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A: Investors snagged 1 in 5 homes for sale in Boston area B: worsening housing crisis 'A' does not lead to 'B'. Investors are money chasers. They wi

by screye 3y ago

A: Investors snagged 1 in 5 homes for sale in Boston area B: worsening housing crisis 'A' does not lead to 'B'. Investors are money chasers. They will pursue gains where the system shows potential for gains. That simple. With the large amount of temporary residents (students & researchers) in Boston, it is the perfect city for corporate rental properties. American cities are woefully under-built. Boston is especially primed for further densification, because it has the infrastructure (other than the current MBTA hiccup) and walkability to scale up with more people. Sadly, the US treats houses as an odd combination of emotional-basic-need and investment. It would've been fine if it was one or the other. The emotional-basic-need part of it allows local individuals to exercise more control on housing in their neighborhood than would be allowed for any other tradeable-investment. The investment part of it leads to the expectations of prices needing to always go up. So you get high upside, and protection from downside at the expense of everyone who isn't a home owner. Investors exploit this dissonance, but it is entirely on the administration for allowing it to exist in the first place. If housing height limits were eased & housing regulations were relaxed (2 fire exits in every building, parking minimum, ""environmental certifications""), then these investors would only be able to make money off thin margins by predicting demand. (like commodity trading). But instead, the US gives unjustifiably oppressive privileges to all homeowners including large investing companies, and now, we're seeing the natural results of it.

TheCleric 3y ago
A does not ALWAYS lead to B, but if the area has a scarcity of housing, then it will. Here's the basic logic in my head: We'll say the total cost of available housing in an area is H. These investors now own 0.2H They will then do one of 2 things: Either put the housing back on the market for more than they paid (they are investors after all). We'll say they want to make P% profit. So the cost of the housing that was .2 * H is now .2 * H * (1 + P/100) = .2 * H + P * H / 5. So now the total cost of available housing has gone up, meaning that any housing difficulties are now worse. The other alternative is even more bleak. The investors buy the housing, and then hold on to it (without renting it) in hopes of making something higher than P% at a future date. We now have 0-20% less housing on the market, which means that housing difficulties are now worse. No matter how you slice it, injecting investors (i.e., middle men) into a scarce market will only ever increase cost or scarcity.

by screye 3y ago

TheCleric 3y ago

A does not ALWAYS lead to B, but if the area has a scarcity of housing, then it will. Here's the basic logic in my head: We'll say the total cost of available housing in an area is H. These investors now own 0.2H They will then do one of 2 things: Either put the housing back on the market for more than they paid (they are investors after all). We'll say they want to make P% profit. So the cost of the housing that was .2 * H is now .2 * H * (1 + P/100) = .2 * H + P * H / 5. So now the total cost of available housing has gone up, meaning that any housing difficulties are now worse. The other alternative is even more bleak. The investors buy the housing, and then hold on to it (without renting it) in hopes of making something higher than P% at a future date. We now have 0-20% less housing on the market, which means that housing difficulties are now worse. No matter how you slice it, injecting investors (i.e., middle men) into a scarce market will only ever increase cost or scarcity.