5 ms·

On the demand side it would be nice to keep PE firms from hoovering up all the single family homes. https://www.thesling.org/are-hedge-funds-and-private-equity

On the demand side it would be nice to keep PE firms from hoovering up all the single family homes. https://www.thesling.org/are-hedge-funds-and-private-equity-firms-driving-up-the-cost-of-housing-2/ https://www.thesling.org/are-hedge-funds-and-private-equity-...

candiddevmike 2y ago
Would be interesting to see what would happen if renters had the option to buy the underlying property/unit somehow after being a tenant for a certain time. The goal should be ownership for folks who want it, not a nation of renters.
- SoftTalker 2y ago
  All they have to do is offer the owner an adequate price.
  - duped 2y ago
    The problem is they can't give the owner an adequate price when they're paying for the owner to grow more equity in the property while also needing to save at a faster rate to afford a downpayment on a mortgage.
    - SoftTalker 2y ago
      Then they are renting something they can't afford, if ownership is their goal. When I was saving for my first house I lived in a crappy little 1 bedroom apartment for a few years so that I could get a down payment together. I had the income to afford renting a larger apartment or a house in a nicer area but I would not have been able to save anything.
      - ebiester 2y ago
        When was this? Have you paid attention to the percentage of wages required for a unit nationally? In your area?
        JumpCrisscross 2y ago
        > Have you paid attention to the percentage of wages required for a unit nationally? In your area? Roommates.
        ebiester 2y ago
        I too had roommates coming up. People today have roommates coming up. That doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing. Median household county in my area is about $55,000 a year. The median price of a house is $450,000. Assuming two people, the 50th percentile wage is equivalent of $14/hour. (This as an eyeball looks pretty close to a median wage.) Fair market rent for a 2 bedroom apartment (40th percentile) is 1500, or 32% of income. If you let everyone get their own bedroom? For a below median two bedroom apartment, they will barely be able to afford the place. A 4 bedroom place is $2500, so you're going to get about 100 dollar discount, but that all gets wiped out if one of your roommates leaves and you can't find a replacement. The more people sharing a space, the more risk there is. It's tougher out there right now if you're not on an engineer's wage.
        JumpCrisscross 2y ago
        > doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing Oh totally agree. Just pointing out that a straight comparison of wages to home prices doesn't dictate unaffordability.
        SoftTalker 2y ago
        If you are saving a down payment for a house you need to be spending far less than "32% of income" on your current rent. You need to move farther out, find a smaller/shittier place to live, be frugal with everything else, and/or increase your income. This has always been the case, unless you are earning well above average income.
      - duped 2y ago
        That's a very different situation than the one you initially replied to. It's also not something everyone can do.
- Loughla 2y ago
  You can rent your home with x% profit, but after x # of years the home sells to the renter. I like it but that seems like a system VERY susceptible to abuse.
  - mcmcmc 2y ago
    You can bet landlords would be doing everything possible to force renters out just before the purchase window comes open.
    - gs17 2y ago
      That's definitely an issue, even if constructive evictions can be prevented, landlords would also have to be forced to renew leases (at limited rent increases).
  - bilbo0s 2y ago
    One small catch, maybe even a constitutional hold up? It's not really your home if you are obliged to sell it after x years. The traditional societal compact with private property is that the property is yours for as long as you choose to keep it. (Providing you pay the taxes covering the costs to provide municipal services to your property.) This kind of changes that, and I'm not sure it would stand up to constitutional scrutiny?
    - candiddevmike 2y ago
      No one is forcing you to rent it
      - bilbo0s 2y ago
        Again, traditionally, renting your property on terms an owner unilaterally determines was seen as a right of owning private property. Provided you're able to find a renter who agrees to your terms, and provided your terms are legal, you were allowed to rent your property, again, forever. For instance, it was perfectly legal to rent your apartments for USD1500 per month, and at the same time, allow your kid to stay in one of the apartments for free and give a USD500 a month break to a long term renter who maybe lost his job. It was your property, so whatever terms you had with each renter was very much considered to be your business. (Again, within the bounds of legality. You can't be asking for a cut of the drugs dealt out of your apartment as a condition for instance.) Unless I'm misunderstanding the proposal, this would change that practice. You would be told how much you could rent the property for, as well as the date you would need to sell the property. (Which, I'm guessing, would be based on the rent amount?) So a radical change from before in terms of private property rights.
- andrewaylett 2y ago
  There's nothing actually wrong with renting, if there's enough supply to stop profiteering by landlords. What's frustrating is when (as appears to be obnoxiously common in the UK) affordability requirements for mortgages mean someone "can't afford" to buy even when their mortgage payments would be less than their current rent. While the landlord probably has an interest-only mortgage and doesn't pay tax on their mortgage payments. Here's a thought: tax landlords based on their self-assessed property value, but make it so that the tenant has the right to buy the property for that amount.
tantalor 2y ago
You can't just ban them. Where there is profit to be made, they will find a way around any regulation. You have to change the structure of the market so they no longer see these investments as profitable. One way local areas do this is by "homestead tax exemption" which reduces property taxes if you live in your own home, but this is binary and punishes small landlords equally as big ones.
- notatoad 2y ago
  > which reduces property taxes if you live in your own home My town is experimenting with allowing this exemption if anybody claims the address as their primary residence, whether it is the owner or not. The main purpose is to cut down on people keeping vacation homes, but it should also make things more expensive for flippers and speculators. Small landlords are no better than big ones if they’re keeping properties empty.
- SoftTalker 2y ago
  Those taxes just get added to the rent charged.
  - chasebank 2y ago
    Indeed they would, however, the underlying asset value would drop to allow for market rents. That's the point.
    - pc86 2y ago
      In a free market, yes. But not when the demand is so artificially constrained. Rents go up and people are forced to either pay a higher percentage of their income to rent, or move farther away. Housing is not a free market by any stretch of the imagination, so if you just move one lever you don't always get the response you would in a true free market.
- debacle 2y ago
  It's a complex problem. Some landlords are great, keep nice homes, and take care of the property. Some homeowners are absolute slobs, and don't take care of their properties. But, in general, "landlord" quality is considered the lowest level of effort/materials for maintenance. Once an area reaches a certain % of landlords (no idea the actual %, but it's low), it leads to a general decline of the neighborhood. These landlords are buying starter homes (apartments and houses) whether they are PE companies or individual landlords, driving up the cost of "cheap" housing.
naltroc 2y ago
can we please.
Analemma_ 2y ago
These PE firms specifically say in their SEC filings that the most credible threat to their business model is municipalities removing restrictive zoning regulation and allowing the natural rate of market-rate housing to be built (0, 1). You can foil their schemes and bankrupt them by electing officials who are pro-development. [0]: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/a154763b-4e28-4de1-9162-82c542a50df5.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/a154763..., "“We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States.” [1]: https://www.sec.gov/Archives/edgar/data/1562401/000119312513247145/d547003ds11.htm https://www.sec.gov/Archives/edgar/data/1562401/000119312513..., "The continuing development of apartment buildings and condominium units in many of our target markets increases the supply of housing and exacerbates competition for tenants."
rcpt 2y ago
You do that by building enough houses to make housing unattractive to investment firms
- codedokode 2y ago
  There is never enough houses, or they are located in the middle of nowhere thousand of kilometers from nearest subway station or supermarket.
  - alistairSH 2y ago
    You're assuming everybody wants/needs a single family with a yard. SFHs should be expensive and considered a luxury. At least in a desirable urban/suburban location. We could/should/must provide more housing in those desirable areas, but it likely should be a mix of high-rise, mid-rise, small apartment units (which could be owner-occupied or rentals), duplexes and triplexes, and row-homes/townhomes.
- bunderbunder 2y ago
  Alternatively, we adjust the tax code to reflect the instinct that people should deserve to keep a larger percentage of money when they actually worked to earn it, and that income that's essentially free to people who already have lots of money should maybe be taxed at a higher rate. I realize this is a spicy take, but we've really got to get away from this thing where we advantage passive income for wealthy landowners. It didn't work out well for society in enlightenment-era France, it didn't work out well in Victorian England, it didn't work out well in Tsarist Russia, and I'm not convinced that removing birthright qualifications and primogeniture makes all that much more equitable in the modern USA than it did in any of those periods that we tend to look back on as being indefensibly elitist.
  - enriquec 2y ago
    Or stop stealing everyones money through inflation?
    - 2y ago
hn72774 2y ago
While we are at it, make it easier for mom-and-pop landlords to rent out their homes so that they can compete with the resources of PE firms. Too many renter protections where I live and the consensus is don't ever try to be a landlord here. One bad tenant/squatter can bankrupt you.
- HeatrayEnjoyer 2y ago
  Let's find a solution that doesn't poke even more holes in what little social safety net the US has.
  - hn72774 2y ago
    One could argue that a owner of one single family home that could be turned into a rental loses out on the social safety net of diversified income and someday retirement, and is subsidising renters on the government's behalf. Most of us are a couple events of bad luck away from homelessness. Mon-and-pop landlords included.
no_wizard 2y ago
Land Value Tax[0] is the way. It strongly incentivizes the following: >The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging them to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes. The entire purpose of a land value tax is to encourage the productive use of land, which boils down to either building stuff on it to make it more productive or selling it to someone else so they can largely do the same. Otherwise it is a simple tax burden to hold. While extremely wealthy individuals may choose to do this, its unlikely that businesses (like PE firms) are going to let their tax obligations stack over time and hold empty land / buildings etc. Same goes for individuals who are taxed at wildly different rates (like in California with Prop 13) simply based on time of sale [0]: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
- enriquec 2y ago
  This has already failed. The bay area is full of empty land and buildings owned by firms and a horrific housing situation. Doesn't stop the statists from proposing yet more tax for every single problem though.
  - kmeisthax 2y ago
    California doesn't count because they have a de-facto landed gentry. In 1978 they passed a ballot initiative[0] that locks in property tax rates until a home is sold or renovated. This was further amended[1] to allow generational transfers of those rates. The end result is an extreme disincentive to sell land and a class of homeowners with favorable tax treatment who want the state to be coated in amber. Any market intervention is useless without addressing the harms caused by the current property tax regime and the people who benefit from it. [0] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13 [1] https://en.wikipedia.org/wiki/1978_California_Proposition_13#Amendments https://en.wikipedia.org/wiki/1978_California_Proposition_13...

candiddevmike 2y ago

Would be interesting to see what would happen if renters had the option to buy the underlying property/unit somehow after being a tenant for a certain time. The goal should be ownership for folks who want it, not a nation of renters.

SoftTalker 2y ago
All they have to do is offer the owner an adequate price.
- duped 2y ago
  The problem is they can't give the owner an adequate price when they're paying for the owner to grow more equity in the property while also needing to save at a faster rate to afford a downpayment on a mortgage.
  - SoftTalker 2y ago
    Then they are renting something they can't afford, if ownership is their goal. When I was saving for my first house I lived in a crappy little 1 bedroom apartment for a few years so that I could get a down payment together. I had the income to afford renting a larger apartment or a house in a nicer area but I would not have been able to save anything.
    - ebiester 2y ago
      When was this? Have you paid attention to the percentage of wages required for a unit nationally? In your area?
      - JumpCrisscross 2y ago
        > Have you paid attention to the percentage of wages required for a unit nationally? In your area? Roommates.
        ebiester 2y ago
        I too had roommates coming up. People today have roommates coming up. That doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing. Median household county in my area is about $55,000 a year. The median price of a house is $450,000. Assuming two people, the 50th percentile wage is equivalent of $14/hour. (This as an eyeball looks pretty close to a median wage.) Fair market rent for a 2 bedroom apartment (40th percentile) is 1500, or 32% of income. If you let everyone get their own bedroom? For a below median two bedroom apartment, they will barely be able to afford the place. A 4 bedroom place is $2500, so you're going to get about 100 dollar discount, but that all gets wiped out if one of your roommates leaves and you can't find a replacement. The more people sharing a space, the more risk there is. It's tougher out there right now if you're not on an engineer's wage.
        JumpCrisscross 2y ago
        > doesn't change the fact that even with roommates, the burden is disproportionately higher than it was for the last generation, particularly with housing Oh totally agree. Just pointing out that a straight comparison of wages to home prices doesn't dictate unaffordability.
        SoftTalker 2y ago
        If you are saving a down payment for a house you need to be spending far less than "32% of income" on your current rent. You need to move farther out, find a smaller/shittier place to live, be frugal with everything else, and/or increase your income. This has always been the case, unless you are earning well above average income.
    - duped 2y ago
      That's a very different situation than the one you initially replied to. It's also not something everyone can do.
Loughla 2y ago
You can rent your home with x% profit, but after x # of years the home sells to the renter. I like it but that seems like a system VERY susceptible to abuse.
- mcmcmc 2y ago
  You can bet landlords would be doing everything possible to force renters out just before the purchase window comes open.
  - gs17 2y ago
    That's definitely an issue, even if constructive evictions can be prevented, landlords would also have to be forced to renew leases (at limited rent increases).
- bilbo0s 2y ago
  One small catch, maybe even a constitutional hold up? It's not really your home if you are obliged to sell it after x years. The traditional societal compact with private property is that the property is yours for as long as you choose to keep it. (Providing you pay the taxes covering the costs to provide municipal services to your property.) This kind of changes that, and I'm not sure it would stand up to constitutional scrutiny?
  - candiddevmike 2y ago
    No one is forcing you to rent it
    - bilbo0s 2y ago
      Again, traditionally, renting your property on terms an owner unilaterally determines was seen as a right of owning private property. Provided you're able to find a renter who agrees to your terms, and provided your terms are legal, you were allowed to rent your property, again, forever. For instance, it was perfectly legal to rent your apartments for USD1500 per month, and at the same time, allow your kid to stay in one of the apartments for free and give a USD500 a month break to a long term renter who maybe lost his job. It was your property, so whatever terms you had with each renter was very much considered to be your business. (Again, within the bounds of legality. You can't be asking for a cut of the drugs dealt out of your apartment as a condition for instance.) Unless I'm misunderstanding the proposal, this would change that practice. You would be told how much you could rent the property for, as well as the date you would need to sell the property. (Which, I'm guessing, would be based on the rent amount?) So a radical change from before in terms of private property rights.
andrewaylett 2y ago
There's nothing actually wrong with renting, if there's enough supply to stop profiteering by landlords. What's frustrating is when (as appears to be obnoxiously common in the UK) affordability requirements for mortgages mean someone "can't afford" to buy even when their mortgage payments would be less than their current rent. While the landlord probably has an interest-only mortgage and doesn't pay tax on their mortgage payments. Here's a thought: tax landlords based on their self-assessed property value, but make it so that the tenant has the right to buy the property for that amount.

tantalor 2y ago

You can't just ban them. Where there is profit to be made, they will find a way around any regulation. You have to change the structure of the market so they no longer see these investments as profitable. One way local areas do this is by "homestead tax exemption" which reduces property taxes if you live in your own home, but this is binary and punishes small landlords equally as big ones.

notatoad 2y ago
> which reduces property taxes if you live in your own home My town is experimenting with allowing this exemption if anybody claims the address as their primary residence, whether it is the owner or not. The main purpose is to cut down on people keeping vacation homes, but it should also make things more expensive for flippers and speculators. Small landlords are no better than big ones if they’re keeping properties empty.
SoftTalker 2y ago
Those taxes just get added to the rent charged.
- chasebank 2y ago
  Indeed they would, however, the underlying asset value would drop to allow for market rents. That's the point.
  - pc86 2y ago
    In a free market, yes. But not when the demand is so artificially constrained. Rents go up and people are forced to either pay a higher percentage of their income to rent, or move farther away. Housing is not a free market by any stretch of the imagination, so if you just move one lever you don't always get the response you would in a true free market.
debacle 2y ago
It's a complex problem. Some landlords are great, keep nice homes, and take care of the property. Some homeowners are absolute slobs, and don't take care of their properties. But, in general, "landlord" quality is considered the lowest level of effort/materials for maintenance. Once an area reaches a certain % of landlords (no idea the actual %, but it's low), it leads to a general decline of the neighborhood. These landlords are buying starter homes (apartments and houses) whether they are PE companies or individual landlords, driving up the cost of "cheap" housing.

naltroc 2y ago

can we please.

Analemma_ 2y ago

These PE firms specifically say in their SEC filings that the most credible threat to their business model is municipalities removing restrictive zoning regulation and allowing the natural rate of market-rate housing to be built (0, 1). You can foil their schemes and bankrupt them by electing officials who are pro-development. [0]: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/a154763b-4e28-4de1-9162-82c542a50df5.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/a154763..., "“We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States.” [1]: https://www.sec.gov/Archives/edgar/data/1562401/000119312513247145/d547003ds11.htm https://www.sec.gov/Archives/edgar/data/1562401/000119312513..., "The continuing development of apartment buildings and condominium units in many of our target markets increases the supply of housing and exacerbates competition for tenants."

rcpt 2y ago

You do that by building enough houses to make housing unattractive to investment firms

codedokode 2y ago
There is never enough houses, or they are located in the middle of nowhere thousand of kilometers from nearest subway station or supermarket.
- alistairSH 2y ago
  You're assuming everybody wants/needs a single family with a yard. SFHs should be expensive and considered a luxury. At least in a desirable urban/suburban location. We could/should/must provide more housing in those desirable areas, but it likely should be a mix of high-rise, mid-rise, small apartment units (which could be owner-occupied or rentals), duplexes and triplexes, and row-homes/townhomes.
bunderbunder 2y ago
Alternatively, we adjust the tax code to reflect the instinct that people should deserve to keep a larger percentage of money when they actually worked to earn it, and that income that's essentially free to people who already have lots of money should maybe be taxed at a higher rate. I realize this is a spicy take, but we've really got to get away from this thing where we advantage passive income for wealthy landowners. It didn't work out well for society in enlightenment-era France, it didn't work out well in Victorian England, it didn't work out well in Tsarist Russia, and I'm not convinced that removing birthright qualifications and primogeniture makes all that much more equitable in the modern USA than it did in any of those periods that we tend to look back on as being indefensibly elitist.
- enriquec 2y ago
  Or stop stealing everyones money through inflation?
  - 2y ago

hn72774 2y ago

While we are at it, make it easier for mom-and-pop landlords to rent out their homes so that they can compete with the resources of PE firms. Too many renter protections where I live and the consensus is don't ever try to be a landlord here. One bad tenant/squatter can bankrupt you.

HeatrayEnjoyer 2y ago
Let's find a solution that doesn't poke even more holes in what little social safety net the US has.
- hn72774 2y ago
  One could argue that a owner of one single family home that could be turned into a rental loses out on the social safety net of diversified income and someday retirement, and is subsidising renters on the government's behalf. Most of us are a couple events of bad luck away from homelessness. Mon-and-pop landlords included.

no_wizard 2y ago

Land Value Tax[0] is the way. It strongly incentivizes the following: >The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging them to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes. The entire purpose of a land value tax is to encourage the productive use of land, which boils down to either building stuff on it to make it more productive or selling it to someone else so they can largely do the same. Otherwise it is a simple tax burden to hold. While extremely wealthy individuals may choose to do this, its unlikely that businesses (like PE firms) are going to let their tax obligations stack over time and hold empty land / buildings etc. Same goes for individuals who are taxed at wildly different rates (like in California with Prop 13) simply based on time of sale [0]: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax

enriquec 2y ago
This has already failed. The bay area is full of empty land and buildings owned by firms and a horrific housing situation. Doesn't stop the statists from proposing yet more tax for every single problem though.
- kmeisthax 2y ago
  California doesn't count because they have a de-facto landed gentry. In 1978 they passed a ballot initiative[0] that locks in property tax rates until a home is sold or renovated. This was further amended[1] to allow generational transfers of those rates. The end result is an extreme disincentive to sell land and a class of homeowners with favorable tax treatment who want the state to be coated in amber. Any market intervention is useless without addressing the harms caused by the current property tax regime and the people who benefit from it. [0] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13 [1] https://en.wikipedia.org/wiki/1978_California_Proposition_13#Amendments https://en.wikipedia.org/wiki/1978_California_Proposition_13...