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High net-worth individuals (as per the article) represent a small fraction of Americans (if you break a $1000000 you're in the top 5%). That they might own a se

High net-worth individuals (as per the article) represent a small fraction of Americans (if you break a $1000000 you're in the top 5%). That they might own a second home makes no meaningful impact on the market, notwithstanding the fact that average people aren't even competing in the same range (multi-million dollar houses). More housing starts means more affordable homes. We've seen what zoning reform has done for cities. We don't build enough. Investors collectively do purchase a good amount of new housing starts (like 18%?) but that's also spurred by interest rates and confidence that demand will grow. It's neither here nor there, build more and houses become more affordable.

hiddencost 3y ago
Small fraction of people but a huge fraction of wealth. Top 10% having 70% of the wealth, e.g. If we make the (extremely crude) assumption that the capital expended on that 2nd home could be moved elsewhere, we could have built more housing in cities instead of building and maintaining that home. [0]https://www.google.com/amp/s/www.statista.com/chart/amp/19635/wealth-distribution-percentiles-in-the-us/ https://www.google.com/amp/s/www.statista.com/chart/amp/1963...
- slothtrop 3y ago
  If you consider what actually deters construction/building rates, there's no reason to believe that capital "moved elsewhere" (appropriated by some abstract entity / people) would translate to more housing. Supposing everyone had more money in their hands (all else remaining equal), that would just be reflected in the market. Houses would increase in cost. Now you're where you started. Housing supply is just too inelastic in most US cities.
thomasahle 3y ago
If we make the assumption that each mansion housing a millionaire could be rebuild to a multi family home housing 10 people (or families), then those 5% houses become homes for 50% of Americans.
- slothtrop 3y ago
  Consider what constitutes a "multi-family home" in the loosest sense and you'll find that zoning/regulation is what is prohibiting its construction. Otherwise, if there is demand, it will be built. 10 people will not buy a multi-million dollar mansion together, but they would buy a piece (or rent) of medium-density housing. Those mansions also tend to be built far away from city cores, with large lots to maintain (with paid labor), more taxes to be spent for infrastructure cost, requiring a vehicle, etc. It would still be too expensive and unhelpful for average people. WE don't build enough. Look at what zoning reform has done for Minneapolis.
voidwtf 3y ago
The owner of the prior home I rented owns 50+ rental properties in the county, has a 1M+ family vacation house in the adjoining county, and lives in California. Explain to me how that made "no meaningful impact" on the market? That's ONE individual. Her brother also owns a number of properties in the area.
- slothtrop 3y ago
  Nice anecdote, but now you're conflating second homes with rental units. Supposing they did not own 50+ rental properties, someone would have to own them if they're to be available for rent. They don't get built for nothing. Why is rental availability framed as a negative? You seem to be making an allusion that average people would otherwise purchase apartment complexes. Supposing they want to buy and not rent, they'd look at condos, and the construction of a condo is not contingent on not constructing apartments. This is not zero sum. If you have a growing population, you have to build. At any rate, the point is that qua "second homes", they represent a drop in the bucket compared to the overall market. Home ownership rate is around 63%, for a population of 334 million. The inelasticity of housing construction whilst demand is steadily climbing due to immigration has far more impact on average housing prices than cases of the ultra-wealthy constructing or purchasing a mansion upstate.

hiddencost 3y ago

Small fraction of people but a huge fraction of wealth. Top 10% having 70% of the wealth, e.g. If we make the (extremely crude) assumption that the capital expended on that 2nd home could be moved elsewhere, we could have built more housing in cities instead of building and maintaining that home. [0]https://www.google.com/amp/s/www.statista.com/chart/amp/19635/wealth-distribution-percentiles-in-the-us/ https://www.google.com/amp/s/www.statista.com/chart/amp/1963...

slothtrop 3y ago
If you consider what actually deters construction/building rates, there's no reason to believe that capital "moved elsewhere" (appropriated by some abstract entity / people) would translate to more housing. Supposing everyone had more money in their hands (all else remaining equal), that would just be reflected in the market. Houses would increase in cost. Now you're where you started. Housing supply is just too inelastic in most US cities.

thomasahle 3y ago

If we make the assumption that each mansion housing a millionaire could be rebuild to a multi family home housing 10 people (or families), then those 5% houses become homes for 50% of Americans.

slothtrop 3y ago
Consider what constitutes a "multi-family home" in the loosest sense and you'll find that zoning/regulation is what is prohibiting its construction. Otherwise, if there is demand, it will be built. 10 people will not buy a multi-million dollar mansion together, but they would buy a piece (or rent) of medium-density housing. Those mansions also tend to be built far away from city cores, with large lots to maintain (with paid labor), more taxes to be spent for infrastructure cost, requiring a vehicle, etc. It would still be too expensive and unhelpful for average people. WE don't build enough. Look at what zoning reform has done for Minneapolis.

voidwtf 3y ago

The owner of the prior home I rented owns 50+ rental properties in the county, has a 1M+ family vacation house in the adjoining county, and lives in California. Explain to me how that made "no meaningful impact" on the market? That's ONE individual. Her brother also owns a number of properties in the area.

slothtrop 3y ago
Nice anecdote, but now you're conflating second homes with rental units. Supposing they did not own 50+ rental properties, someone would have to own them if they're to be available for rent. They don't get built for nothing. Why is rental availability framed as a negative? You seem to be making an allusion that average people would otherwise purchase apartment complexes. Supposing they want to buy and not rent, they'd look at condos, and the construction of a condo is not contingent on not constructing apartments. This is not zero sum. If you have a growing population, you have to build. At any rate, the point is that qua "second homes", they represent a drop in the bucket compared to the overall market. Home ownership rate is around 63%, for a population of 334 million. The inelasticity of housing construction whilst demand is steadily climbing due to immigration has far more impact on average housing prices than cases of the ultra-wealthy constructing or purchasing a mansion upstate.