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> people who buy those are leaving their old houses I do not believe this is accurate, at least not in the last ~10 years or so. The houses are purchased by he

> people who buy those are leaving their old houses I do not believe this is accurate, at least not in the last ~10 years or so. The houses are purchased by hedge funds and other smaller investors.

SoftTalker 1y ago
Only because they are scarce enough to be worth doing that. With greater supply, there comes a point where you can make better investments than buying up empty houses. And so they will stop buying them.
- lcnPylGDnU4H9OF 1y ago
  I don't see how that really matters. If you keep making homes and investment buyers keep buying them then the price will keep going up and regular folk will still be priced out. If you make so many homes via this strategy that institutional buyers are no longer interested, I think it's because the homes have somehow become genuinely worthless, at least to the investors. I don't see how to do that without legislation that makes the investment unattractive (unprofitable) to them. Policies such as rent control, "you can't buy that house because you're not living in it", etc., are the proper solution.
  - BobaFloutist 1y ago
    Investors have finite capital, and it's easier to corner a tight, pinched market than a large market with lots of liquidity. You don't see PE making huge investments in gas stations, because you can always easily just go to another gas station, and there's way too many of them to easily corner the market. We could pretty easily make housing similarly unattractive.
  - epistasis 1y ago
    Why would the price keep going up if more and more houses are being added? Prices go up when there is a shortage. Everywhere that has been building adequate housing sees prices falling.
  - supertrope 1y ago
    Scalpers won’t bother scalping an item that’s widely available at MSRP.
connicpu 1y ago
If you reach a point where housing supply out paces demand plus the vacancy rate those investors are willing to tolerate, that's when rent prices will finally start to drop as the big landlords need to generate more revenue to keep up the capital and operational expenses. And if rent prices drop far enough then it will no longer be profitable to spend all that capital snapping up starter homes, and eventually may even be placed back on the market.
whall6 1y ago
What data do you have to support that only hedge funds and smaller investors are purchasing new builds?
legitster 1y ago
> The houses are purchased by hedge funds and other smaller investors. The hedge fund thing is way overblown. Even if they buy up homes in hot markets, their incentive is still going to be to sell them if/when the market cools. Corporations do not enjoy the same tax incentives as homeowners in this country, and the risks/costs to rent out older homes just doesn't pen out for non-local investors. If PE wants to get into housing, it's such a better deal for them to just build apartments. Currently less than a percent of homes are owned by private equity. And the majority of those are owned for the purpose of turning around and selling them, like Home Partners. (Zillow also tried buying up homes for the purpose of arbitrage and it ended up blowing up in their face).
- lcnPylGDnU4H9OF 1y ago
  I believe you are correct on the hedge fund point; I was confusing it with something else that's related but different (I recall investing in a platform that made some of its profit from financing the construction of homes). The effects that I worry about still seem to be actualized by the "smaller investors" I mentioned, such as the head of a household being able to afford to purchase another home as a rental or a replacement as they rent out their old home.
- petsfed 1y ago
  I suspect that people conflate "buying a house as an investment" with "investors bought a house", which is leading to the incorrect idea that hedge funds or private equity are somehow cornering the market. I think the reality is that the main component of investor pressure is from people who hold onto an overly large/well placed home far past the point of utility, because they want to sell as late as possible and maximize their return. Follow that with small-time landlords, and then finally actual explicit investors buying homes as some kind of commodity. A lot of the dysfunction of capitalism (so-called "late stage capitalism") is induced by people trying to outsmart the market, time the market, etc. when they really don't have the knowledge or information to play such games.
jeremyjh 1y ago
They purchase them, and rent them out, and that is still a net increase in housing supply.

> people who buy those are leaving their old houses I do not believe this is accurate, at least not in the last ~10 years or so. The houses are purchased by hedge funds and other smaller investors.

SoftTalker 1y ago

Only because they are scarce enough to be worth doing that. With greater supply, there comes a point where you can make better investments than buying up empty houses. And so they will stop buying them.

lcnPylGDnU4H9OF 1y ago
I don't see how that really matters. If you keep making homes and investment buyers keep buying them then the price will keep going up and regular folk will still be priced out. If you make so many homes via this strategy that institutional buyers are no longer interested, I think it's because the homes have somehow become genuinely worthless, at least to the investors. I don't see how to do that without legislation that makes the investment unattractive (unprofitable) to them. Policies such as rent control, "you can't buy that house because you're not living in it", etc., are the proper solution.
- BobaFloutist 1y ago
  Investors have finite capital, and it's easier to corner a tight, pinched market than a large market with lots of liquidity. You don't see PE making huge investments in gas stations, because you can always easily just go to another gas station, and there's way too many of them to easily corner the market. We could pretty easily make housing similarly unattractive.
- epistasis 1y ago
  Why would the price keep going up if more and more houses are being added? Prices go up when there is a shortage. Everywhere that has been building adequate housing sees prices falling.
- supertrope 1y ago
  Scalpers won’t bother scalping an item that’s widely available at MSRP.

connicpu 1y ago

If you reach a point where housing supply out paces demand plus the vacancy rate those investors are willing to tolerate, that's when rent prices will finally start to drop as the big landlords need to generate more revenue to keep up the capital and operational expenses. And if rent prices drop far enough then it will no longer be profitable to spend all that capital snapping up starter homes, and eventually may even be placed back on the market.

whall6 1y ago

What data do you have to support that only hedge funds and smaller investors are purchasing new builds?

legitster 1y ago

> The houses are purchased by hedge funds and other smaller investors. The hedge fund thing is way overblown. Even if they buy up homes in hot markets, their incentive is still going to be to sell them if/when the market cools. Corporations do not enjoy the same tax incentives as homeowners in this country, and the risks/costs to rent out older homes just doesn't pen out for non-local investors. If PE wants to get into housing, it's such a better deal for them to just build apartments. Currently less than a percent of homes are owned by private equity. And the majority of those are owned for the purpose of turning around and selling them, like Home Partners. (Zillow also tried buying up homes for the purpose of arbitrage and it ended up blowing up in their face).

lcnPylGDnU4H9OF 1y ago
I believe you are correct on the hedge fund point; I was confusing it with something else that's related but different (I recall investing in a platform that made some of its profit from financing the construction of homes). The effects that I worry about still seem to be actualized by the "smaller investors" I mentioned, such as the head of a household being able to afford to purchase another home as a rental or a replacement as they rent out their old home.
petsfed 1y ago
I suspect that people conflate "buying a house as an investment" with "investors bought a house", which is leading to the incorrect idea that hedge funds or private equity are somehow cornering the market. I think the reality is that the main component of investor pressure is from people who hold onto an overly large/well placed home far past the point of utility, because they want to sell as late as possible and maximize their return. Follow that with small-time landlords, and then finally actual explicit investors buying homes as some kind of commodity. A lot of the dysfunction of capitalism (so-called "late stage capitalism") is induced by people trying to outsmart the market, time the market, etc. when they really don't have the knowledge or information to play such games.

jeremyjh 1y ago

They purchase them, and rent them out, and that is still a net increase in housing supply.