8 ms·

How private equity is changing housing

117 points by harambae 10mo ago

toomuchtodo 10mo ago
https://archive.today/HlxXN https://archive.today/HlxXN
mwkaufma 10mo ago
Summary: they're pulling "starter homes" off the market, predominantly in nonwhite neighborhoods, and skimping more on maintenance/landscaping.
- potato3732842 10mo ago
  >and skimping more on maintenance/landscaping I.e the kind of stuff everyone wants to do but can't justify flying so close to the sun on because they don't have a legal army say "we are in compliance and here's why" on their behalf when the municipal government comes looking for fine money or the slip and fall lawyer tries to make something their fault. In "reasonable" (note for the bottom feeders, I did not say "free", I said "reasonable") markets the big guy has to do things to higher standards because his big pot of money will attract vultures looking for a quick buck if he does even slightly wrong.
  - nradov 10mo ago
    It's usually the opposite. In a lot of rental markets the small time landlords do even less than the minimum in terms of maintenance and upkeep, whereas the big corporate landlords at least have some basic level of organizational competence. Most local governments don't have the resources to do much enforcement so only the most serious violations are ever punished.
    - potato3732842 10mo ago
      Eh, toss a coin. I've seen it cut both ways. Corporate can be "is sending someone to fix it" for months just like a slumlord.
  - immibis 10mo ago
    I remember there was once a guy who just went around fixing potholes with no official authorization or anything (he did it properly), and I think he got arrested but then released with a warning.
- oldjim798 10mo ago
  "Skimping on maintenance" is capitalisms main and really only play. So many issues (housing, transport, utilities) are because "the market" won't ever pay to maintain.
  - edoceo 10mo ago
    Externalize the costs, to build your profit!
  - FireBeyond 10mo ago
    Agreed. When I moved to the US from Australia 19 years ago, the road condition here blew my mind. The potholes, tree roots, all of that? There'd be protests at City Councils for a fraction of that in Australia. Here, just "the way it is".
- cyberax 10mo ago
  There are now no "starter homes". There are starter _locations_. And dense cities ain't them no more.
  - mwkaufma 10mo ago
    [flagged]
    - cyberax 10mo ago
      No, it's not. The article is nothing but a complete lie and a ragebait against scapegoats. This is similar to how conservatives are raging against trans people. Starting from this: > The United States is short 4 million housing units It's a lie. The US has more than one housing unit (1.1) per family. We don't have a housing problem. We really really don't. We have an urbanism problem, that made the dense hellscapes the only viable housing location.
- thephyber 10mo ago
  When a landlord “Skimps” systematically on their obligations as a landlord, we call it a slumlord.
christkv 10mo ago
I'm as pro capitalism as it comes but private equity should not be allowed to operate in the consumer housing market. They can develop and sell houses but cannot hold is my point of view.
- jack_tripper 10mo ago
  Same. I remember growing up in the 90s, after the fall of communism, hearing that capitalism beat communism because in capitalism you can own things. MFW I now live in capitalism and can't afford to own anything.
  - ReptileMan 10mo ago
    One of the things communism did right was housing - in the Eastern Bloc home ownership was above 90%. The quality was not great, not terrible. But bad shelter is infinitely better than no shelter. I also think that it also excelled in K12 education. Whether because the german style system that was common in europe pre WWII was just left alone - I don't know. But until the mid 90s we really didn't had the school reformers to fuck it up. Right now we are as good as producing illiteracy as the rest of the west.
    - thephyber 10mo ago
      What does “home ownership” mean in a country where there is no private property?
      - ReptileMan 10mo ago
        There was a lot of private property in the socialist countries. I am not sure from where this thought even came to you. What was impossible was owning big private enterprise. But small businesses - like a restaurant or a shoe repair shop were allowed. You were also allowed to own houses, cars, appliances, clothes and almost everything else. Land was a bit weird - you could own, but not too much - basically stuff that was small enough to evade the collectivisation process.
oldjim798 10mo ago
Ban corporate ownership of residences. Only individuals, Coops or condominiums. Cap how many rentals an individual can own. The government should also build massive amounts of housing. Everywhere of all types - apartments, townhouses, single family. After built transferred to the residents as coops.
- garbawarb 10mo ago
  It's interesting to think of the second-order effects of this. If these corporations can't invest in housing, they'd direct their money elsewhere. Maybe we'd see a stock market or commercial real estate boom. Maybe a proliferation of new ventures.
  - phkahler 10mo ago
    >> If these corporations can't invest in housing, they'd direct their money elsewhere. I think that's why they're buying residential - there aren't any other traditional investments that aren't in a bubble or just have low returns. If you anticipate economic collapse or hyper inflation or whatever, physical assets make sense - when you measure wealth in houses you don't care what the dollar does. Gold people can do without, housing not so much. Whatever happens next, people will need a place to live. OTOH the population collapse is also coming so housing doesn't make much sense beyond 2030 or so.
    - the_sleaze_ 10mo ago
      There will be a squeeze on real estate as the sea level rises and insurance increasingly withdraws from coastal and fire-prone areas.
      - asdff 10mo ago
        I'd expect to see a surge in self insurance. These areas are so valuable already in a lot of cases where rich people are content to pay six figure property tax bills. Especially with cost of construction being a fraction of that property's value.
postflopclarity 10mo ago
build. more. and this problem will go away.
- ryanmcbride 10mo ago
  Not if private equity just snatches it all up. Yes build more. Also regulate the oligarchs until they no longer exist.
  - api 10mo ago
    PE buying real estate is a long bet on housing prices. If supply increases enough, prices flatten out and then fall, and the longs get crushed. These investments are a bet on continuing to under-build and under-densify.
    - swat535 10mo ago
      If they buy out all the supply, there will always be a shortage.
      - Ekaros 10mo ago
        So build so much they cannot rent all of it. Over supply will eventually drive down prices.
        ryanmcbride 10mo ago
        who is going to do the building? Because PE is the one doing that too.
        verteu 10mo ago
        No, private equity appears to be a minority of home builders: https://www.builderonline.com/builder-100/builder-100-list/2025/ https://www.builderonline.com/builder-100/builder-100-list/2...
    - 10mo ago
collinmcnulty 10mo ago
I recently learned about Singapore’s seemingly excellent public housing system that is used by over 75% of its population. Singapore being so capitalist about everything else while carving out housing I think provides evidence that capitalism can be made stronger by keeping certain things away from strict market forces. https://en.wikipedia.org/wiki/Public_housing_in_Singapore https://en.wikipedia.org/wiki/Public_housing_in_Singapore
- api 10mo ago
  We don't have a free market in housing at all. It's a cartel with restricted supply.
  - orwin 10mo ago
    You can't have a free market if supply (or demand) is constrained. You either go the liberal+regulated free market way, which will get lobbied, then overregulated, or you go the socialized way, where you allow local government and associations/unions to compete in the market... with the exact same rights as the companies, and no weird rules that prevent them to truly compete. And if you have a natural monopoly (energy distribution is the worst offender), you have to go the central planning way I guess, until we find something better.
  - collinmcnulty 10mo ago
    Who is “we”? Even within the USA that statement certainly isn’t true everywhere.
hardtke 10mo ago
One of the issues the article doesn't mention is that these houses are effectively cheaper to purchase for corporate owners. Generally they can borrow money at a lower rate, but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant. Effectively they are redirecting money that would be paid in taxes into the payments on the new purchase.
- shadowpho 10mo ago
  > Generally they can borrow money at a lower rate There is some tax tricks you can play, but in general homes for primary residence is lower then secondary/rent, which is a big proportion of cost.
- api 10mo ago
  Our system is far more regressive than most people realize. The poor pay more for things, don't have access to all kinds of tax breaks and cheap money, and can't afford accountants and shell companies and all the other complicated tricks you can use if you are wealthier. I wonder: if you added it all up, would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have?
  - AnthonyMouse 10mo ago
    > would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have? That's an easy one to fix regardless. Use a flat tax with a large fixed refundable credit. Now everyone pays e.g. 30% but gets a $12,000 credit, so someone who makes $40,000 is effectively paying zero, someone who makes $80,000 is effectively paying 15% and the effective rate approaches 30% as the number goes up. But the marginal rate is the same for everyone so there aren't all these complexities and arbitrage games, and at lower incomes the credit stands in for a lot of assistance programs so you don't get all the marginal rate cliffs from overlapping phase outs.
    - ceejayoz 10mo ago
jkhall81 10mo ago
Nice, a pay wall. Pay to read about how housing costs too much.
- quesera 10mo ago
  Disable JavaScript. Solves many of the problems on the net, including the ability to read this article. :)
BeetleB 10mo ago
> Moreover, even if big investors are purchasing thousands of homes, they don’t own significant numbers of homes compared with small-scale landlords and individuals. > Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties. They're invoking a false dichotomy. Small scale landlords (i.e. the guy who owns a second home and rents it out) are part of the corporations. From the linked report: > A corporate investor, also referred to as a nonindividual investor, is a business entity that owns residential property, usually for the purpose of generating income. This broad category ranges from small entities such as family trusts and limited liability corporations (LLCs) to larger outfits like real estate investment trusts (REITs), endowments, and pension funds. Many/most "ordinary" folks who buy a house to rent fall in this category - they form an LLC or something similar. Many reasons for this. Percentage-wise, my guess is that institutional investors (not just individuals who formed an LLC) are still a relatively small minority, but I don't have the data. There is a common misconception on HN that it's rich people who mostly buy houses/units to rent out. In my experience, that's just not the case. Everyone is doing it across the board, and just by virtue of there being more non-rich people, they are likely the majority. Also, higher income folks don't feel a great need to make more money. Median or lower income want to make a lot more, and real estate is actually one of the fewest options available to them (and also really easy to learn/understand). A lot less work than a second job (although some get a second job just to bootstrap the RE purchase process). Just 3 days ago I spoke to a friend. Engineer (not software). Decent income, but not FAANG level. Non-working spouse and multiple kids. Rents out two houses, and is buying 2 more. I took an AirBnB course from a guy who has lots of listings on AirBnB. He got there with almost no money down (most of his money was spent on furnishing the place). He was educated, but fairly low income ($50-60K in California). When I took the course he was making over $300K/year net from his AirBnBs. When I used to listen to the Bigger Pockets podcast, the majority of people who owned 10+ homes to rent had very average incomes (less than a typical non-FAANG engineer). I've been in the real estate space for a few years now. I don't own other units, but I do invest in them, and am moderately active in a local real estate club. I know how these things work. If you want to solve this problem, stop pointing fingers at "rich people", and stop allowing multiple ownership for a decade or two.
stock_toaster 10mo ago
Wild idea... Maybe tax wealth instead of income? Tax break on single home ownership, but significantly increased tax on multi-home-ownership? It would be interesting to see comparisons between PE ownership in markets with property tax vs markets without.
- gjsman-1000 10mo ago
  Wealth taxes don't work because wealth gets extremely fuzzy. For example, unsold stock that I bought 15 years ago; and then got a loan against. I'm wealthy... kinda? But I didn't sell the stock; I have unrealized gains, and you shouldn't tax me beyond income tax on borrowed money? Okay, tax me on my unrealized gains then - but then 2008 repeats itself, stock goes down 40%, do I get a refund? Of course not, I only pay when stock goes up and never down, which is not exactly a fair incentive. Now imagine artwork I bought 15 years ago from Banksy. Or imagine my video game collection I bought on eBay that contains some rare titles. Or what about my wine collection? Now imagine I'm Elon Musk, on paper worth $400B, but if I sold even 20% of my stock, that paper valuation would be shredded from an excess of liquidity driving the share price down, so you can't tax me on what is physically impossible to realize.
  - EricDeb 10mo ago
    What about a law where you couldnt use over a million dollars (to exclude normal people) a year of any asset as collateral for a loan unless you paid capital gains on it at its current valuation?
    - gjsman-1000 10mo ago
      If I pledge $10M in stock for a $2M loan, what's the taxable event? The full $10M valuation, or my $2M loan? What if the stock is in a company worth $40M, but the sale of $10M in stock causes it to be worth $5M afterwards and the private company's value is reassessed to $20M, after I got the loan and after my pledge?
    - novok 10mo ago
      You create a lot of other side effects that destroy a lot of valid activity and thus cause a large economic depressive effect, or you will start needing to provide a lot of other counterbalances that will be even worse or cost the government a lot more. This has the finance equivalent of feeling like cookie banners will actually do anything. Political power will advocate for it's power, you have to go one level higher and interact at that level, not on tax law tweaks. To give an example of where this has gone wrong already, look at the entire interaction between startup stock, ISOs and AMT and how it creates a horrible trap for startup employees, but not for founders and investors who get a lot of very nice tax benefits like QSBS, no AMT, so on. Because startup employees are diffuse, usually have unstable employment and are usually younger, this hasn't been fixed to this day. While other countries like Israel have this fixed in a very elegant way, where you can exercise without tax bombs and only actually have tax liability when you actually can and do practically realize or liquidate the stock gains.
mugivarra69 10mo ago
[dead]
shuntress 10mo ago
My extreme political opinion is that no one (including corporations) should be allowed to own more than one property in which they do not reside.
- bell-cot 10mo ago
  So I can own a duplex and rent out the other half, but that's it? Or - what if I own a 5-bedroom house, and rent the other 4 bedrooms to roommates?
  - bpt3 10mo ago
    No, you just do what most people (and corporations) do and create a new entity (normally an LLC) for each property. There you go, you've sidestepped this inane policy.
djoldman 10mo ago
> The United States is short 4 million housing units, with a particular dearth of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings The number cited links to here: https://upforgrowth.org/apply-the-vision/2023-housing-underproduction/ https://upforgrowth.org/apply-the-vision/2023-housing-underp... Which has this as the report: https://upforgrowth.org/wp-content/uploads/2023/10/2023_Housing-Underproduction-in-the-US-Report_FINAL.pdf https://upforgrowth.org/wp-content/uploads/2023/10/2023_Hous... The number is driven by this definition: > Missing Households. Households that may not have formed due to lack of availability and affordability, e.g. households with children over 18 years of age still living with their parents or individuals or couples living together as roommates at levels exceeding historical norms.
- gruez 10mo ago
  Did you intend to add something after the definition? For better or worse, "moving out once you reach 18" is widespread enough of an expectation that it can be used as a yardstick for housing shortage.
  - djoldman 10mo ago
    I think it's interesting how "shortage" is defined across different products. From an economics standpoint, "shortage" isn't a useful word, unless it's applied in the extremely unlikely scenario where there nothing is available at any price. Generally, this is because price dictates supply. "Shortage" for the current housing market is generally used to mean, "relative to historic trends, many people want houses who can't afford the current prices."
    - AnthonyMouse 10mo ago
      Shortage in the absence of price controls generally means that something is inhibiting supply from increasing as demand does, causing increased demand to have the primary result of increasing prices rather than increasing production. Sometimes this is expected or unavoidable, e.g. if you have a sudden increase in the demand for electricity then the price will increase temporarily until new power generation or transmission capacity can be brought online, and in the meantime you have a shortage. The problem comes when the shortage is a result of artificial scarcity as it is with housing/zoning, because then it's not temporary, it persists until the cause of the artificial scarcity is defeated.
vondur 10mo ago
I just watched a video from Dave Ramsey title "What the Government Should Do to Fix the Housing Problem" He specifically calls out Institutional Investors and Foreign Corporations that have been purchasing single family housing and converting them into rental properties. I think he makes some good point in his video: https://youtu.be/_CrgniwSLLM https://youtu.be/_CrgniwSLLM
- jeffbee 10mo ago
  Why do you think that renters don't deserve to live in single-family homes?
  - MetaWhirledPeas 10mo ago
    Not at all what the GP said. They aren't saying landlords are the problem, they are saying Institutional Investors and Foreign Corporations being landlords are the problem.
    - jeffbee 10mo ago
      There is absolutely nothing wrong with institutional investors buying tract homes and renting them out. Nothing! It brings the benefits of living in such homes to people who otherwise would be excluded from them by the financial credit system.
      - gnatman 10mo ago
        The article linked in the OP, and many posters in this thread, present arguments to the contrary. The main one seems to be that although institutional investors are happy to let people “benefit” from renting their homes, they are precluding many from ever owning those homes themselves.
        jeffbee 10mo ago
        I understand the arguments, and I understand that they are morally vacuous arguments. It is simply an advancement of the interests of the bourgeoisie. They are annoyed that renters are effectively able to influence the market, even if by the second degree through large-scale renting. They believe that having scraped together a quarter million dollars for the down payment makes them a special class of people. It is a stupid position to defend.
SirFatty 10mo ago
When we bought our first home, a townhouse, in the early 1990s the builder only sold to people that were going to live in said home. They helped save the down payment and made sure that utility payments (gas/electric) were under a certain amount each month (super insulated and heated with a hybrid hot water system). Bigelow Homes, they were on a few This Old House episodes in the 80s. It would be nice to see that again, the new housing market is ridiculous now.
- HexPhantom 10mo ago
  That sounds like an absolute dream compared to today's market
  - lotsofpulp 10mo ago
    Homeownership rates are not materially lower than before. Page 5 for the data, page 13 for the formula. https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf I would bet most, if not almost all homes, are sold to buyers who will occupy them. This graph goes further back: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N More info: https://en.wikipedia.org/wiki/Homeownership_in_the_United_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
    - SirFatty 10mo ago
      Median age of ownership? Skews older now I'm guessing. I was talking about the younger crowd trying to get a start.
      - JumpCrisscross 10mo ago
        > Median age of ownership? Skews older now I'm guessing First-time homebuyer (FTB) "average and median age stood at 36.3 and 33 years for the period Q3:24-Q2:25, and there has been minimal FTB average age change since either 2001 or 2021" [1]. [1] https://www.aei.org/articles/nar-says-the-typical-first-time-homebuyer-age-was-40-this-year-up-from-33-in-2021-but-is-this-accurate/ https://www.aei.org/articles/nar-says-the-typical-first-time...
SoftTalker 10mo ago
> Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash? I don't see why the seller would care. They're getting a check at closing, that's all they care about. I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But most buyers are pre-qualified (at least if they're working with an agent). The main reason they would not get financing is if the appraisal came in lower than the sale price.
- beisner 10mo ago
  Closing certainty is a major reason people will take all-cash offers over financed ones. Even if you're pre-approved for a loan.
  - SoftTalker 10mo ago
    A cash offer will still fall apart if the appraisal comes in too low, I would think. Or does the term "cash offer" imply that no appraisal will be done?
    - abosley 10mo ago
      Appraisals are generally done to ensure that the loan guarantor will be able to recover their investment if the party taking the loan defaults. Therefore, cash offers don't perform appraisals. Cash offers lower risk for the seller and provide fastest time to close the transaction.
    - creaghpatr 10mo ago
      Probably the latter, the appraisal is typically mandated by the bank issuing the mortgage.
    - lotsofpulp 10mo ago
      There is no purpose for a cash buyer to pay an appraiser to appraise a house. They have already decided to pay the price, so who cares what an appraiser thinks?
stego-tech 10mo ago
Everyone wants to finger someone to blame rather than (before trying to) fix the fucking problem. Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property. Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing. Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems. EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of. Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.
- immibis 10mo ago
  Also stop fucking arresting people for living in unapproved locations or building structures that don't cost enough money, as long as they're not actually in the way of anyone. Like, don't arrest people for sleeping under bridges unless they are sleeping in the middle of a footpath under a bridge. And don't go building footpaths under all the bridges to prevent them, either. Also tear down all the hostile architecture or at least don't arrest people for taking to it with angle grinders. The free market is supposed to work by everyone solving all their own problems and then exchanging solutions with each other. If you claim to have a market but then arrest people for solving problems, no wonder you get a dysfunctional society. Not saying that people living in tents on public land is a good long-term solution, but it's a step up from being completely shelterless, and since price changes happen at the margins, if it's even remotely viable, it may cause a market crash.
  - stego-tech 10mo ago
    Literally this. Someone has to “lose” to fix this problem, and that loser has to be those with the most to gain from keeping the status quo as-is (developers, landlords, private equity, current homeowners, extortive townships/governments, etc).
HexPhantom 10mo ago
Housing is more than a market - it's where people live
- gruez 10mo ago
  Do we apply that logic to any other market that's served by for-profit companies? "corn/egg/beef is more than a market - it's what people eat" "cars/gas is more than a market - it's how people get around" "natural gas is more than a market - it's how people stay warm"
  - ssl-3 10mo ago
    So what if we do apply that same logic to those other categories? Or what if we do not? Is there a point to this line of questioning?
    - JumpCrisscross 10mo ago
      > Is there a point to this line of questioning? That "housing is more than a market - it's where people live" is a platitude. It sounds nice. But it doesn't tell us anything meaningful nor solve any problems.
fuckinpuppers 10mo ago
Super depressing. An individual can’t compete against big money
ahmeneeroe-v2 10mo ago
[flagged]
- guyzero 10mo ago
  There are so many confounding factors that this can't be taken at face value. Immigrants go where jobs are in general and it's demand for workers that causes housing prices to go up. If there was zero immigration there would still be huge housing demand in SF and LA.
  - ahmeneeroe-v2 10mo ago
    You think that a minimum of 35% of demand being artificial isn't a factor that can be seen to increase overall demand? edit: I say "minimum 35%" because that is just the percentage of immigrant-demand that managed to secure housing. Hard to say exactly how many more immigrants are bidding on SF & LA-County housing but 35% is the absolute floor.
    - guyzero 10mo ago
      Framing foreign-born residents as "artificial demand" is definitely a thing you can do, but it doesn't align with reality. Some portion of the foreign-born population are naturalized or are family members of US citizens, so it's not like waving your magic racist wand would actually solve the problem.
      - ahmeneeroe-v2 10mo ago
        It's weird that immigration and housing is an off-limits topic for you that you're not able to discuss it objectively.
        guyzero 10mo ago
        I just said you're wrong, not that you're prohibited from discussing it.
lwansbrough 10mo ago
Lots of ideas in here that fail to properly identify and address the root cause, which is disappointing given how many of us are programmers. Trace the problem back. Where does it start? Why is PE investing in homes? Because they can make money. Why does buying a home make money? Because the value appreciates. Why does the value appreciate on an asset that literally deteriorates over time? Because of restricted supply. Why is there a supply shortage? The root cause of this issue is supply. Zoning, mostly, is to blame. There are down stream issues, like the capacity of the construction industry, but that is an effect of the current environment not a root cause in and of itself — if there is money to be made, construction will grow as fast as it can. Fix supply, and you fix the issue. This is a uniquely (English) western world problem. Go look at western countries that speak English vs. non-English housing starts. It’s just a cultural failure. You can blame corporations all you want but at the end of the day most people in the anglosphere expect a return on the largest purchase of their lives, even if it comes at the cost of materially worsening the lives of those around them.
- samdoesnothing 10mo ago
  You're absolutely right of course. Even a child could look at the present situation and determine that the solution is to simply build more housing, but for some reason many grown adults cannot accept such a simple solution and insist that what's actually needed is more government regulation or something.
- c-linkage 10mo ago
  Usually a root-cause analysis asks for five why's so your analysis seems a bit short. One should ask why it is that housing / land is more profitable than those investments in which banks and private equity previously invested. And then when you follow that line of reasoning (too much capital and credit -- thanks quantitative easing! -- poor performance on bonds due to low interest rates and restrictions on the quality of investment vehicles) and you'll see that the root cause is probably more financial rather than _just_ too little housing. Debts need to be cleared, losses need to be accepted, and leverage unwound. Building more housing just gives banks and private equity more stuff to buy.
MetaWhirledPeas 10mo ago
Private equity is the gamification of everything, in a compressed time frame. A company focused on longer time frames will cultivate their reputation. This takes the form of quality products and good customer service. PE has no need for any of this nonsense. They are looking for a quick return on their investment; to trade in all reputation and goodwill for their immediate value in cold hard cash. The more immediate the better, so they can move on to their next acquisition.
- gruez 10mo ago
  Funny, because you hear the same hand-wringing about how public companies (ie. the exact opposite of PE) only care about next quarter's earnings report. By that metric, PE is better than public companies, because their source of capital is more secure and don't have to worry about flighty shareholders dumping their shares.
  - MetaWhirledPeas 10mo ago
    I don't see how they are opposites; public companies have their own perverse incentives.
danesparza 10mo ago
Corporations shouldn't be allowed to own residential properties. Period.
- malfist 10mo ago
  For every complex and difficult problem, there is a simple, easy and wrong solution. If corporations can't own residential properties, how would anyone rent a house? How would home builders build model homes? How would Trusts manage real estate? This is a complex and nuanced problem.
  - ssl-3 10mo ago
    From individuals? Anecdotally: I've rented 5 different single-family houses in my life. All of them were rented from individuals. Only 1 out of the 5 had a landlord that owned some other stuff that they also rented out. For the remaining 4 out of 5, the landlord only had that singular property to rent: They lived wherever they lived, and they also had an extra house for whatever reason that they rented to me.
    - malfist 10mo ago
      I'd be willing to bet the majority of those "individuals" were incorporated as an LLC to limit liability, thus making them corporations.
      - ssl-3 10mo ago
        I knew these individuals (no scare quotes required) personally before I rented from them. But sure: If you want to bet that you're right about a very specific situation that you have no specific knowledge of, then don't let me stand in your way. A fool and his money are soon to part.
        BeetleB 10mo ago
        I think you're misreading his intent. It may not be the case for those you rented from, but over the last 15-20 years, the standard practice for them has increasingly become "Form an LLC". In most cities, when you rent a detached house from a corporation, it's really one individual behind it. These people are likely not the minority.
nine_k 10mo ago
A gift link (no paywall, no archive): https://www.theatlantic.com/ideas/2025/12/private-equity-housing-changes/685138/?gift=Exty0c37iBapZfMrmNPU4pW9Gj0uu72B4b0jAvyak24 https://www.theatlantic.com/ideas/2025/12/private-equity-hou...
austhrow743 10mo ago
The reasons for high housing prices generally come down to "government restriction of supply, as supported by a large amount of voters". There's no other expense where we talk about it as a market, at least in general layman focused new and discussions. People aren't concerned about the fuel market or the grocery market. They're concerned about fuel prices. Grocery prices. Housing is an exception due to catastrophic historical policy choices to encourage it as an investment. Government restrictions on housing supply will exist for as long as a significant number of people not only have their net worth wrapped up in housing, but who actually leverage themselves and go in to extreme debt to achieve it. Not to mention the attached cultural issues of then wanting "buying a house" to mean "buying an area staying the same". Concentration of residential real estate among fewer owners is the only path that doesn't lead to the future being housing based feudalism where your station in life is determined by if you inherited somewhere to live, and how desirable it is.
- potato3732842 10mo ago
  Most people are apathetic about most things at best. They don't "really" care nor should they. They only casually approve or disapprove. The problem is that we as a society tolerate people turning off their brains and becoming useful idiots if you frame things in certain ways. And so what to the scheming weasels with special interests to serve do? They frame things that way. You see it all the time on HN, say nothing of "other" platforms. People who have no real pressing need to care about some specific thing will go to bat for something just because it's peddlers say it's good for the environment or public health or god or whatever. Anything can be framed in such a way they're happy to advocate for. It's like an open mail relay or DDOS reflection. This exploit in our society gets leverages left and right by special interests to get all sorts of things that make them money written into the rules and laws at every turn. These people ought to feel bad for just taking a one sided story at face value and broader society ought to ostracize them for it same as we'd ostracize anyone stupid enough to go to bat for bigotry in drag. The problem is in the mirror. This is a social norms issue.
- cal_dent 10mo ago
  Good luck trying to mass build in this financial and fiscal environment. Governments could cut as much red tape as they'd like now to stimulate housebuilding and the market will still continue to build higher priced homes because that's the only game in town now to deliver an attractive ROI. A fundamental issue no one is truly engaging with his the concentration of where people want to live which has been a combination of where jobs are and the development consumer activities in those locations have fostered to keep them attractive places to live. They're too many people trying to live in too few places and thats subtly due to necessity related to where employment is. Remote working should have eased that more sustainably over the medium term but society decided it was better to throw the baby out with the bathwater when it came to that & productivity issues etc.
AuthAuth 10mo ago
I feel like i've seen the atlantic write this exact same article at least 3 times in the past year. Its getting better but the claims are still not supported by reality.
mlsu 10mo ago
Private equity goes to housing because there is a return there. A housing can either be an investment or be affordable. It cannot be both. Those two things are completely at odds. When something is an investment, it must become unaffordable over time. There is no way to square that circle! Unfortunately, housing-as-investment is more or less baked into our cultural DNA. We do not need to unwind the supply problem; or the government regulation problem; or the corporate problem. We need to unwind the idea that a house is an investment. Good luck with that. It's the air we breathe here. There's nowhere to go but up.
xivzgrev 10mo ago
Maybe if I say it enough times it will become true. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes...
klipklop 10mo ago
I have just laughed over the years as people argued that private equity owned too small of a percentage of the housing stock to move the market. Looks like they were wrong. The entire arrangement is such a tax and loan leveraged scam. It's time investment groups and corporations are no longer allowed to use tax advantages that were intended to help build families/middle-class build wealth. Too bad PE essentially runs the US now. I would not be surprised that in ten years PE/REITs own 50% of the housing stock in every city that has a functioning job market.

117 points by harambae 10mo ago

https://archive.today/HlxXN https://archive.today/HlxXN

Summary: they're pulling "starter homes" off the market, predominantly in nonwhite neighborhoods, and skimping more on maintenance/landscaping.

potato3732842 10mo ago
>and skimping more on maintenance/landscaping I.e the kind of stuff everyone wants to do but can't justify flying so close to the sun on because they don't have a legal army say "we are in compliance and here's why" on their behalf when the municipal government comes looking for fine money or the slip and fall lawyer tries to make something their fault. In "reasonable" (note for the bottom feeders, I did not say "free", I said "reasonable") markets the big guy has to do things to higher standards because his big pot of money will attract vultures looking for a quick buck if he does even slightly wrong.
- nradov 10mo ago
  It's usually the opposite. In a lot of rental markets the small time landlords do even less than the minimum in terms of maintenance and upkeep, whereas the big corporate landlords at least have some basic level of organizational competence. Most local governments don't have the resources to do much enforcement so only the most serious violations are ever punished.
  - potato3732842 10mo ago
    Eh, toss a coin. I've seen it cut both ways. Corporate can be "is sending someone to fix it" for months just like a slumlord.
- immibis 10mo ago
  I remember there was once a guy who just went around fixing potholes with no official authorization or anything (he did it properly), and I think he got arrested but then released with a warning.
oldjim798 10mo ago
"Skimping on maintenance" is capitalisms main and really only play. So many issues (housing, transport, utilities) are because "the market" won't ever pay to maintain.
- edoceo 10mo ago
  Externalize the costs, to build your profit!
- FireBeyond 10mo ago
  Agreed. When I moved to the US from Australia 19 years ago, the road condition here blew my mind. The potholes, tree roots, all of that? There'd be protests at City Councils for a fraction of that in Australia. Here, just "the way it is".
cyberax 10mo ago
There are now no "starter homes". There are starter _locations_. And dense cities ain't them no more.
- mwkaufma 10mo ago
  [flagged]
  - cyberax 10mo ago
    No, it's not. The article is nothing but a complete lie and a ragebait against scapegoats. This is similar to how conservatives are raging against trans people. Starting from this: > The United States is short 4 million housing units It's a lie. The US has more than one housing unit (1.1) per family. We don't have a housing problem. We really really don't. We have an urbanism problem, that made the dense hellscapes the only viable housing location.
thephyber 10mo ago
When a landlord “Skimps” systematically on their obligations as a landlord, we call it a slumlord.

christkv 10mo ago

I'm as pro capitalism as it comes but private equity should not be allowed to operate in the consumer housing market. They can develop and sell houses but cannot hold is my point of view.

jack_tripper 10mo ago
Same. I remember growing up in the 90s, after the fall of communism, hearing that capitalism beat communism because in capitalism you can own things. MFW I now live in capitalism and can't afford to own anything.
- ReptileMan 10mo ago
  One of the things communism did right was housing - in the Eastern Bloc home ownership was above 90%. The quality was not great, not terrible. But bad shelter is infinitely better than no shelter. I also think that it also excelled in K12 education. Whether because the german style system that was common in europe pre WWII was just left alone - I don't know. But until the mid 90s we really didn't had the school reformers to fuck it up. Right now we are as good as producing illiteracy as the rest of the west.
  - thephyber 10mo ago
    What does “home ownership” mean in a country where there is no private property?
    - ReptileMan 10mo ago
      There was a lot of private property in the socialist countries. I am not sure from where this thought even came to you. What was impossible was owning big private enterprise. But small businesses - like a restaurant or a shoe repair shop were allowed. You were also allowed to own houses, cars, appliances, clothes and almost everything else. Land was a bit weird - you could own, but not too much - basically stuff that was small enough to evade the collectivisation process.

oldjim798 10mo ago

Ban corporate ownership of residences. Only individuals, Coops or condominiums. Cap how many rentals an individual can own. The government should also build massive amounts of housing. Everywhere of all types - apartments, townhouses, single family. After built transferred to the residents as coops.

garbawarb 10mo ago
It's interesting to think of the second-order effects of this. If these corporations can't invest in housing, they'd direct their money elsewhere. Maybe we'd see a stock market or commercial real estate boom. Maybe a proliferation of new ventures.
- phkahler 10mo ago
  >> If these corporations can't invest in housing, they'd direct their money elsewhere. I think that's why they're buying residential - there aren't any other traditional investments that aren't in a bubble or just have low returns. If you anticipate economic collapse or hyper inflation or whatever, physical assets make sense - when you measure wealth in houses you don't care what the dollar does. Gold people can do without, housing not so much. Whatever happens next, people will need a place to live. OTOH the population collapse is also coming so housing doesn't make much sense beyond 2030 or so.
  - the_sleaze_ 10mo ago
    There will be a squeeze on real estate as the sea level rises and insurance increasingly withdraws from coastal and fire-prone areas.
    - asdff 10mo ago
      I'd expect to see a surge in self insurance. These areas are so valuable already in a lot of cases where rich people are content to pay six figure property tax bills. Especially with cost of construction being a fraction of that property's value.

postflopclarity 10mo ago

build. more. and this problem will go away.

ryanmcbride 10mo ago
Not if private equity just snatches it all up. Yes build more. Also regulate the oligarchs until they no longer exist.
- api 10mo ago
  PE buying real estate is a long bet on housing prices. If supply increases enough, prices flatten out and then fall, and the longs get crushed. These investments are a bet on continuing to under-build and under-densify.
  - swat535 10mo ago
    If they buy out all the supply, there will always be a shortage.
    - Ekaros 10mo ago
      So build so much they cannot rent all of it. Over supply will eventually drive down prices.
      - ryanmcbride 10mo ago
        who is going to do the building? Because PE is the one doing that too.
        verteu 10mo ago
        No, private equity appears to be a minority of home builders: https://www.builderonline.com/builder-100/builder-100-list/2025/ https://www.builderonline.com/builder-100/builder-100-list/2...
  - 10mo ago

collinmcnulty 10mo ago

I recently learned about Singapore’s seemingly excellent public housing system that is used by over 75% of its population. Singapore being so capitalist about everything else while carving out housing I think provides evidence that capitalism can be made stronger by keeping certain things away from strict market forces. https://en.wikipedia.org/wiki/Public_housing_in_Singapore https://en.wikipedia.org/wiki/Public_housing_in_Singapore

api 10mo ago
We don't have a free market in housing at all. It's a cartel with restricted supply.
- orwin 10mo ago
  You can't have a free market if supply (or demand) is constrained. You either go the liberal+regulated free market way, which will get lobbied, then overregulated, or you go the socialized way, where you allow local government and associations/unions to compete in the market... with the exact same rights as the companies, and no weird rules that prevent them to truly compete. And if you have a natural monopoly (energy distribution is the worst offender), you have to go the central planning way I guess, until we find something better.
- collinmcnulty 10mo ago
  Who is “we”? Even within the USA that statement certainly isn’t true everywhere.

hardtke 10mo ago

One of the issues the article doesn't mention is that these houses are effectively cheaper to purchase for corporate owners. Generally they can borrow money at a lower rate, but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant. Effectively they are redirecting money that would be paid in taxes into the payments on the new purchase.

shadowpho 10mo ago
> Generally they can borrow money at a lower rate There is some tax tricks you can play, but in general homes for primary residence is lower then secondary/rent, which is a big proportion of cost.
api 10mo ago
Our system is far more regressive than most people realize. The poor pay more for things, don't have access to all kinds of tax breaks and cheap money, and can't afford accountants and shell companies and all the other complicated tricks you can use if you are wealthier. I wonder: if you added it all up, would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have?
- AnthonyMouse 10mo ago
  > would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have? That's an easy one to fix regardless. Use a flat tax with a large fixed refundable credit. Now everyone pays e.g. 30% but gets a $12,000 credit, so someone who makes $40,000 is effectively paying zero, someone who makes $80,000 is effectively paying 15% and the effective rate approaches 30% as the number goes up. But the marginal rate is the same for everyone so there aren't all these complexities and arbitrage games, and at lower incomes the credit stands in for a lot of assistance programs so you don't get all the marginal rate cliffs from overlapping phase outs.
  - ceejayoz 10mo ago

jkhall81 10mo ago

Nice, a pay wall. Pay to read about how housing costs too much.

quesera 10mo ago
Disable JavaScript. Solves many of the problems on the net, including the ability to read this article. :)

BeetleB 10mo ago

> Moreover, even if big investors are purchasing thousands of homes, they don’t own significant numbers of homes compared with small-scale landlords and individuals. > Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties. They're invoking a false dichotomy. Small scale landlords (i.e. the guy who owns a second home and rents it out) are part of the corporations. From the linked report: > A corporate investor, also referred to as a nonindividual investor, is a business entity that owns residential property, usually for the purpose of generating income. This broad category ranges from small entities such as family trusts and limited liability corporations (LLCs) to larger outfits like real estate investment trusts (REITs), endowments, and pension funds. Many/most "ordinary" folks who buy a house to rent fall in this category - they form an LLC or something similar. Many reasons for this. Percentage-wise, my guess is that institutional investors (not just individuals who formed an LLC) are still a relatively small minority, but I don't have the data. There is a common misconception on HN that it's rich people who mostly buy houses/units to rent out. In my experience, that's just not the case. Everyone is doing it across the board, and just by virtue of there being more non-rich people, they are likely the majority. Also, higher income folks don't feel a great need to make more money. Median or lower income want to make a lot more, and real estate is actually one of the fewest options available to them (and also really easy to learn/understand). A lot less work than a second job (although some get a second job just to bootstrap the RE purchase process). Just 3 days ago I spoke to a friend. Engineer (not software). Decent income, but not FAANG level. Non-working spouse and multiple kids. Rents out two houses, and is buying 2 more. I took an AirBnB course from a guy who has lots of listings on AirBnB. He got there with almost no money down (most of his money was spent on furnishing the place). He was educated, but fairly low income ($50-60K in California). When I took the course he was making over $300K/year net from his AirBnBs. When I used to listen to the Bigger Pockets podcast, the majority of people who owned 10+ homes to rent had very average incomes (less than a typical non-FAANG engineer). I've been in the real estate space for a few years now. I don't own other units, but I do invest in them, and am moderately active in a local real estate club. I know how these things work. If you want to solve this problem, stop pointing fingers at "rich people", and stop allowing multiple ownership for a decade or two.

stock_toaster 10mo ago

Wild idea... Maybe tax wealth instead of income? Tax break on single home ownership, but significantly increased tax on multi-home-ownership? It would be interesting to see comparisons between PE ownership in markets with property tax vs markets without.

gjsman-1000 10mo ago
Wealth taxes don't work because wealth gets extremely fuzzy. For example, unsold stock that I bought 15 years ago; and then got a loan against. I'm wealthy... kinda? But I didn't sell the stock; I have unrealized gains, and you shouldn't tax me beyond income tax on borrowed money? Okay, tax me on my unrealized gains then - but then 2008 repeats itself, stock goes down 40%, do I get a refund? Of course not, I only pay when stock goes up and never down, which is not exactly a fair incentive. Now imagine artwork I bought 15 years ago from Banksy. Or imagine my video game collection I bought on eBay that contains some rare titles. Or what about my wine collection? Now imagine I'm Elon Musk, on paper worth $400B, but if I sold even 20% of my stock, that paper valuation would be shredded from an excess of liquidity driving the share price down, so you can't tax me on what is physically impossible to realize.
- EricDeb 10mo ago
  What about a law where you couldnt use over a million dollars (to exclude normal people) a year of any asset as collateral for a loan unless you paid capital gains on it at its current valuation?
  - gjsman-1000 10mo ago
    If I pledge $10M in stock for a $2M loan, what's the taxable event? The full $10M valuation, or my $2M loan? What if the stock is in a company worth $40M, but the sale of $10M in stock causes it to be worth $5M afterwards and the private company's value is reassessed to $20M, after I got the loan and after my pledge?
  - novok 10mo ago
    You create a lot of other side effects that destroy a lot of valid activity and thus cause a large economic depressive effect, or you will start needing to provide a lot of other counterbalances that will be even worse or cost the government a lot more. This has the finance equivalent of feeling like cookie banners will actually do anything. Political power will advocate for it's power, you have to go one level higher and interact at that level, not on tax law tweaks. To give an example of where this has gone wrong already, look at the entire interaction between startup stock, ISOs and AMT and how it creates a horrible trap for startup employees, but not for founders and investors who get a lot of very nice tax benefits like QSBS, no AMT, so on. Because startup employees are diffuse, usually have unstable employment and are usually younger, this hasn't been fixed to this day. While other countries like Israel have this fixed in a very elegant way, where you can exercise without tax bombs and only actually have tax liability when you actually can and do practically realize or liquidate the stock gains.

mugivarra69 10mo ago

[dead]

shuntress 10mo ago

My extreme political opinion is that no one (including corporations) should be allowed to own more than one property in which they do not reside.

bell-cot 10mo ago
So I can own a duplex and rent out the other half, but that's it? Or - what if I own a 5-bedroom house, and rent the other 4 bedrooms to roommates?
- bpt3 10mo ago
  No, you just do what most people (and corporations) do and create a new entity (normally an LLC) for each property. There you go, you've sidestepped this inane policy.

djoldman 10mo ago

> The United States is short 4 million housing units, with a particular dearth of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings The number cited links to here: https://upforgrowth.org/apply-the-vision/2023-housing-underproduction/ https://upforgrowth.org/apply-the-vision/2023-housing-underp... Which has this as the report: https://upforgrowth.org/wp-content/uploads/2023/10/2023_Housing-Underproduction-in-the-US-Report_FINAL.pdf https://upforgrowth.org/wp-content/uploads/2023/10/2023_Hous... The number is driven by this definition: > Missing Households. Households that may not have formed due to lack of availability and affordability, e.g. households with children over 18 years of age still living with their parents or individuals or couples living together as roommates at levels exceeding historical norms.

gruez 10mo ago
Did you intend to add something after the definition? For better or worse, "moving out once you reach 18" is widespread enough of an expectation that it can be used as a yardstick for housing shortage.
- djoldman 10mo ago
  I think it's interesting how "shortage" is defined across different products. From an economics standpoint, "shortage" isn't a useful word, unless it's applied in the extremely unlikely scenario where there nothing is available at any price. Generally, this is because price dictates supply. "Shortage" for the current housing market is generally used to mean, "relative to historic trends, many people want houses who can't afford the current prices."
  - AnthonyMouse 10mo ago
    Shortage in the absence of price controls generally means that something is inhibiting supply from increasing as demand does, causing increased demand to have the primary result of increasing prices rather than increasing production. Sometimes this is expected or unavoidable, e.g. if you have a sudden increase in the demand for electricity then the price will increase temporarily until new power generation or transmission capacity can be brought online, and in the meantime you have a shortage. The problem comes when the shortage is a result of artificial scarcity as it is with housing/zoning, because then it's not temporary, it persists until the cause of the artificial scarcity is defeated.

vondur 10mo ago

I just watched a video from Dave Ramsey title "What the Government Should Do to Fix the Housing Problem" He specifically calls out Institutional Investors and Foreign Corporations that have been purchasing single family housing and converting them into rental properties. I think he makes some good point in his video: https://youtu.be/_CrgniwSLLM https://youtu.be/_CrgniwSLLM

jeffbee 10mo ago
Why do you think that renters don't deserve to live in single-family homes?
- MetaWhirledPeas 10mo ago
  Not at all what the GP said. They aren't saying landlords are the problem, they are saying Institutional Investors and Foreign Corporations being landlords are the problem.
  - jeffbee 10mo ago
    There is absolutely nothing wrong with institutional investors buying tract homes and renting them out. Nothing! It brings the benefits of living in such homes to people who otherwise would be excluded from them by the financial credit system.
    - gnatman 10mo ago
      The article linked in the OP, and many posters in this thread, present arguments to the contrary. The main one seems to be that although institutional investors are happy to let people “benefit” from renting their homes, they are precluding many from ever owning those homes themselves.
      - jeffbee 10mo ago
        I understand the arguments, and I understand that they are morally vacuous arguments. It is simply an advancement of the interests of the bourgeoisie. They are annoyed that renters are effectively able to influence the market, even if by the second degree through large-scale renting. They believe that having scraped together a quarter million dollars for the down payment makes them a special class of people. It is a stupid position to defend.

SirFatty 10mo ago

When we bought our first home, a townhouse, in the early 1990s the builder only sold to people that were going to live in said home. They helped save the down payment and made sure that utility payments (gas/electric) were under a certain amount each month (super insulated and heated with a hybrid hot water system). Bigelow Homes, they were on a few This Old House episodes in the 80s. It would be nice to see that again, the new housing market is ridiculous now.

HexPhantom 10mo ago
That sounds like an absolute dream compared to today's market
- lotsofpulp 10mo ago
  Homeownership rates are not materially lower than before. Page 5 for the data, page 13 for the formula. https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf I would bet most, if not almost all homes, are sold to buyers who will occupy them. This graph goes further back: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N More info: https://en.wikipedia.org/wiki/Homeownership_in_the_United_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
  - SirFatty 10mo ago
    Median age of ownership? Skews older now I'm guessing. I was talking about the younger crowd trying to get a start.
    - JumpCrisscross 10mo ago
      > Median age of ownership? Skews older now I'm guessing First-time homebuyer (FTB) "average and median age stood at 36.3 and 33 years for the period Q3:24-Q2:25, and there has been minimal FTB average age change since either 2001 or 2021" [1]. [1] https://www.aei.org/articles/nar-says-the-typical-first-time-homebuyer-age-was-40-this-year-up-from-33-in-2021-but-is-this-accurate/ https://www.aei.org/articles/nar-says-the-typical-first-time...

SoftTalker 10mo ago

> Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash? I don't see why the seller would care. They're getting a check at closing, that's all they care about. I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But most buyers are pre-qualified (at least if they're working with an agent). The main reason they would not get financing is if the appraisal came in lower than the sale price.

beisner 10mo ago
Closing certainty is a major reason people will take all-cash offers over financed ones. Even if you're pre-approved for a loan.
- SoftTalker 10mo ago
  A cash offer will still fall apart if the appraisal comes in too low, I would think. Or does the term "cash offer" imply that no appraisal will be done?
  - abosley 10mo ago
    Appraisals are generally done to ensure that the loan guarantor will be able to recover their investment if the party taking the loan defaults. Therefore, cash offers don't perform appraisals. Cash offers lower risk for the seller and provide fastest time to close the transaction.
  - creaghpatr 10mo ago
    Probably the latter, the appraisal is typically mandated by the bank issuing the mortgage.
  - lotsofpulp 10mo ago
    There is no purpose for a cash buyer to pay an appraiser to appraise a house. They have already decided to pay the price, so who cares what an appraiser thinks?

stego-tech 10mo ago

Everyone wants to finger someone to blame rather than (before trying to) fix the fucking problem. Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property. Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing. Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems. EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of. Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.

immibis 10mo ago
Also stop fucking arresting people for living in unapproved locations or building structures that don't cost enough money, as long as they're not actually in the way of anyone. Like, don't arrest people for sleeping under bridges unless they are sleeping in the middle of a footpath under a bridge. And don't go building footpaths under all the bridges to prevent them, either. Also tear down all the hostile architecture or at least don't arrest people for taking to it with angle grinders. The free market is supposed to work by everyone solving all their own problems and then exchanging solutions with each other. If you claim to have a market but then arrest people for solving problems, no wonder you get a dysfunctional society. Not saying that people living in tents on public land is a good long-term solution, but it's a step up from being completely shelterless, and since price changes happen at the margins, if it's even remotely viable, it may cause a market crash.
- stego-tech 10mo ago
  Literally this. Someone has to “lose” to fix this problem, and that loser has to be those with the most to gain from keeping the status quo as-is (developers, landlords, private equity, current homeowners, extortive townships/governments, etc).

HexPhantom 10mo ago

Housing is more than a market - it's where people live

gruez 10mo ago
Do we apply that logic to any other market that's served by for-profit companies? "corn/egg/beef is more than a market - it's what people eat" "cars/gas is more than a market - it's how people get around" "natural gas is more than a market - it's how people stay warm"
- ssl-3 10mo ago
  So what if we do apply that same logic to those other categories? Or what if we do not? Is there a point to this line of questioning?
  - JumpCrisscross 10mo ago
    > Is there a point to this line of questioning? That "housing is more than a market - it's where people live" is a platitude. It sounds nice. But it doesn't tell us anything meaningful nor solve any problems.

fuckinpuppers 10mo ago

Super depressing. An individual can’t compete against big money

ahmeneeroe-v2 10mo ago

[flagged]

guyzero 10mo ago
There are so many confounding factors that this can't be taken at face value. Immigrants go where jobs are in general and it's demand for workers that causes housing prices to go up. If there was zero immigration there would still be huge housing demand in SF and LA.
- ahmeneeroe-v2 10mo ago
  You think that a minimum of 35% of demand being artificial isn't a factor that can be seen to increase overall demand? edit: I say "minimum 35%" because that is just the percentage of immigrant-demand that managed to secure housing. Hard to say exactly how many more immigrants are bidding on SF & LA-County housing but 35% is the absolute floor.
  - guyzero 10mo ago
    Framing foreign-born residents as "artificial demand" is definitely a thing you can do, but it doesn't align with reality. Some portion of the foreign-born population are naturalized or are family members of US citizens, so it's not like waving your magic racist wand would actually solve the problem.
    - ahmeneeroe-v2 10mo ago
      It's weird that immigration and housing is an off-limits topic for you that you're not able to discuss it objectively.
      - guyzero 10mo ago
        I just said you're wrong, not that you're prohibited from discussing it.

lwansbrough 10mo ago

Lots of ideas in here that fail to properly identify and address the root cause, which is disappointing given how many of us are programmers. Trace the problem back. Where does it start? Why is PE investing in homes? Because they can make money. Why does buying a home make money? Because the value appreciates. Why does the value appreciate on an asset that literally deteriorates over time? Because of restricted supply. Why is there a supply shortage? The root cause of this issue is supply. Zoning, mostly, is to blame. There are down stream issues, like the capacity of the construction industry, but that is an effect of the current environment not a root cause in and of itself — if there is money to be made, construction will grow as fast as it can. Fix supply, and you fix the issue. This is a uniquely (English) western world problem. Go look at western countries that speak English vs. non-English housing starts. It’s just a cultural failure. You can blame corporations all you want but at the end of the day most people in the anglosphere expect a return on the largest purchase of their lives, even if it comes at the cost of materially worsening the lives of those around them.

samdoesnothing 10mo ago
You're absolutely right of course. Even a child could look at the present situation and determine that the solution is to simply build more housing, but for some reason many grown adults cannot accept such a simple solution and insist that what's actually needed is more government regulation or something.
c-linkage 10mo ago
Usually a root-cause analysis asks for five why's so your analysis seems a bit short. One should ask why it is that housing / land is more profitable than those investments in which banks and private equity previously invested. And then when you follow that line of reasoning (too much capital and credit -- thanks quantitative easing! -- poor performance on bonds due to low interest rates and restrictions on the quality of investment vehicles) and you'll see that the root cause is probably more financial rather than _just_ too little housing. Debts need to be cleared, losses need to be accepted, and leverage unwound. Building more housing just gives banks and private equity more stuff to buy.

MetaWhirledPeas 10mo ago

Private equity is the gamification of everything, in a compressed time frame. A company focused on longer time frames will cultivate their reputation. This takes the form of quality products and good customer service. PE has no need for any of this nonsense. They are looking for a quick return on their investment; to trade in all reputation and goodwill for their immediate value in cold hard cash. The more immediate the better, so they can move on to their next acquisition.

gruez 10mo ago
Funny, because you hear the same hand-wringing about how public companies (ie. the exact opposite of PE) only care about next quarter's earnings report. By that metric, PE is better than public companies, because their source of capital is more secure and don't have to worry about flighty shareholders dumping their shares.
- MetaWhirledPeas 10mo ago
  I don't see how they are opposites; public companies have their own perverse incentives.

danesparza 10mo ago

Corporations shouldn't be allowed to own residential properties. Period.

malfist 10mo ago
For every complex and difficult problem, there is a simple, easy and wrong solution. If corporations can't own residential properties, how would anyone rent a house? How would home builders build model homes? How would Trusts manage real estate? This is a complex and nuanced problem.
- ssl-3 10mo ago
  From individuals? Anecdotally: I've rented 5 different single-family houses in my life. All of them were rented from individuals. Only 1 out of the 5 had a landlord that owned some other stuff that they also rented out. For the remaining 4 out of 5, the landlord only had that singular property to rent: They lived wherever they lived, and they also had an extra house for whatever reason that they rented to me.
  - malfist 10mo ago
    I'd be willing to bet the majority of those "individuals" were incorporated as an LLC to limit liability, thus making them corporations.
    - ssl-3 10mo ago
      I knew these individuals (no scare quotes required) personally before I rented from them. But sure: If you want to bet that you're right about a very specific situation that you have no specific knowledge of, then don't let me stand in your way. A fool and his money are soon to part.
      - BeetleB 10mo ago
        I think you're misreading his intent. It may not be the case for those you rented from, but over the last 15-20 years, the standard practice for them has increasingly become "Form an LLC". In most cities, when you rent a detached house from a corporation, it's really one individual behind it. These people are likely not the minority.

nine_k 10mo ago

A gift link (no paywall, no archive): https://www.theatlantic.com/ideas/2025/12/private-equity-housing-changes/685138/?gift=Exty0c37iBapZfMrmNPU4pW9Gj0uu72B4b0jAvyak24 https://www.theatlantic.com/ideas/2025/12/private-equity-hou...

austhrow743 10mo ago

The reasons for high housing prices generally come down to "government restriction of supply, as supported by a large amount of voters". There's no other expense where we talk about it as a market, at least in general layman focused new and discussions. People aren't concerned about the fuel market or the grocery market. They're concerned about fuel prices. Grocery prices. Housing is an exception due to catastrophic historical policy choices to encourage it as an investment. Government restrictions on housing supply will exist for as long as a significant number of people not only have their net worth wrapped up in housing, but who actually leverage themselves and go in to extreme debt to achieve it. Not to mention the attached cultural issues of then wanting "buying a house" to mean "buying an area staying the same". Concentration of residential real estate among fewer owners is the only path that doesn't lead to the future being housing based feudalism where your station in life is determined by if you inherited somewhere to live, and how desirable it is.

potato3732842 10mo ago
Most people are apathetic about most things at best. They don't "really" care nor should they. They only casually approve or disapprove. The problem is that we as a society tolerate people turning off their brains and becoming useful idiots if you frame things in certain ways. And so what to the scheming weasels with special interests to serve do? They frame things that way. You see it all the time on HN, say nothing of "other" platforms. People who have no real pressing need to care about some specific thing will go to bat for something just because it's peddlers say it's good for the environment or public health or god or whatever. Anything can be framed in such a way they're happy to advocate for. It's like an open mail relay or DDOS reflection. This exploit in our society gets leverages left and right by special interests to get all sorts of things that make them money written into the rules and laws at every turn. These people ought to feel bad for just taking a one sided story at face value and broader society ought to ostracize them for it same as we'd ostracize anyone stupid enough to go to bat for bigotry in drag. The problem is in the mirror. This is a social norms issue.
cal_dent 10mo ago
Good luck trying to mass build in this financial and fiscal environment. Governments could cut as much red tape as they'd like now to stimulate housebuilding and the market will still continue to build higher priced homes because that's the only game in town now to deliver an attractive ROI. A fundamental issue no one is truly engaging with his the concentration of where people want to live which has been a combination of where jobs are and the development consumer activities in those locations have fostered to keep them attractive places to live. They're too many people trying to live in too few places and thats subtly due to necessity related to where employment is. Remote working should have eased that more sustainably over the medium term but society decided it was better to throw the baby out with the bathwater when it came to that & productivity issues etc.

AuthAuth 10mo ago

I feel like i've seen the atlantic write this exact same article at least 3 times in the past year. Its getting better but the claims are still not supported by reality.

mlsu 10mo ago

Private equity goes to housing because there is a return there. A housing can either be an investment or be affordable. It cannot be both. Those two things are completely at odds. When something is an investment, it must become unaffordable over time. There is no way to square that circle! Unfortunately, housing-as-investment is more or less baked into our cultural DNA. We do not need to unwind the supply problem; or the government regulation problem; or the corporate problem. We need to unwind the idea that a house is an investment. Good luck with that. It's the air we breathe here. There's nowhere to go but up.

xivzgrev 10mo ago

Maybe if I say it enough times it will become true. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes...

klipklop 10mo ago

I have just laughed over the years as people argued that private equity owned too small of a percentage of the housing stock to move the market. Looks like they were wrong. The entire arrangement is such a tax and loan leveraged scam. It's time investment groups and corporations are no longer allowed to use tax advantages that were intended to help build families/middle-class build wealth. Too bad PE essentially runs the US now. I would not be surprised that in ten years PE/REITs own 50% of the housing stock in every city that has a functioning job market.