12 ms·

New legislation proposes to take Wall Street out of the housing market

61 points by goplayoutside 3y ago

goplayoutside 3y ago
https://archive.is/Exu9f https://archive.is/Exu9f
redder23 3y ago
I have a feeling they will fight this with all the lawyers and lobbyists and it will not come to pass.
- 000ooo000 3y ago
  Yes, an inkling..
deleted 3y ago
[deleted]
ripvanwinkle 3y ago
I believe this will eventually come to pass as the housing crisis impacts more and more families and eventually becomes an election issue. It's unlikely to happen in the first few attempts though It's a bit like healthcare - the national consensus has gradually but firmly shifted in the direction of a regulated marketplace. Took a while but eventually did happen.
- esoterica 3y ago
  Banning investors from owning homes will do NOTHING to alleviate the housing crisis. The problem is lack of supply, not the capital structure of the supply. We will never solve the housing crisis as long as people like you continue to deny basic economics and refuse to acknowledge the basic supply and demand problem that is causing rents and home prices to skyrocket.
  - PlunderBunny 3y ago
    You can always argue that a problem that involves shortages will be alleviated by more supply (like saying that building more roads will solve traffic congestion), but if the increased supply is just captured by the same forces that capture it now, you haven’t solved anything.
    - konschubert 3y ago
      So these hedge funds buy the houses and let them sit empty forever? Or how do you imagine they “capture supply”?
      - toomuchtodo 3y ago
        They buy the asset and crank rent as high as they can. That’s capturing supply. When you buy a home, your payment is fixed for the life of the loan, and instead of being exposed to annual rent increases that can greatly exceed inflation, you as the homeowner are insulated from a private corporation’s extraction efforts due to that fixed payment (while your potential annual wage increases inflate away the debt). Google yieldstar to understand the collusion in doing this. If homes don’t end up in the hands of people, they end up in the hands of corporations who treat their renters like cattle. At current build rates, supply may never exceed the rate at which institutional investors can acquire these assets, hence the need for legislation and regulation. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
        konschubert 3y ago
        I don’t even know where to start. The buying and renting markets for houses are linked. These landlords need to rent their houses, so clearly they meeting a demand in the market. That demand would not go away and thus prices would not go down if the houses were owned privately. There would simply be more former renters, now trying to buy. You can keep blaming the messenger or you can just accept that the housing demand is real and work to increase housing supply. One of these things works.
simoncion 3y ago
There's a _really_ cool way to take Wall Street out of the housing market. Build. Enough. Housing. Enough housing means supply meets or exceeds demand which means prices fall which means Wall Street doesn't get the returns they want which means they move on to prey on something else.
- 000ooo000 3y ago
  Wouldn't removing demand from the likes of Wall St make the required supply much easier to achieve?
  - refurb 3y ago
    Wall Street would lose interest if the housing market stopped being pumped.
    - simoncion 3y ago
      Yep. "Cities and municipalities suddenly start building enough housing to meet current and even maybe expected-future demand" is often in the "Known Risks" section of the SEC filings of these sorts of businesses.
  - konschubert 3y ago
    No. The renters would then push into the house buying market. The demand would be the same.
    - 000ooo000 3y ago
      That's the required supply I am talking about though
- all2 3y ago
  But who will build enough housing? And will they be able to do it at a reasonable profit? There have to be the appropriate incentives for builders to produce.
morsecodist 3y ago
Putting aside whether or not discouraging investment makes sense as a strategy, it is absolutely wild that this is specific to single family homes. Apartments are unaffordable as well and they are also often owned by funds. Are people who live in apartments just out of luck then? Discouraging investors from owning single family homes could encourage more speculation on multifamily homes.
- dlss 3y ago
  The price of rent roughly tracks the price of a mortgage, and apartments are only about 20% of all homes. If this legislation passes, and home prices go down, then rental prices for homes will go down, and apartment rental prices will need to match those price reductions to attract renters.
  - seanmcdirmid 3y ago
    They are somewhat opposite: rents go down when everyone wants to (and can) buy, they go up when people don’t want to (or cannot) buy. This is just a short term effect, long term rents should track home values. I see this bill as a no-op: Wall Street will continue to invest in multi-family rental buildings, as it always has, and SFH purchases were always somewhat of a side show.
  - deleted 3y ago
    [deleted]
edrxty 3y ago
I'm for this, but it raises questions about what will happen to the millions of renters living in these investment properties. They're mostly not just sitting there empty.
- readthenotes1 3y ago
  Apparently a bunch are, otherwise vacancy taxes wouldn't be a thing
jacknews 3y ago
Short of banning land ownership (IMHO the correct solution, since the earth belongs to all of us) they should just put large taxes on land, with some rebates if you actually live there, farm there, etc.
- makk 3y ago
  And those taxes will be paid by whom? How does this help the renter?
  - konschubert 3y ago
    It helps the renter because it forces the land owner to develop the land with as many apartments as possible, thus increasing supply.
- rayiner 3y ago
  [flagged]
  - lividly3529 3y ago
    Do you not live in your house? The way I read their comment was 'If you own a house then you have high tax. If live in house 1 allotment of rebates if you also own the house equal to 1 house of extra tax.' If the "vagrants" dont own the house then they get nothing. If you don't live in the house you get no extra. Probably means that small 1-4 family rented dwellings will be come impossible but larger apartment complexes should still be viable.
    - rayiner 3y ago
      I was responding to the part about nobody being able to own land.
      - jacknews 3y ago
        Not being able to own land does not mean you cannot be sole occupant. It's just that you'd lease it from government (aka the rest of society), rather than owning it outright in perpetuity (and pass to your offspring), to do as you wish with, etc.
im_down_w_otp 3y ago
I’m not sure how this would work practically in the US. A huge constituency of people has most of their finances centered around their home as minimally a value store and maximally a growth investment. Having homes go down in price or even just leveling off would create a whole other host of challenges for a society that’s been organized so completely for so long around home values going up.
- carllerche 3y ago
  Good thing this would have no impact on home values. Hedge funds getting involved is a symptom, not a cause. Hedge funds buy properties *because* home values go up due to limited supply. The only thing that can lower housing prices is a dramatic increase in supply.
esoterica 3y ago
Investors that buy houses just rent them out again, so the houses are not removed from the supply of housing, just moved from the homeowner's market to the rental market. There is nothing wrong with this - renters need a place to live too! The problem is the lack of overall housing, not the balance between homes to rent and buy. The fact that it's profitable to buy homes and rent them out means that renters are currently overpaying relative to buyers, and shifting properties over to the rental market will help correct this inequality. If you advocate against this then you are arguing that renters should be screwed over the subsidize homebuyers. If you want to screw over wall street you should build more homes to flood supply and tank the value of their investment. Of course many of the people who complain about Wall Street buying up homes are also NIMBYs who adamantly block all new housing because they are supply-and-demand deniers or vacancy truthers.
- gumballindie 3y ago
  > There is nothing wrong with this - renters need a place to live too! They wouldnt be renters if they could afford buying homes and that would make them home owners, living in their own homes not someone else’s.
  - esoterica 3y ago
    This is just wrong, there are many people who rent for non financial reasons (e.g they plan on moving within a few years). Just because you’ve chosen to nest in the same place until you die doesn’t mean everyone wants to.
- soupfordummies 3y ago
  A lot of times they just buy em and let em sit too though. A lot more than individuals since large corps can afford to do that.
  - JamesBarney 3y ago
    Is there any evidence of that? The last thing any landlord I've ever talked to wanted was for a property to sit empty.
w10-1 3y ago
Legislative proposals like this in an election year work to put candidates on record and fish for contributions. It seems unworkable. The $50M threshold for hedge funds is easily circumvented by breaking up funds, and the "on any day" language makes bulk transfers tricky. "Single-family" includes 1-4 units, so all those savers who prefer real estate to the stock market could have their buyers dry up. (No comment on the actual economic or fairness benefit.) However, what could work this year and be even more useful would be to strip out everything except reporting requirements. The government has really no idea what's happening in the housing market or why, and no evidence that could quantify the degree of market control or indicate illegal collusion. This could be combined with anti-money-laundering reporting requirements designed to disclose real estate being used to launder dirty money, with appropriate requirements to disclose the beneficial owners, and detect the effective but unregistered sale of property by selling the owning entity. There's really no policy objection because property already must be registered, and there are no real business confidentiality concerns from the government having this information. If/since the reporting would be limited to real estate, it wouldn't raise the substantial lobbying hackles of all the other businesses relying on shell corporations, and might even garner the support of the big hedge funds seeking to scare off competition.
- r00fus 3y ago
  > The $50M threshold for hedge funds is easily circumvented by breaking up funds Wouldn't this put those funds at a significant disadvantage?
Incipient 3y ago
I'm yet to see a holistic review of housing. Yes corporate ownership is bad, I think, however the availability of land is also a problem, the cost of building, which is driven by the cost of materials and labour. Arbitrarily capping one part of the problem I have doubts will help overall, and possibly make the situation worse. Eg if we block wall Street investment, and could that money go into other areas and increase competition for materials and labour and make it harder and more expensive to build homes?
- carllerche 3y ago
  IMO corporate ownership isn't bad as corporations rent housing to individuals who can't afford mortgages. Let's say corporations are 100% banned from the housing market. 85% of Americans cannot qualify for a mortgage, where would they live?
andrewstuart 3y ago
Housing has been destroyed by unrestrained capitalism. Capitalism without limits, without social seatbelts is a bad thing. I don’t care if this makes the pure capitalists shriek “COMMUNISM!”. In fact it’s not communism to have a society that has rules around housing, it’s healthy social democracy. Housing is a fundamental human need and houses should be owned by people and every single citizen who wants to own a house should be able to buy one within their local community. Teachers, clerks, garbage collectors, everyone. It used to be this way before housing turned into a real world monopoly game. Rich people - ie those who own one or more houses tend to be completely lacking in empathy for those who don’t own a house. And people who own houses tend to have lots of advice like “move somewhere cheaper further out”, but such advice is easy to give because they never have to take such worthless and insensitive advice. Singapore has 89% owner occupied housing. This should be the mission for any country that cares about its people. But modern governments don’t care about their people, they care about growth, and about making politicians and vested interests richer.
- konschubert 3y ago
  Housing is expensive because supply is artificially limited. You can increase supply by allowing more construction. No need to decree the end of capitalism.
RCitronsBroker 3y ago
This is a paper tiger. just by banning "Hedgefonds" (misnomer of the decade by the way, they do anything but hedge these days), or, more precisely investment funds structured as limited partnerships, from owning residential real estate you do absolutely NOTHING to mitigate what happened in 2008. hedge funds are just an easily hated scapegoat, because they ARE insufferable in many cases, but they are not at fault here. The real problem is the moral hazard that is growing exponentially with every increase in distance between the ones dishing out the money and the ones who are liable. If you can repackage mortgages into more and more complex derivatives you can sell to other people, and you also figure out a way to game rating agencies into a triple A rating by misleading them with thin-file FICO scores and faux diversification, you can profit from deadbeat customers and make someone else the bag holder at the same time. That’s the archetypal moral hazard. The institutional clients don’t understand that correlation increases with volatility, they are consoled by the ratings and don’t realize they are part of a time bomb, waiting to drag the whole economy down with it.
nojvek 3y ago
It’s a step in right direction to cool off demand, but the big issue is supply. Make a law that building permits can’t take longer than 6 months. No nimbysm crap. Permits can only be denied if the building plans don’t meet code and cause major environmental issues. Also permits shouldn’t cost a fortune. Permits are a huge bottleneck. A piece of paper.

61 points by goplayoutside 3y ago

goplayoutside 3y ago

https://archive.is/Exu9f https://archive.is/Exu9f

redder23 3y ago

I have a feeling they will fight this with all the lawyers and lobbyists and it will not come to pass.

000ooo000 3y ago
Yes, an inkling..

deleted 3y ago

[deleted]

ripvanwinkle 3y ago

I believe this will eventually come to pass as the housing crisis impacts more and more families and eventually becomes an election issue. It's unlikely to happen in the first few attempts though It's a bit like healthcare - the national consensus has gradually but firmly shifted in the direction of a regulated marketplace. Took a while but eventually did happen.

esoterica 3y ago
Banning investors from owning homes will do NOTHING to alleviate the housing crisis. The problem is lack of supply, not the capital structure of the supply. We will never solve the housing crisis as long as people like you continue to deny basic economics and refuse to acknowledge the basic supply and demand problem that is causing rents and home prices to skyrocket.
- PlunderBunny 3y ago
  You can always argue that a problem that involves shortages will be alleviated by more supply (like saying that building more roads will solve traffic congestion), but if the increased supply is just captured by the same forces that capture it now, you haven’t solved anything.
  - konschubert 3y ago
    So these hedge funds buy the houses and let them sit empty forever? Or how do you imagine they “capture supply”?
    - toomuchtodo 3y ago
      They buy the asset and crank rent as high as they can. That’s capturing supply. When you buy a home, your payment is fixed for the life of the loan, and instead of being exposed to annual rent increases that can greatly exceed inflation, you as the homeowner are insulated from a private corporation’s extraction efforts due to that fixed payment (while your potential annual wage increases inflate away the debt). Google yieldstar to understand the collusion in doing this. If homes don’t end up in the hands of people, they end up in the hands of corporations who treat their renters like cattle. At current build rates, supply may never exceed the rate at which institutional investors can acquire these assets, hence the need for legislation and regulation. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
      - konschubert 3y ago
        I don’t even know where to start. The buying and renting markets for houses are linked. These landlords need to rent their houses, so clearly they meeting a demand in the market. That demand would not go away and thus prices would not go down if the houses were owned privately. There would simply be more former renters, now trying to buy. You can keep blaming the messenger or you can just accept that the housing demand is real and work to increase housing supply. One of these things works.

simoncion 3y ago

There's a _really_ cool way to take Wall Street out of the housing market. Build. Enough. Housing. Enough housing means supply meets or exceeds demand which means prices fall which means Wall Street doesn't get the returns they want which means they move on to prey on something else.

000ooo000 3y ago
Wouldn't removing demand from the likes of Wall St make the required supply much easier to achieve?
- refurb 3y ago
  Wall Street would lose interest if the housing market stopped being pumped.
  - simoncion 3y ago
    Yep. "Cities and municipalities suddenly start building enough housing to meet current and even maybe expected-future demand" is often in the "Known Risks" section of the SEC filings of these sorts of businesses.
- konschubert 3y ago
  No. The renters would then push into the house buying market. The demand would be the same.
  - 000ooo000 3y ago
    That's the required supply I am talking about though
all2 3y ago
But who will build enough housing? And will they be able to do it at a reasonable profit? There have to be the appropriate incentives for builders to produce.

morsecodist 3y ago

Putting aside whether or not discouraging investment makes sense as a strategy, it is absolutely wild that this is specific to single family homes. Apartments are unaffordable as well and they are also often owned by funds. Are people who live in apartments just out of luck then? Discouraging investors from owning single family homes could encourage more speculation on multifamily homes.

dlss 3y ago
The price of rent roughly tracks the price of a mortgage, and apartments are only about 20% of all homes. If this legislation passes, and home prices go down, then rental prices for homes will go down, and apartment rental prices will need to match those price reductions to attract renters.
- seanmcdirmid 3y ago
  They are somewhat opposite: rents go down when everyone wants to (and can) buy, they go up when people don’t want to (or cannot) buy. This is just a short term effect, long term rents should track home values. I see this bill as a no-op: Wall Street will continue to invest in multi-family rental buildings, as it always has, and SFH purchases were always somewhat of a side show.
- deleted 3y ago
  [deleted]

edrxty 3y ago

I'm for this, but it raises questions about what will happen to the millions of renters living in these investment properties. They're mostly not just sitting there empty.

readthenotes1 3y ago
Apparently a bunch are, otherwise vacancy taxes wouldn't be a thing

jacknews 3y ago

Short of banning land ownership (IMHO the correct solution, since the earth belongs to all of us) they should just put large taxes on land, with some rebates if you actually live there, farm there, etc.

makk 3y ago
And those taxes will be paid by whom? How does this help the renter?
- konschubert 3y ago
  It helps the renter because it forces the land owner to develop the land with as many apartments as possible, thus increasing supply.
rayiner 3y ago
[flagged]
- lividly3529 3y ago
  Do you not live in your house? The way I read their comment was 'If you own a house then you have high tax. If live in house 1 allotment of rebates if you also own the house equal to 1 house of extra tax.' If the "vagrants" dont own the house then they get nothing. If you don't live in the house you get no extra. Probably means that small 1-4 family rented dwellings will be come impossible but larger apartment complexes should still be viable.
  - rayiner 3y ago
    I was responding to the part about nobody being able to own land.
    - jacknews 3y ago
      Not being able to own land does not mean you cannot be sole occupant. It's just that you'd lease it from government (aka the rest of society), rather than owning it outright in perpetuity (and pass to your offspring), to do as you wish with, etc.

im_down_w_otp 3y ago

I’m not sure how this would work practically in the US. A huge constituency of people has most of their finances centered around their home as minimally a value store and maximally a growth investment. Having homes go down in price or even just leveling off would create a whole other host of challenges for a society that’s been organized so completely for so long around home values going up.

carllerche 3y ago
Good thing this would have no impact on home values. Hedge funds getting involved is a symptom, not a cause. Hedge funds buy properties *because* home values go up due to limited supply. The only thing that can lower housing prices is a dramatic increase in supply.

esoterica 3y ago

Investors that buy houses just rent them out again, so the houses are not removed from the supply of housing, just moved from the homeowner's market to the rental market. There is nothing wrong with this - renters need a place to live too! The problem is the lack of overall housing, not the balance between homes to rent and buy. The fact that it's profitable to buy homes and rent them out means that renters are currently overpaying relative to buyers, and shifting properties over to the rental market will help correct this inequality. If you advocate against this then you are arguing that renters should be screwed over the subsidize homebuyers. If you want to screw over wall street you should build more homes to flood supply and tank the value of their investment. Of course many of the people who complain about Wall Street buying up homes are also NIMBYs who adamantly block all new housing because they are supply-and-demand deniers or vacancy truthers.

gumballindie 3y ago
> There is nothing wrong with this - renters need a place to live too! They wouldnt be renters if they could afford buying homes and that would make them home owners, living in their own homes not someone else’s.
- esoterica 3y ago
  This is just wrong, there are many people who rent for non financial reasons (e.g they plan on moving within a few years). Just because you’ve chosen to nest in the same place until you die doesn’t mean everyone wants to.
soupfordummies 3y ago
A lot of times they just buy em and let em sit too though. A lot more than individuals since large corps can afford to do that.
- JamesBarney 3y ago
  Is there any evidence of that? The last thing any landlord I've ever talked to wanted was for a property to sit empty.

w10-1 3y ago

Legislative proposals like this in an election year work to put candidates on record and fish for contributions. It seems unworkable. The $50M threshold for hedge funds is easily circumvented by breaking up funds, and the "on any day" language makes bulk transfers tricky. "Single-family" includes 1-4 units, so all those savers who prefer real estate to the stock market could have their buyers dry up. (No comment on the actual economic or fairness benefit.) However, what could work this year and be even more useful would be to strip out everything except reporting requirements. The government has really no idea what's happening in the housing market or why, and no evidence that could quantify the degree of market control or indicate illegal collusion. This could be combined with anti-money-laundering reporting requirements designed to disclose real estate being used to launder dirty money, with appropriate requirements to disclose the beneficial owners, and detect the effective but unregistered sale of property by selling the owning entity. There's really no policy objection because property already must be registered, and there are no real business confidentiality concerns from the government having this information. If/since the reporting would be limited to real estate, it wouldn't raise the substantial lobbying hackles of all the other businesses relying on shell corporations, and might even garner the support of the big hedge funds seeking to scare off competition.

r00fus 3y ago
> The $50M threshold for hedge funds is easily circumvented by breaking up funds Wouldn't this put those funds at a significant disadvantage?

Incipient 3y ago

I'm yet to see a holistic review of housing. Yes corporate ownership is bad, I think, however the availability of land is also a problem, the cost of building, which is driven by the cost of materials and labour. Arbitrarily capping one part of the problem I have doubts will help overall, and possibly make the situation worse. Eg if we block wall Street investment, and could that money go into other areas and increase competition for materials and labour and make it harder and more expensive to build homes?

carllerche 3y ago
IMO corporate ownership isn't bad as corporations rent housing to individuals who can't afford mortgages. Let's say corporations are 100% banned from the housing market. 85% of Americans cannot qualify for a mortgage, where would they live?

andrewstuart 3y ago

Housing has been destroyed by unrestrained capitalism. Capitalism without limits, without social seatbelts is a bad thing. I don’t care if this makes the pure capitalists shriek “COMMUNISM!”. In fact it’s not communism to have a society that has rules around housing, it’s healthy social democracy. Housing is a fundamental human need and houses should be owned by people and every single citizen who wants to own a house should be able to buy one within their local community. Teachers, clerks, garbage collectors, everyone. It used to be this way before housing turned into a real world monopoly game. Rich people - ie those who own one or more houses tend to be completely lacking in empathy for those who don’t own a house. And people who own houses tend to have lots of advice like “move somewhere cheaper further out”, but such advice is easy to give because they never have to take such worthless and insensitive advice. Singapore has 89% owner occupied housing. This should be the mission for any country that cares about its people. But modern governments don’t care about their people, they care about growth, and about making politicians and vested interests richer.

konschubert 3y ago
Housing is expensive because supply is artificially limited. You can increase supply by allowing more construction. No need to decree the end of capitalism.

RCitronsBroker 3y ago

This is a paper tiger. just by banning "Hedgefonds" (misnomer of the decade by the way, they do anything but hedge these days), or, more precisely investment funds structured as limited partnerships, from owning residential real estate you do absolutely NOTHING to mitigate what happened in 2008. hedge funds are just an easily hated scapegoat, because they ARE insufferable in many cases, but they are not at fault here. The real problem is the moral hazard that is growing exponentially with every increase in distance between the ones dishing out the money and the ones who are liable. If you can repackage mortgages into more and more complex derivatives you can sell to other people, and you also figure out a way to game rating agencies into a triple A rating by misleading them with thin-file FICO scores and faux diversification, you can profit from deadbeat customers and make someone else the bag holder at the same time. That’s the archetypal moral hazard. The institutional clients don’t understand that correlation increases with volatility, they are consoled by the ratings and don’t realize they are part of a time bomb, waiting to drag the whole economy down with it.

nojvek 3y ago

It’s a step in right direction to cool off demand, but the big issue is supply. Make a law that building permits can’t take longer than 6 months. No nimbysm crap. Permits can only be denied if the building plans don’t meet code and cause major environmental issues. Also permits shouldn’t cost a fortune. Permits are a huge bottleneck. A piece of paper.