3y ago
  So apartments shouldn't exist? Or...? I understand your perspective; there's a reason the term "rent-seeking" has a negative connotation. But I don't really see an alternative that wouldn't be worse. Different tax rates for primary residences sounds like a potentially okay compromise (though it would make renting more expensive, by design).
  - packetlost 3y ago
    No. Build more condos. We generally still need the density.
  - martin_a 3y ago
    > So apartments shouldn't exist? Or...? The state/county/city/whatever entity could provide those and make it a +/-0 thing for their books. They don't need to make money by doing that. "Social housing" is a concept that has been pretty much lost, I think.
    - NoMoreNicksLeft 3y ago
      It hasn't been lost. Some of us are just old enough to remember what the projects were like, and we're glad they're gone.
      - digging 3y ago
        Nope, you're just old enough to remember the propaganda. Social housing (in the US) has always been underfunded to make it look bad. It was a worst-of-both-worlds compromise which served to undermine confidence in government and promote racism. There is literally no reason a municipal government can't run high quality social housing. That's why it happens, outside of the US.
        NoMoreNicksLeft 3y ago
        > has always been underfunded to make it look bad. I Yes, the "secret capitalists hiding in the woodpile" theory of why communism sucks. You, of course, are immune to the other side's propaganda, and your own brain is a perfect simulator of the real world so you've run mental experiments that prove to you irrefutably how awesome it would be. If only other people paid for it for you. > That's why it happens, outside of the US. This is shit throughout all of western civilization. Go check out Ireland, or any place in Europe right now. It's shit everywhere.
- packetlost 3y ago
  Fair.
shiftpgdn 3y ago
Singapore does this very well. Almost no property tax or land value tax for primary residence for Singapore citizens. Up to 30% property/LVT for corporations and foreigners.
- seanmcdirmid 3y ago
  Given how much Singapore relies on foreign labor, this makes housing those foreigners tricky. The non-migrant worker foreigners who aren’t put in dorms face a very expensive housing market, Singapore companies have to pay larger salaries to compensate (and if you are American, you have to lean heavily on your housing exemption to avoid double taxation because Singapore taxes are also low).

alright2565 3y ago

> the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental Homeownership rates haven't changed by more than a couple percentage points since the 1960s: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N

abathur 3y ago
I agree it is worth accounting for this, though I'm not sure the nation-wide rate disproves the claim. "Large companies" could be having a significant impact on some number of urban markets without shifting a country-wide statistic in a way that's unambiguous against trends driven by larger forces like population age and economic trends.

invalidOrTaken 3y ago

>Among my friends seeking to buy houses, the greater problem is the ability of large companies to buy up whatever is on the market, which they then immediately turn into a rental. It’s nearly impossible to compete with a company who will pay $50k over asking price, in cash, for the house you’re trying to get. Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. While I bear zero animus towards immigrants, this seems obtuse. Why are those companies willing to pay so much? Because they predict they can charge enough rent to make it profitable anyway. Why would they think that? Because immigrants can compete down at the level of rents. This seems like the same mistake people make about "luxury housing," but on the other end of the market. Building housing at the top of the market does indeed make things cheaper at the bottom of the market, and bringing in people at the bottom of the market does indeed make things more expensive at the top.

titzer 3y ago
> Why are those companies willing to pay so much? Because they are buying assets with debt just like everyone else, and they don't actually care about ROI via rents, either due to "appreciation" (really, further inflation), or they're expecting the financial system to collapse.
- jlmorton 3y ago
  Blackrock doesn't care about the ROI of their housing investments, and they expect the financial system to collapse? Damn. Big if true.
Workaccount2 3y ago
These companies hardly exist, "evil corporations" is just super memeable and denizens of the internet will accept it as the answer to anything bad. In reality, the economy has been booming for the "haves" and those people are the ones bidding up homes and pay $50k over asking with a 6.5% mortgage. Corporations don't care much for home rentals when treasuries are paying 5% with zero overhead and zero risk. Sucks to be poor and sad to be poor and still eating the "evil corporations" delusion.

mlinhares 3y ago

Not only building new homes is unnecessarily complicated and expensive, single family homes are an incredible waste of space and money, had the US and it's big cities invested in apartment buildings with better amenities or forced developers to build shared neighborhood amenities Americans in general wouldn't be so incredibly against it. It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities.

wocka 3y ago
> It's insane to me that my hometown of 1M people in Brazil has more tall apartment buildings than Philadelphia, with incredibly better amenities. Would you mind sharing what the amenities are that you are referring to--both the in-building and neighborhood amenities? In the US I've seen gyms, swimming pools, shared hosting spaces, and some child-friendly spaces, to name a few.
- voisin 3y ago
  Just to add on to this, a number of older buildings in my city in Canada (say late 1960s to mid 1970s construction) even had woodworking shops as common amenities! Today there are pet washing stations, EV chargers, outdoor rooftop patios, movie theatres, etc. It’s incredible.
- mlinhares 3y ago
  Pools, BBQs, gyms, playgrounds, multi sports courts, party rooms, stores and restaurants. In PHL unless you’re paying big money in a new or refurbished building in center city (and there aren’t that many) you’re out of luck. Doesn’t help that schools also suck and are heavily segregated, which ended up forcing us to move to the suburbs into a single family home to raise our kids as we knew we wouldn’t have enough money to send them to private schools and didn’t want them on the public system there.
unethical_ban 3y ago
The only problem with apartments in the US is the lack of equity.

flir 3y ago

Are rental prices falling? If not, I suggest that the root problem is still not enough houses.

J_Shelby_J 3y ago

a) Housing is only a viable investment because of a shortage. If housing supply met housing demand, housing would be a depreciating asset. b) Investors turn around and rent/sell those houses, so they aren't actually eating into housing supply. What they are reducing the supply of is the bottom level of the rent seeking pyramid. Property ownership is simply so profitable that the average person now can't afford to buy in.

spir 3y ago

You only perceive corporate landlords as the greater problem because we're not living in the counterfactual reality where there are millions of new apartments that are inexpensive, tiny, safe, quiet, modern, clean, dignified, and well-located. In pretty much every major city in North America, it is illegal or there is too much red tape to build the affordable housing people actually want. Why is it that living in a tent on the street costs $0/month but the entry-level apartments cost ~$2k/month? Why are there no price points between $0 and $2k? The answer is bad government policy.

skeeter2020 3y ago
Maybe? Or how about they are in no-way comparable.Unless you are talking mass subsidization there is an absolute floor for providing housing, not to mention finite capacity for both tent cities and affordable apartments.
- JumpCrisscross 3y ago
  > Unless you are talking mass subsidization there is an absolute floor for providing housing Sure. We are nowhere close to that floor. Voters who reject supply and demand pay the consequence for their ignorance.
- Ajedi32 3y ago
  What would you say determines the level of that floor? It's an interesting question, because I can imagine lots of possible housing solutions that would be way cheaper than $2k/month and more pleasant than living in a tent on the street. So the question is why haven't those solutions been built?
- fatfingerd 3y ago
  The absolute floor is nothing, far less than the cost of tent cities which use a lot of horizontal space compared to high rises of prefab micro apartments. The trouble is that local government is coerced to eliminate people who don't directly or indirectly pay a lot of property tax, especially if they are minors and require school. The federal government should be required to pay general costs per head to local government from it's excessive collection of income tax to put an end to this nonsense of states and towns trying to evict the poor and steal the rich from each other.

ryukafalz 3y ago

> But other than zoning it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock just to flip into rentals. There was a timely video about this yesterday from Oh the Urbanity: https://youtu.be/BRqZBuu_Ers?si=NlavrFpm8sNTUcYp https://youtu.be/BRqZBuu_Ers?si=NlavrFpm8sNTUcYp Summary is that Rotterdam did just this, and the effect was that the price to purchase a house did not measurably decrease, and that rents rose. The neighborhoods regulated in this way had fewer immigrants and skewed wealthier than those that were not. So, not the effect we're looking for.

unethical_ban 3y ago
If more people actually owned, that's a positive.
- ryukafalz 3y ago
  If the result of that is excluding lower-income people from living there, I disagree.
- gruez 3y ago
  1. Homeowners being a powerful political bloc and using that power to stop development is part of the problem in the first place 2. Buying a house makes sense if you're a starting a family and/or setting down roots, but that's not everyone's situation. Students or young professionals get utterly shafted by lack of rental housing, because they don't have the income or the credit to buy a house, and they don't intend on staying long they'll get eaten by the transaction fees.
  - unethical_ban 3y ago
    You're not entirely wrong. Housing should be seen as more than just a place to live but less than a moneymaking investment - it should be seen as basic housing security for those who want roots as you said. NIMBYs do screw things over sometimes, I agree. And liquidity in mid-term housing supply is important. But I suggest that it would be better for society in the long term if more people had a stake in where they live.

Nifty3929 3y ago

What would happen to the person renting from the landlord, if the corporation hadn’t purchased the house to rent to them? Well, maybe that person would buy the house themselves to live in. But there still wouldn’t be any more houses for YOU to buy. Corporations and landlords aren’t the problem, lack of building is.

horpolopolil 3y ago
No, they are too. If you build, blackrock, or evergrand will buy it for a lot more than most can afford. The goal being to limit stock and push the prices of their asset up.
- max47 3y ago
  As long as they don’t leave it empty, they are not limiting the stock. Changing the name on a piece of paper doesn’t magically creates new houses out of thin air.
  - jessfyi 3y ago
    Well they are leaving them vacant. Both rentals and houses across the country are sitting unfilled. NYC has anywhere from 13-26k rent controlled apartments vacant. As of last year ~16 million homes were estimated to be vacant overall and increasing interest rates have likely increased that. Why? Because these large orgs have purchased them via debt and it's just a line-item on a spreadsheet to them. Just build might work in a world where market actors were wholly rational and the government regulations actually targeted these perverse incentives, but that's not the reality we currently find ourselves in.
    - dublinben 3y ago
      Why "Vacant Homes" Won't Solve the Housing Crisis - https://www.youtube.com/watch?v=3xZXdXxYBGU https://www.youtube.com/watch?v=3xZXdXxYBGU
    - vel0city 3y ago

titzer 3y ago

> the ability of large companies to buy up whatever is on the market, And that has a simple cause: they created too much money to prop up both the housing and stock markets. We're in an inflationary debt spiral that has a very high chance of going the same route as every other one in history; completely devaluing the currency, defaulting on debt, and issuing new currency. The rational play in such a scenario is to take on more debt to buy assets, because the debt will be wiped by inflation. Which is exactly the energy powering the debt spiral. It's nearly impossible to fix.

mindslight 3y ago
Raise the government-set lending rates and keep them there, let overextended private parties (like highly leveraged asset owners) actually default en masse, and slowly pay down the government's external debt by moving it to the federal reserve. I'm not saying that the metastasized finance industry will let this happen, but there is a way out of the spiral.
- titzer 3y ago
  I agree with those things, but we both see how unworkable it is. It hurts the monied class and edifice that holds up the house of cards made of people who produce no real value other than pulling levers in the casino.

Elyra 3y ago

> Comparatively, immigrants don’t have the purchasing power to compete What makes you say that? As someone who's currently dating a Chinese immigrant I have been made aware of an entire world I didn't know existed. They often have much better family support so their parents will send money from home to help them buy a house. From her masters program at university, which was all immigrants because universities here seem to be taking advantage of the fact that this is an easy path for immigration, everyone in her class (80 people) already have a house. From my group of friends at university, only 1 of them has a house, and 1 a condo (out of the ~50 people I loosely keep in touch with, all with good careers). We would too if my parents had been willing to meet her parents partway and give us a 50k loan, but they preferred to buy a 100k luxury car for themselves instead (they also refuse to acknowledge the current housing situation). She also found out from WeChat that there are a number of Chinese landlords in Toronto who own blocks of houses by investing money on behalf of friends and family back home to get around foreign investment regulations, and nothing is being done to stop it. edit: I'm not sure why this was downvoted, it may be anecdotal evidence, but nothing I said here is untrue, nor did I make any claims other than there being immigrants who are able to compete in the current housing market.

ebiester 3y ago
It's likely true. It's also relatively small relative to the amount of money being funneled through the REITs.

gniv 3y ago

> it seems it would help more if the government would step in to disallow large leasing companies buying up giant swathes of the housing stock My instinct is to disagree. That could create other problems and it's not a given that it would help prices. Encouraging growth by changing zoning seems preferable. We know that it works, since Japan has been doing it forever.

thedaly 3y ago
If the policy goal is to have more homeowners, which I think it should be, you have to do something about private equity buying up all the home stock. Blackrock and its ilk of private equity firms buying up single family homes to turn them into rentals stands in direct opposition to the goal of more people owning homes.
- ryandrake 3y ago
  Where was Blackrock when I was desperately trying to sell my home last year? Reduced price three times, and I can assure you that Mister Blackrock didn't contact my agent even once. For an evil wizard intent on gobbling up homes, he didn't seem interested in mine.

JumpCrisscross 3y ago

> the greater problem is the ability of large companies to buy up whatever is on the market Out of curiosity, where? How do they know this? I bought my house “cash.” It doesn’t mean I filed my car with paper. Just that I didn’t require a financing contingency. (Brokers typically don’t know who they lost a house to until property records are updated.)

datavirtue 3y ago
Then all they see is the name of the trust...and they still don't know.
- JumpCrisscross 3y ago
  > all they see is the name of the trust I’m arguing they don’t. If a client looks likely to be soothed by losing to a corporate landlord, versus anyone else, there is a real estate broker who will sell them that line.
escapedmoose 3y ago
You can look up the listings for the rentals after the house has been flipped. And damn, good for you being able to purchase a home without financing! Most of us can’t pull that off

mwbajor 3y ago

"Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw." Does more demand drive up price or does it not? Large swaths of farmland are being bulldozed in my state to build townhouses that are largely populated by 1st generation immigrants. I'm sure this is not the only place.

dukeyukey 3y ago

Rentals are more accessible to poorer people than buying somewhere so I'd be surprised if that led to homelessness.

luxuryballs 3y ago

I have a hunch that companies paying $50k over to turn a house into a rental and governments paying the rent of immigrants are not things happening in a vacuum.

NoMoreNicksLeft 3y ago

> Comparatively, immigrants don’t have the purchasing power to compete, Does that even matter? They don't have to compete on house purchases, they just have to increase demand on rentals, even at the low end. This pushes everyone in an income bracket above them to compete for the higher priced rentals, until those say "screw this, I'll just buy" find out that even that's no longer possible. In this game, it's possible for everyone to lose.

tempsy 3y ago

Is the problem really just boomers who have rented long term and never bought? Even if you own you could be forced to sell your house if you can't afford the property taxes and maintenance costs associated with your home, especially in states where they aren't strict limits on how much your property taxes can increase each year. A $500k house in Texas is more than $10k in property taxes a year. Not cheap especially if you do not work or have limited income.

granshaw 3y ago

The Blackrock issue is overhyped. Saw a post recently showing that the percentages aren’t actually that high, don’t have time to find it now but hope to do so later

gadders 3y ago

>>Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. Who do you think the houses are being rented to? If there is an excess of demand, then it will push up prices or rents or both.

scld 3y ago

The ability for them to do this is only granted to them by the restrictiveness of the regulatory state. You've prescribed a byzantine series of rules in order to free up supply when the quickest step is to just free up supply, which will make "buying up whatever is on the market" a gigantic waste of money because it will not be possible to corner said market.

tempsy 3y ago

Investors cannot magically make rentals profitable at these prices and interest rates.

adasdasdas 3y ago

Yea we desperately need land reform. What Japan did after WW2 should set an example [0]. Also, investment properties should be heavily taxed to disincentivize this behavior. [0]: http://www.crosscurrents.hawaii.edu/content.aspx?lang=eng&site=japan&theme=work&subtheme=AGRIC&unit=JWORK099 http://www.crosscurrents.hawaii.edu/content.aspx?lang=eng&si...

wuliwong 3y ago

I don't understand the math of this? If the company is paying way over asking price, they will be losing money for some number of years while renting the property. I guess the idea is that eventually they will turn cash flow positive? So these companies have a bunch of cash in reserve? My personal experience in recent years, in the city of Atlanta, Atlanta suburbs, and Philadelphia suburbs, is that I do not see companies buying up all the houses to rent. In the Philly burbs in particular, I see traditional home buyers bidding up the prices. Even with the high interest rates, the low supply is still causing a good bit of competition for each new listing that is in good shape. The supply of rentals in this area is pretty low as well. So if there were these large swathes of homes going from family owned to rentals, I would think it would be pretty obvious when I'm looking for a rental.

BizarroLand 3y ago
The idea is simple, you burn through money to establish a monopoly, then squeeze the profits out on the back end. Hold on long enough to get your money back plus a hefty profit, and then when it seems like the laws will change to outlaw what you're doing, then sell ahead of the wave for more than you paid to begin with and leave the next sucker holding the check when the bottom falls out. It's worked so many times in the past and barring some sort of major legislation it will happen again.

lp0_on_fire 3y ago

> Comparatively, immigrants don’t have the purchasing power to compete, so saying they’re the problem is a weird conclusion to draw. But they do put downward pressure on salaries as the labor pool gets larger. Legal, or otherwise.

hyuuu 3y ago

i have never heard any investor who is willing to put $50K over asking, they are dictated by their pro-forma, they run the numbers and it has to beat S&P 500, much more stricter in sending offers. Families however..they purchase with emotions or schools for their kids, they are the ones who drive the price up. https://www.freddiemac.com/perspectives/sam-khater/first-time-homebuyers-are-driving-market-forward https://www.freddiemac.com/perspectives/sam-khater/first-tim...

closeparen 3y ago

Why are the needs of prospective renters less legitimate than those of prospective owner-occupiers?