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“Private equity firms should not be allowed to own all the land” isn’t a particularly radical policy proposal
by dymk 1y ago
“Private equity firms should not be allowed to own all the land” isn’t a particularly radical policy proposal
- WalterBright 1y agoDistorting markets like that tend to have unforeseen deleterious side effects that just make things worse. For example: rent control
- dymk 1y agoWell, what we have right now obviously isn’t working. So what’s your proposal?
- WalterBright 1y agoReturn to free markets in housing.
- anigbrowl 1y agoGot anything more specific than cliches? For example, do you have any examples of this demonstrably making housing more affordable (ie lowering housing costs as a percentage of income) at scale?
- WalterBright 1y agoRent control making creating more rental units unprofitable. Zoning laws that prevent housing density.
- TFYS 1y agoThose are the result of a free market. Zoning laws are the results of participants in a free market protecting their investments. Even in the absence of a government (if functioning markets could exist in such an environment) with which to create such laws, people would find other ways to do it. Rent control comes after rents in the free market have already increased to the point where people create political pressure to make these policies (if it's not the result of lobbying by investors). You could temporarily make the situation better by getting rid of these laws and regulations, but over time they would just come back because in a free market the players that get such policies implemented get richer and win.
- anigbrowl 1y agoI asked you for examples of market deregulation making housing more affordable at scale. I am not interested in your assertions about how the market works, but empirical data of your proposals leading to improved outcomes. Apparently you don't have any.
- zefhous 1y agoHow one defines “distorting markets” is an important question when it comes to defining policy, and not an un-contentious one.
- Avicebron 1y ago"Markets" exist because they are a thing people find useful. If people can't afford shelter and participate in the "market" of leveraging property because they are being pushed out by a soulless outgrowth of "line go up" thinking, then the "market" has failed and needs to be fixed until it is useful for people again.
- derektank 1y agoIt's not the fault of private capital firms that local governments have essentially outlawed building new homes in many areas. The solution should be focused on restricting the ability of localities to do this, not restricting the ability of companies to buy real estate.
- Avicebron 1y ago> It's not the fault of private capital firms Which doesn't really matter because they don't need to be "protected" in any capacity. Removing their ability to purchase those homes, and letting it get sorted between the people who are "outlawing building homes" and those who want to move there makes more sense.
- WalterBright 1y agoDeciding who gets to buy what is known as central economic planning. It doesn't have a good track record. In this case, by restricting who can buy, you're reducing the demand for housing. Less demand means lower prices. Lower prices mean fewer homes will be built, meaning less supply. A better scheme would be to lower the costs of home construction by reducing regulations and taxes on them.
- xphos 1y agoYeah I agree with this here. Its simply to hard to build housing and the number permits and zoning restrictions have lead to localized housing shortages where people want to live. Its simply a difficult poltical issue to solve because most of the time zoning is handled at the local level and old people who have houses attend town hall meetings where zoning is discussed (if seldomly ever). Homeowners who have treated housing as a speculative centeralized asset have little to gain in allowing the market fixing itself.
- hooverd 1y agorent control is good actually combined with robust building
- deleted 1y ago[deleted]
- amanaplanacanal 1y agoRent control has a tendency to kill robust building.
- thrance 1y agoSo basically remove all regulations and everything will fix itself automatically? This kind of wishful thinking is ludicrous, and it's insane how common it is. Markets have issues that need to be addressed through regulations, unless we want a return to the Gilded Age.
- WalterBright 1y ago> So basically remove all regulations and everything will fix itself automatically? I didn't say that. I said "rent control". And yes, remove all regulations on rent. > unless we want a return to the Gilded Age The Gilded Age was a time of great prosperity in the US.
- dragonwriter 1y ago> The Gilded Age was a time of great prosperity in the US. In aggregate, sure. (At least compared to times prior.) How the prosperity was distributed, OTOH...
- WalterBright 1y agoWealth isn't "distributed" in a free market. People work and invest to get money in exchange. Consider Jeff Bezos. He was roundly criticized for the profligacy of spending $80 million for his wedding. But look at it another way. He spread the wealth around by paying artisans, workers, craftsmen, photographers, travel agents, hotels, restaurateurs, etc.
- dragonwriter 1y ago> Wealth isn't "distributed" in a free market. Wealth has a distribution in any economy, and the actual distribution is a consequence of the economic system which itself is the aggregate of specific policy decisions.
- TFYS 1y agoThose people could have been doing something more useful with their time if Bezos hadn't bought them. Because Bezos has such an obscene amount of wealth, he can outpay any other cause that people would want to pay for. Those craftsmen and workers could have built a farm and a school, but because the people that need those don't have the kind of money Bezos does, they used their time to entertain Bezos and his friends for a couple of days instead.
- anigbrowl 1y ago“Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which best bear to have a particular tax imposed upon them.” “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.” “A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.” “The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of the inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the landlord is in proportion, not to what he can make by the land, but to what he can make both by the land and water. It is partly paid in sea-fish.” Karl MArx? No, Adam Smith.
- MBCook 1y agoThere’s nothing wrong with investing by buying homes. Just pay a 75% tax when you do. If you can find places to make money with those taxes, have at it. But you’ll stop messing with normal people’s attempts to buy a house for the most part.
- peab 1y agoYeah, we definitely still need homes to be available for rent. If you move a lot, or want to be able to move easily and explore different cities or even neighborhoods within a city, renting is way easier than if you'd have to go through the hassle of buying. What sucks is when private companies start owning too many houses and they have unfair advantages over regular folks. For example, they have teams of lawyers.
- deleted 1y ago[deleted]
- MBCook 1y agoI was suggesting that as a way to prevent purchasing homes to resell for more money. I actually meant it as a tax on the profits from a sale of a house. I completely agree, we need homes for rent at reasonable rates. But I forgot that a lot of the homes that were purchased for investing were purchased to rent out. A 75% tax on the profits from sale wouldn’t help. If it’s 75% on all profits, including rental income, it’ll destroy the rental market. I can’t think of a decent answer off the top of my head. My suggestion was glib, but it was meant for the pretty easy case of just flipping. Trying to control how many houses are purchased versus rented, and how you determine a reasonable rent or prevent that from being abused, is a lot harder.
- peab 1y agoI think there are a few solutions. Having a property tax that goes higher the more properties you have would be a good one (it could be exempt for bigger apartment blocs if that was an issue)
- burnt-resistor 1y ago
- CBLT 1y agoThat's the desired outcome. What's the policy proposal?
- deleted 1y ago[deleted]
- dymk 1y agoDisallowing companies from owning residential housing would be a start
- StanislavPetrov 1y agoHow about we start with no home-based deductions for corporations. The means depreciation, vacancy, any sort of loss is not tax deductible for a corporation. If a corporation owns 100 homes, it may cost them nothing (or close to nothing) to keep 10 (or more) of those homes vacant, because they can simply deduct the costs from those vacant homes from the massive profits they are reaping on the other 90 and lower their tax burden. The average person who owns a second home for rental purposes is highly motivated to get that home rented out, even if it means lowering the rent to attract a renter, because it can be financially ruinous to pay for the taxes and an upkeep if it stays empty.
- alright2565 1y ago> Of those, mom-and-pop investors, or those who own between 1 and 5 homes, account for 85% of all investor-owned residential properties, while those with between 6 and 10 properties account for another 5%.
- blindriver 1y ago1 home qualifies you as an invrestor? So I’m an investor? That definition is whacked it should be at least 2 homes.
- sorcerer-mar 1y ago1 and 5 non-primary residence.
- jodrellblank 1y ago“I own no homes, and am buying a home” “I own one home, and am buying a house” “That makes you an investor” “No that’s whack. When I buy a third - buying while owning two - then I will be an investor” You have an off-by-one error.
- selimthegrim 1y agoI own no homes, and must scream.
- potato3732842 1y ago[flagged]
- phil21 1y agoThese stats are tracking folks who buy a second property intended as an investment - typically renting it out but not always. You’re not a mom and pop landlord if you’re just buying a second home to move into with intent to sell your current one.
- freddie_mercury 1y agoWhy not? Are PE firms worse landlords than mom-and-pop landlords?
- paulryanrogers 1y agoModerned, industrialized PE? Absolutely worse, yes.
- GuinansEyebrows 1y agoi wish we could think bigger than the lesser of two evils.
- conradev 1y agoYep, pass that, free up a few percentage points of inventory, good wealth transfer to the rest of existing entrenched investor base. They might even come leased!
- darth_avocado 1y agoIf you want cash poor people to compete with cash rich private equity in the housing market without banning PE completely, you need to make it cheaper for cash poor people to borrow money. That too isn’t a particularly radical policy proposal. A lot of countries across the world do it with positive outcomes.
- physicles 1y agoDidn’t we do that in the lead up to the 2008 financial crisis? Remember NINJA loans?
- darth_avocado 1y agoNINJA loans were loans for people with no income and no jobs. What I’m proposing is cheaper access to cash for first time homebuyers. You’d still have to be credit worthy.
- 3rdDeviation 1y agoYou could go the other direction -increasing the borrowing cost of purchasing a home for investment to ensure that borrowers with less capital can still afford homes in the same market. As a hypothetical, you could tax their purchase at the same rate at which they're borrowing and use the funds to back loan guarantees for new/lower income purchasers. The point is to impair the ROI for multi-home purchasers without limiting upside in the market.
- anigbrowl 1y agoEven Adam Smith fulminated against landlords, who he saw as parasitical free riders.
- dietr1ch 1y agoPrivate equity shouldn't be able to own housing. It should be like new highways and tolls, you get to charge until you make up for your investment, but then people who live there or the government should own it. Want to keep your toll business? Build more housing.
- hollerith 1y agoI have a different take. I feel housing is important enough that the government (i.e., the voters) shouldn't be able to interfere in the market for it, e.g., shouldn't be able to restrict who can buy and who can sell a house or apartment building.
- dietr1ch 1y agoIf it's so important, then my take is that the government should step in and make sure it happens and in some orderly way. Cost cutting in my town for profits that go away just drains the local's pockets. If you want free market rules to apply, then profits going out of the town/city should be taxed harder to promote local businesses and community.
- hollerith 1y agoIf there are people that cannot afford housing, I would prefer for the government to give those people money rather than interfering with the resource-allocation system on which everyone relies. Prohibiting certain kinds of investors from investing in housing would be an example of interfering.
- dietr1ch 1y ago> Prohibiting certain kinds of investors from investing in housing would be an example of interfering. Note that I did not propose forbidding investment, just having rules to help make sure final ownership ends in people (who ideally live there and don't own other 10+ homes). I'm just making sure that investments don't fuel a system where regular people can't own, but only rent forever, paying past the investment and a healthy interest for their lending, planning and doing service. Why do road and other infrastructure investments can get these limited profit kind of terms for governments, but housing can't get similar ones for the people?
- deleted 1y ago[deleted]
- burnt-resistor 1y agoAmericans hear any limitations on greed or anything that would benefit society as "communism".