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This is because the American home buyer isn't competing with other American home buyers anymore. They're competing with VCs trying to build developments and co

This is because the American home buyer isn't competing with other American home buyers anymore. They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit. Everyone who buys a house today wants the value to go up. Nobody who can afford a house needs one. They are not commodities that you utilize and repair. They are now investments, vehicles to grow your money. That's great for all the snobbish out of touch retirees. But the middle class needs somewhere to hang their hat so they can rest up and make it to work tomorrow.

zeroCalories 3y ago
This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem worse because we will have even less development that people need. We need to heavily update construction regulations to be more sensible like Tokyo, and we probably need massive amount of direct and indirect public housing investments.
- zelon88 3y ago
  I would argue we need to put limitations on what entities can purchase residential property. There is no reason a corp needs to own a 2 bedroom house. It is manipulating a critical market and destabilizing everything. Push them out of the market. They should have have no skin in this game. You want to increase the supply. I want to tank the demand. Your method won't work because if regular people could afford to compete, they would be already. The players in the market manipulated the prices once to give themselves an advantage. You're just giving them an opportunity to do it again. Only now they have the market cap to do it right. The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA. And taxes will come down too because towns will have no choice but to tax property owners more reasonably.
  - CapstanRoller 3y ago
    How can this correction take place? Individual home owners and business interests have a vested interest in maintaining a very tight grip on the status quo with regard to zoning, which is the primary tool for driving housing reform. They will continue to do everything in their power to prevent the construction of affordable housing, because it will destroy their current real estate investments. The non-landed folks have zero leverage within the political system.
  - zeroCalories 3y ago
    Rentals make up a small percentage of single family homes. Around 5% depending on where you are. Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. We know flooding supply works because we've seen it play out. Tokyo is the biggest metro area in the world, with a growing population, and reasonable rents because the government took serious measures to increase supply. Restricting demand by banning corporate investors probably won't help, but even if they did it did the effects would be minor. Focus on the solutions we know will work.
    - Supermancho 3y ago
      > Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. What data do you have to support this? > As of 2022, investment companies own about one-fourth of all single-family homes in the US, accounting for 22% of American homes sold, down from 80% in 2020-2021 Naturally, the homes bought are all in the most densely populated areas with a relatively new construction (gentrified neighborhoods). I think it's gonna be a couple years before prices drop.
      - zeroCalories 3y ago
        https://www.yardimatrix.com/publications/download/file/2530-MatrixBulletin-SFRSector-July2022?signup=false https://www.yardimatrix.com/publications/download/file/2530-... Large institutions own 5%. Most of these "investors" are house flippers and small landlords trying to "make it big in real estate". It's not the 1% strangling the working class, it's the 10%. Any solution that doesn't hit them the hardest won't be a solution. Infact, we want more density, we need more gentrification, so I don't want to discourage large institutions from investing in a new apartment. But at the very least, if you claim to care about housing prices, don't prevent the government from building more housing.
- zelon88 3y ago
  If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game and you'll have the corporate owned HOAs that are just out of control expensive. Oh, and plenty of tent cities.
  - zeroCalories 3y ago
    You don't need low income housing. Just make government housing at market rate. If you really want to be kind, offer it at maintenance cost. Even if housing prices don't fall(they probably will), they won't rise faster than inflation if the market is sufficiently flooded. Eventually wages will catch up to prices. Yes it will take a long time, but that's why we need to do it now. No. Twenty years ago.
  - CapstanRoller 3y ago
    I'll take C&C barracks (a basic Quonset Hut) at this point, as long as I can own it and it's legally habitable. I don't care about aesthetics. In fact, something like that would be ideal as I could customize it completely. Unfortunately those sorts of structures are banned by most municipalities. https://en.m.wikipedia.org/wiki/Quonset_hut https://en.m.wikipedia.org/wiki/Quonset_hut
  - toomuchtodo 3y ago
    > If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game It does not have to be this way. https://www.youtube.com/watch?v=sKudSeqHSJk https://www.youtube.com/watch?v=sKudSeqHSJk https://www.youtube.com/watch?v=d6DBKoWbtjE https://www.youtube.com/watch?v=d6DBKoWbtjE
- friend_and_foe 3y ago
  Well it's two problems: the monetization of non money assets and the artificial housing shortage to encourage housing as an investment vehicle. A significant percentage of property investment is simply hedging against inflation. Even someone speculating is doing so to a large degree. So the other fundamental problem is that it is impossible to save money because it is constantly being debased.
xphos 3y ago
I think this is flipped. VC's wouldn't compete here if the the supply was much bigger because than the price globally would dip they wouldn't have a leverage advantage. If there was no shortfall in constructions for multiple decades that VC see houses as an opportunity. I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses. Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses
- PH95VuimJjqBqy 3y ago
  If they're using it to "house cash" then the only thing they need is continued inflation of housing costs. Even if it were lower than today, the inflation is the only thing needed for them to continue investing in it as its then considered to be a protection against inflation if nothing else.
  - userinanother 3y ago
    They will get burned on interest rates and transaction fees
    - PH95VuimJjqBqy 3y ago
      that's not true, these things exist today and they don't stop anyone from investing. What you're trying to say is that it would be less profitable and that may be true but as long as it tracks with inflation it would be worth it as an investment tool.
      - userinanother 3y ago
        That’s a big caveat. Inflation is 4-5% officially, bonds are 7-8 ish maybe more for real estate investment. But real estate prices are falling or flat. If you suddenly need to earn even 6% off a house you need to rent it for quite a bit. It might make sense still at the low end (under 250k) but a 500k property needs to rent out for 2500a month to break even. And that’s not including taxes, maintenance, vacancy, admin, and transaction costs at sale. House prices need to come down for this to be a profitable venture again. The bet is that real estate prices will rise to new highs faster than inflation or at least comparable assets. If that doesn’t happen then you lose money

zeroCalories 3y ago

This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem worse because we will have even less development that people need. We need to heavily update construction regulations to be more sensible like Tokyo, and we probably need massive amount of direct and indirect public housing investments.

zelon88 3y ago
I would argue we need to put limitations on what entities can purchase residential property. There is no reason a corp needs to own a 2 bedroom house. It is manipulating a critical market and destabilizing everything. Push them out of the market. They should have have no skin in this game. You want to increase the supply. I want to tank the demand. Your method won't work because if regular people could afford to compete, they would be already. The players in the market manipulated the prices once to give themselves an advantage. You're just giving them an opportunity to do it again. Only now they have the market cap to do it right. The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA. And taxes will come down too because towns will have no choice but to tax property owners more reasonably.
- CapstanRoller 3y ago
  How can this correction take place? Individual home owners and business interests have a vested interest in maintaining a very tight grip on the status quo with regard to zoning, which is the primary tool for driving housing reform. They will continue to do everything in their power to prevent the construction of affordable housing, because it will destroy their current real estate investments. The non-landed folks have zero leverage within the political system.
- zeroCalories 3y ago
  Rentals make up a small percentage of single family homes. Around 5% depending on where you are. Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. We know flooding supply works because we've seen it play out. Tokyo is the biggest metro area in the world, with a growing population, and reasonable rents because the government took serious measures to increase supply. Restricting demand by banning corporate investors probably won't help, but even if they did it did the effects would be minor. Focus on the solutions we know will work.
  - Supermancho 3y ago
    > Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. What data do you have to support this? > As of 2022, investment companies own about one-fourth of all single-family homes in the US, accounting for 22% of American homes sold, down from 80% in 2020-2021 Naturally, the homes bought are all in the most densely populated areas with a relatively new construction (gentrified neighborhoods). I think it's gonna be a couple years before prices drop.
    - zeroCalories 3y ago
      https://www.yardimatrix.com/publications/download/file/2530-MatrixBulletin-SFRSector-July2022?signup=false https://www.yardimatrix.com/publications/download/file/2530-... Large institutions own 5%. Most of these "investors" are house flippers and small landlords trying to "make it big in real estate". It's not the 1% strangling the working class, it's the 10%. Any solution that doesn't hit them the hardest won't be a solution. Infact, we want more density, we need more gentrification, so I don't want to discourage large institutions from investing in a new apartment. But at the very least, if you claim to care about housing prices, don't prevent the government from building more housing.
zelon88 3y ago
If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game and you'll have the corporate owned HOAs that are just out of control expensive. Oh, and plenty of tent cities.
- zeroCalories 3y ago
  You don't need low income housing. Just make government housing at market rate. If you really want to be kind, offer it at maintenance cost. Even if housing prices don't fall(they probably will), they won't rise faster than inflation if the market is sufficiently flooded. Eventually wages will catch up to prices. Yes it will take a long time, but that's why we need to do it now. No. Twenty years ago.
- CapstanRoller 3y ago
  I'll take C&C barracks (a basic Quonset Hut) at this point, as long as I can own it and it's legally habitable. I don't care about aesthetics. In fact, something like that would be ideal as I could customize it completely. Unfortunately those sorts of structures are banned by most municipalities. https://en.m.wikipedia.org/wiki/Quonset_hut https://en.m.wikipedia.org/wiki/Quonset_hut
- toomuchtodo 3y ago
  > If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game It does not have to be this way. https://www.youtube.com/watch?v=sKudSeqHSJk https://www.youtube.com/watch?v=sKudSeqHSJk https://www.youtube.com/watch?v=d6DBKoWbtjE https://www.youtube.com/watch?v=d6DBKoWbtjE
friend_and_foe 3y ago
Well it's two problems: the monetization of non money assets and the artificial housing shortage to encourage housing as an investment vehicle. A significant percentage of property investment is simply hedging against inflation. Even someone speculating is doing so to a large degree. So the other fundamental problem is that it is impossible to save money because it is constantly being debased.

xphos 3y ago

I think this is flipped. VC's wouldn't compete here if the the supply was much bigger because than the price globally would dip they wouldn't have a leverage advantage. If there was no shortfall in constructions for multiple decades that VC see houses as an opportunity. I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses. Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses

PH95VuimJjqBqy 3y ago
If they're using it to "house cash" then the only thing they need is continued inflation of housing costs. Even if it were lower than today, the inflation is the only thing needed for them to continue investing in it as its then considered to be a protection against inflation if nothing else.
- userinanother 3y ago
  They will get burned on interest rates and transaction fees
  - PH95VuimJjqBqy 3y ago
    that's not true, these things exist today and they don't stop anyone from investing. What you're trying to say is that it would be less profitable and that may be true but as long as it tracks with inflation it would be worth it as an investment tool.
    - userinanother 3y ago
      That’s a big caveat. Inflation is 4-5% officially, bonds are 7-8 ish maybe more for real estate investment. But real estate prices are falling or flat. If you suddenly need to earn even 6% off a house you need to rent it for quite a bit. It might make sense still at the low end (under 250k) but a 500k property needs to rent out for 2500a month to break even. And that’s not including taxes, maintenance, vacancy, admin, and transaction costs at sale. House prices need to come down for this to be a profitable venture again. The bet is that real estate prices will rise to new highs faster than inflation or at least comparable assets. If that doesn’t happen then you lose money