5 ms·

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 congestio

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.
    - deleted 3y ago
      [deleted]
    - jjav 3y ago
      > 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. If simply increasing housing supply is known to transform a city from having very expensive housing to having affordable housing, it should be possible to name a handful of previously-expensive cities which are now cheap. Could you name a few?
      - konschubert 3y ago
        Tokyo, Vienna, … Most cities aren’t very good at adding enough supply. And sometimes that supply increases agglomeration effects and makes even more people want to move there. Which is a good thing, that’s what cities are for.
        jjav 3y ago
        Tokyo is such a unique special case that I don't think it should be an example for anywhere else. I did not know about Vienna, spent some time reading about it! Seems that it had very expensive rents and government programs to build a lot of public housing cut those rents making it fairly affordable. So it is a good case study of this approach working. Although it seems most of that housing was built a century ago. I have to wonder how practical it would be to replicate that today. > Most cities aren’t very good at adding enough supply. Maybe it's just not that easy? Also, culturally in the US it's just never going to happen that a city owns half or more of all housing as a public service, so I suspect wishing for that is not realistic. So in the US, building housing doesn't happen unless it is profitable for builders.
        konschubert 3y ago
        There is nothing wrong with builders making money. Most of the cost of housing in cities comes from the underlying land. And you can make that cheaper overnight by increasing supply through zoning.
  - esoterica 3y ago
    Key phrase is “as high as they can”. When supply goes up their ability to charge high rents goes down. They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. More supply pushes rents down even if all the excess supply is acquired by investors.
    - toomuchtodo 3y ago
      "When supply goes up." When will supply velocity exceed the rate at which investors (institutional and otherwise) can acquire real estate? Please be specific if this is your argument. https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST https://www.mortgagenewsdaily.com/data/housing-completions https://www.mortgagenewsdaily.com/data/housing-completions https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display
      - maxerickson 3y ago
        Isn't that the wrong question? Presumably unrestrained builders would be happy to sell to anyone, so you need the build rate where it is not profitable to invest in properties, not the build rate where it is impossible for investment to buy all properties. And then it's logical that the one is lower than the other.
      - esoterica 3y ago
        It does not need to exceed the rate at which investors acquire supply, because the homes investors buy are not removed from the market, they are just rented out, and increasing the rental supply will drive rents down.
    - jjav 3y ago
      > They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. Housing supply will never trend to infinity. Ok I realize you exaggerate and probably meant to some very large number. Even that is quite wishful thinking since housing is expensive to build and takes time and people (who are in short supply, tried hiring a house building crew lately?) > More supply pushes rents down even if all the excess supply is acquired by investors. Can you name a few US cities where this has worked out that way?
- soupfordummies 3y ago
  A lot of times yes they do.
  - konschubert 3y ago
    What’s the vacancy rate in the affected cities?

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.
  - deleted 3y ago
    [deleted]
  - jjav 3y ago
    > 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. If simply increasing housing supply is known to transform a city from having very expensive housing to having affordable housing, it should be possible to name a handful of previously-expensive cities which are now cheap. Could you name a few?
    - konschubert 3y ago
      Tokyo, Vienna, … Most cities aren’t very good at adding enough supply. And sometimes that supply increases agglomeration effects and makes even more people want to move there. Which is a good thing, that’s what cities are for.
      - jjav 3y ago
        Tokyo is such a unique special case that I don't think it should be an example for anywhere else. I did not know about Vienna, spent some time reading about it! Seems that it had very expensive rents and government programs to build a lot of public housing cut those rents making it fairly affordable. So it is a good case study of this approach working. Although it seems most of that housing was built a century ago. I have to wonder how practical it would be to replicate that today. > Most cities aren’t very good at adding enough supply. Maybe it's just not that easy? Also, culturally in the US it's just never going to happen that a city owns half or more of all housing as a public service, so I suspect wishing for that is not realistic. So in the US, building housing doesn't happen unless it is profitable for builders.
        konschubert 3y ago
        There is nothing wrong with builders making money. Most of the cost of housing in cities comes from the underlying land. And you can make that cheaper overnight by increasing supply through zoning.
- esoterica 3y ago
  Key phrase is “as high as they can”. When supply goes up their ability to charge high rents goes down. They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. More supply pushes rents down even if all the excess supply is acquired by investors.
  - toomuchtodo 3y ago
    "When supply goes up." When will supply velocity exceed the rate at which investors (institutional and otherwise) can acquire real estate? Please be specific if this is your argument. https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST https://www.mortgagenewsdaily.com/data/housing-completions https://www.mortgagenewsdaily.com/data/housing-completions https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display
    - maxerickson 3y ago
      Isn't that the wrong question? Presumably unrestrained builders would be happy to sell to anyone, so you need the build rate where it is not profitable to invest in properties, not the build rate where it is impossible for investment to buy all properties. And then it's logical that the one is lower than the other.
    - esoterica 3y ago
      It does not need to exceed the rate at which investors acquire supply, because the homes investors buy are not removed from the market, they are just rented out, and increasing the rental supply will drive rents down.
  - jjav 3y ago
    > They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. Housing supply will never trend to infinity. Ok I realize you exaggerate and probably meant to some very large number. Even that is quite wishful thinking since housing is expensive to build and takes time and people (who are in short supply, tried hiring a house building crew lately?) > More supply pushes rents down even if all the excess supply is acquired by investors. Can you name a few US cities where this has worked out that way?
soupfordummies 3y ago
A lot of times yes they do.
- konschubert 3y ago
  What’s the vacancy rate in the affected cities?