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It's not that simple - the problem is that those institutions are market makers. They are a tiny portion of the market, but a huge driving force in setting and

It's not that simple - the problem is that those institutions are market makers. They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. The things that they do have massively outsized downstream impact contrasted against their relatively tiny overall participation in the market, and they can afford to behave in ways that manipulate the behavior of the majority. If you can decouple them from the housing markets, you also decouple the interests of the donor class, and you allow for policy that doesn't maximize the cost of real estate over the interests of the majority of the population.

WalterBright 10mo ago
> They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. Raising prices when you only have a tiny portion of the market does not work. People won't buy them when there's another house for less.
- observationist 10mo ago
  It's not just raising prices - it's holding prices steady at some point without the concurrent pressure to sell, for example, or manipulating other markets in order to raise or lower prices in an area, or using other mechanics to manipulate pricing, across the entire market, depending on the intended actions. If they intend to purchase properties, it benefits them to depress pricing in the area, if they intend to rent, they can afford to impose artificial scarcity until they force renters to meet their rates, and so on. Normal landlords don't have effectively infinite money with no forces bearing prices down, nor do they have the capabilities to influence markets. Even tiny percentage shifts can result in significant fluctuations in the prices consumers see. It's a very nuanced and complex system in which these institutional investors have very outsized influence.
  - estearum 10mo ago
    This is extremely silly. Prices are high because we don't build enough houses which is mostly because it's really expensive to build houses, then the houses we have built are all owned by empty nesters and people with 1 - 3 investment properties. Everything else you're describing is completely ridiculous.
    - fc417fc802 10mo ago
      > which is mostly because it's really expensive to build houses, Assuming you're referring to the typical high CoL areas, the shortage has very little to do with the expense of building. The zoning laws don't permit sufficient supply in those areas. And that's quite unlikely to change (at least quickly) because anyone pushing such reform would be obliterating the average Joe's net worth.
      - packetlost 10mo ago
        In areas with low CoL the cost of building houses and the cost of selling a house has a massive impact on the number and type of homes that get built. If it's not profitable for a builder to build a home they simply won't, whether it's because of bureaucratic red tap or economic conditions. There's very strong incentives for builders to take the path of least resistance and highest margin.
        hparadiz 10mo ago
        The profit margin has to be significantly higher than simply plopping that cash straight into an index fund. The risk of a project failure is simply too high.
        packetlost 10mo ago
        I imagine the margin necessary scales with the size of the project.
        fc417fc802 10mo ago
- datsci_est_2015 10mo ago
  Define "tiny portion of the market", especially "market". There are many houses in the US. Not all of them are for sale. There's a difference between having a "tiny portion of the market" when you define "the market" as all houses in the US, and "tiny portion of the market" when you define "the market" as the houses that are actively being bought and sold. I would not be surprised if corporate involvement was a significantly higher proportion of the latter rather than the former. It takes a lot less to put your thumb on the scale of the "liquid" portion of a stock if it is significantly smaller in size than the total stock.
  - ToucanLoucan 10mo ago
    To add to this: the "total stock" is also completely different to any other asset in terms of market forces, because it varies widely depending on the buyer in question. People don't shop for "a house" and address the entire available market of houses in the country. They shop for a house in a particular area/city, of a certain value, with certain amenities, in proximity to other things, etc. etc. etc. In this way houses are virtually unique in terms of financial vehicles and it introduces all manner of complexity and otherwise strange forces into the market. You can't simply treat it like any other commodified asset.
  - observationist 10mo ago
    The market meaning all real estate, residential and commercial, and tiny, as in under 3%, with regards to what is owned by the institutional investors. That's probably higher with regards to properties that are or have been on the market in the last ten years or so. From what I can tell, the other ~97% is owned by individuals and smaller funds and mom&pop companies, with fewer than 20 properties involved. In some dense urban areas, up to 10% of the local residential properties are owned by funds or investors. There's also overlap with investment networks where you're not getting to BlackRock levels, but you'll have a web of companies with mutual interests and a network of private debt and collateral, and these make up around 20% of the whole. For the most part, though, the majority of single family homes are not institutional. Even multi-family units, apartment complexes, and other rental properties are only in the ~10% range of institutional ownership, with the remainder owned by individuals, mom&pops, and small investment networks. The conjunction of capabilities and incentives in combination with a huge buffer of wealth allows institutional investors to manipulate things in ways that aren't healthy for private home ownership, and the downstream social and economic impacts of being forced to rent, or hold debt that's not properly reflective of the value of the property. We should impose reasonable policies that serve the interests of the people, and not simply maximize wealth building at the expense of citizens and families that would benefit from home ownership.
- tshaddox 10mo ago
  I don't think that's quite what the comment is claiming. They're not saying that some small portion of homeowners are working together to raise prices. I think they're more talking about the concept of "marginal buyers." It's the marginal buyer that sets prices, not the average buyer. And particularly when supply is heavily restricted, the marginal buyers can be a very tiny portion of all buyers, and can look very different from the average buyer.
  - xvedejas 10mo ago
    Marginal buyers have a big impact by adding a lot of liquidity, but I'm not sure they manipulate prices that much, given that if they ever tried to move prices far from the margin they would cease to be marginal buyers.
    - tshaddox 10mo ago
      But again, I don't think we're talking about a concerted effort to manipulate prices. We're talking about the effect that particular marginal buyers just so happen to cause.
    - deleted 10mo ago
      [deleted]
- kortex 10mo ago
  Going by the graph in the article, that's still ~13% of homes owned by investors with >5 properties. And that's total of what is currently held, it speaks nothing of liquidity. That number likely includes investors who have had that property for a long time, the current property buy-up likely means far greater than 13% of the market right now is going to those sorts of aggregators. Dropping the price of a house by a few percentage points can be the make-or-break for some families. And small changes in availability can have large impacts on price. If we banned (or severely penalized) all entities from owning more than 5 residential homes, this would probably reduce cost by a few percentage points across the board. That's thousands of dollars. Personally, I think unoccupied homes in general ought to be penalized (beyond just tax burden, an actual vacancy tax).
  - no_wizard 10mo ago
    You may be interested in learning about the Land Value Tax[0] which will in effect, taxes become more burdensome for leaving land unproductive (e.g., empty housing or land). It also shifts the calculus on home improvements, which means remodeling your home or doing other perhaps large pieces of upkeep will not trigger a property tax increase as it does today, which is better for median home owners as well. [0]: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
    - throwaway2037 10mo ago
      > home improvements, which means remodeling your home or doing other perhaps large pieces of upkeep will not trigger a property tax increase as it does today I have heard this complaint here a few times, but very few specifics. I would call getting your roof replaced or your kitchen/bathroom remodelled as major home improvements. Do these actually property tax increases?
      - no_wizard 10mo ago
        In many jurisdictions they do, yes. A general guideline is that if it requires an permit it will typically trigger an assessment and thus increase in property tax
- Horffupolde 10mo ago
  The theater on fire has a small exit door.
- immibis 10mo ago
  It can in an extremely illiquid market.
- m00x 10mo ago
  The thing is that there is only a tiny portion of houses ever selling at any time. The only ones that would benefit from selling are people who are downsizing or moving away. If you buy 60% of the properties on market, the rest will see this and adjust their own prices. Usually this only works when the macro is favourable (low interest rates, easy mortgage applications, etc.), but it is definitely a large factor. It sometimes creates a even hotter market, with people thinking that real estate goes up forever, then they sell. You're right that it's not always large investment groups. Vancouver in Canada had the same thing happen, but mostly from foreign investors and criminals washing money. The latter was facilitated by politicians who cashed in big on this.
  - sokoloff 10mo ago
    I don’t understand the last sentence in your second paragraph. If “people [think] that real estate goes up forever” why does that trigger them to sell?
- yulker 10mo ago
  When a strongly capitalized minority cohort can sustain positions that are untenable for normal market participants, they can act as a kingmaker by shaping outcomes at the margin.
- somenameforme 10mo ago
  I generally agree with you on market discussions, but I don't think you're considering this one correctly. Imagine a country responsible for just 10% of global oil production decided to stop producing. What's going to happen oil prices assuming no other country starts producing more? They're going to skyrocket in a seemingly irrational way. But it's completely rational. The reason is that they're a finite resource that is needed, and so there is very minimal price elasticity. People will pay as low as they can, but simultaneously must have oil and so have a practically uncapped price ceiling if that's all that's available. The same is true of housing. You're right that people won't, generally speaking, buy a house for $100 when there's another one for sale for $80. But what you've done there is greatly increase the demand for that $80 house, which is now going to naturally send its price upwards. --- Finally there's the issue that figures on the percent of homes that are owned by investment groups are misleading, because they aren't just buying homes randomly. They're going to pick up lots of houses in precise areas, and so the impact on prohibiting this behavior will be dramatic in these areas.
  - WalterBright 10mo ago
    > so there is very minimal price elasticity. Having lived through the various oil crises, I can confidently assert that there's a great deal of demand elasticity. For example, when the 70s oil crisis hit, people stopped driving to the store for a loaf of bread, but would shop weekly instead. For another, people buy more fuel efficient cars when gas prices are high. For a third, people switch to electric cars. There are regular major disruptions in the flow of oil. Pump prices change on a daily basis, and that results in the amount of gas available == number of gallons customers pay for. No gluts and no shortages.
- AngryData 10mo ago
  You don't have to control the whole market to manipulate it. Housing is localized and the ideal situation is people hold onto their homes for decades before going on the market again and spend months if not years looking at purchasing a home. But investments into single family homes operates on completely different timescales and pace with an entirely separate list of considerations and values.
- class3shock 10mo ago
  But if you bought that tiny portion of the total market all at once or in concentrated areas you better believe you can influence it. https://papersourceonline.com/wall-street-has-spent-billions-buying-homes-a-crackdown-is-looming/ https://papersourceonline.com/wall-street-has-spent-billions... https://www.kut.org/texasstandard/2022-06-14/texas-home-sales-investors-bought-nearly-a-third-of-all-homes-2021 https://www.kut.org/texasstandard/2022-06-14/texas-home-sale...
- antonymoose 10mo ago
  > People won't buy them when there's another house for less. As others have pointed out housing markets are illiquid and tend to have a limited set of sellers at any given time such that the race-to-the-bottom doesn’t happen very often. Rather, an institutional investor buys high on houses in desired neighborhoods then charge high rents on their portfolio. Subsequent sellers in the same neighborhood see the high closing price and ask for even more.
- HumblyTossed 10mo ago
  There won't BE another house for less, because of the way the real estate market works. If a house goes up in price, others do to.
  - brewdad 10mo ago
    There is always another house for less. You will almost certainly have to sacrifice on something (size, location, condition) in order to find that lower price but you can get there if price isn’t flexible. Does no one remember “drive til you qualify”?
- aaravchen 10mo ago
  That's the problem, they don't care if people will buy or rent them. They literally just sit on them writing off any losses against other business units. When enough institutional investors are all doing that same thing, the market suppply becomes restricted, especially in focused regional areas. It ends up indistinguishable from collusionary antitrust, though there's no actual communicated collusion so it's not technically illegal. In a normal situation like that, all it takes is a single participant to cave and drops prices to take advantage of the demand. But in this case the institutional investors can keep taking the losses indefinitely so no one ever feels the need or benefit to "break" first, and they can maintain it forever.
appreciatorBus 10mo ago
The vast majority of land in the country has been owned by capitalistic profit motivated players since 1776 - individual home owner occupiers. If you doubt they will lobby to increase their profit, try proposing anything that has a 0.1% risk of their property value going down and see how they react.
deleted 10mo ago
[deleted]
EugeneG 10mo ago
“properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives” Spoken like someone has no clue what they are talking about and just throwing out jargon
- john-h-k 10mo ago
  I think specifically spoken like someone who saw The Big Short very recently
- whatshisface 10mo ago
  The truth is that BlackRock buying rental properties is the opposite of that. The foundation of the MBS market is in its name: mortgages.
ASinclair 10mo ago
> you allow for policy that doesn't maximize the cost of real estate over the interests of the majority of the population. How do you think homeowners would feel about a policy that doesn't maximize the value of their homes. That's just another way to phrase "maximizing the cost of real estate"?
pandaman 10mo ago
I somehow doubt these institutions are market makers in the housing market, if they had been ones then they'd be offering to sell and buy houses all the time, this is a market maker's function.
johncolanduoni 10mo ago
If you have a model where you can do price manipulation of something while owning 1% of it, I understand why you wouldn’t share it. Where are you on the Forbes Billionaire List, out of curiosity?
mi_lk 10mo ago
Not buying this. Have you seen studies that support this line of arguments?
conradev 10mo ago
An article making that case: https://www.thebignewsletter.com/p/messing-with-texas-how-big-homebuilders https://www.thebignewsletter.com/p/messing-with-texas-how-bi... A rebuttal to that article from Derek Thompson: https://www.derekthompson.org/p/the-anti-abundance-critique-on-housing https://www.derekthompson.org/p/the-anti-abundance-critique-...
- pfdietz 10mo ago
  Noah Smith on "Corporations aren't the reason your rent is too high", with nice things to say about Thompson: https://www.noahpinion.blog/p/corporations-arent-the-reason-your https://www.noahpinion.blog/p/corporations-arent-the-reason-... Quoting Thompson: "The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, the real-estate rental company Invitation Homes—in which BlackRock is an investor—owns about 80,000. (To clear up a common confusion: The investment firm Blackstone, not BlackRock, established Invitation Homes. Don’t yell at me; I didn’t name them.) Megacorps such as BlackRock, then, are not removing a large share of the market from individual ownership. Rental-home companies own less than half of one percent of all housing, even in states such as Texas, where they were actively buying up foreclosed properties after the Great Recession. Their recent buying has been small compared with the overall market."
BenFranklin100 10mo ago
Supply and demand sets prices. The gobbledygook you posted, “ properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing”, is just that, gobbledygook. Just because a buyer as Inc. behind its name doesn’t give it magical powers to set market prices. If you think it does, then please explain it to us like we are really slow.
- mrcode007 10mo ago
  It’s not gobbledygook. I think for most people it’s hard to grasp the scale of the entire industries outside of their area of professional expertise so you can look at some numbers here: https://www.milliman.com/en/insight/mortgage-market-and-housing-trends-q2-2025 https://www.milliman.com/en/insight/mortgage-market-and-hous... https://www.sifma.org/issues/market-structure/housing-finance https://www.sifma.org/issues/market-structure/housing-financ...
throwaway2037 10mo ago
> because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. I assume that you are already aware that regular home buyers use debt, and, thus lots(!) of leverage to buy their homes. The average down payment for first time buyers in the US is about 10%. That is a lot of leverage! Probably much more than corporate buyers of residential homes. > instrumentalized What does this term mean? I have never seen it before. My spell checker does recognize it as a word. > securitized Regular home buyers almost always enter into borrowing agreements with their bank that fit loan buying programmes with Fannie Mae and Freddie Mac. This allows for most of these loans to be securitized into MBS. > with derivative products Can you give an example scenario / product? Else, this feels like handwaving. CDS on MBS is an absolutely tiny market these days. > speculation There is already plenty of speculation from regular home buyers in the US. Do you have any suggestions to reduce the existing speculation by these regular buyers?
rayiner 10mo ago
A “market maker” provides liquidity that allows trades to clear and keeps prices stable. They make money on the bid-ask spread. They don’t have leverage to raise or lower prices.
- throwaway2037 10mo ago
  Another thing: Residential homes are never considered liquid assets. They don't need professional market makers.
  - rayiner 10mo ago
    Liquidity doesn’t make something more or less of an investment, it makes it easier to buy and sell. Liquidity in residential homes is a good thing. It means that it’s easier to sell your house and buy a new one if you need to move for whatever reason.
    - munksbeer 10mo ago
      If we're still talking about big investors, they're buying, not selling. They're not "market makers" if they're one side only.
bjourne 10mo ago
If what you say is true, wouldn't the same argument apply to practically every market these institutions are in? Oil, timber, steel, AI stuff, cars, you name it.
eek2121 10mo ago
Based on the data I've seen, respectfully, you are wrong. No, I can't share it. The data is publicly available, however. Feel free to dig it up and aggregate it. The data is publicly available, the effort to dig into it, finding meaning, and sell it to folks, however, is not.
- sounds 10mo ago
  What I don't understand is how this new type of asset is above reproach. I mean BlackRock and Blackstone creating securities backed by real estate in general, not only single family homes. What if this new type of asset signals to the broader real estate market that regulators favor large investors? Even more likely, what if this new type of asset succeeds at the expense of first time home buyers?
njarboe 10mo ago
The majority of the US population (65% https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N) are home owners. I agree that high home prices are not in the interest of the majority of the population, but I bet the majority think so.
mhb 10mo ago
Why doesn't your explanation apply to every commodity? Gold, cocoa, mustard seed, electricity? These are also essential products subject to the influence of markets and market makers.
- ivewonyoung 10mo ago
  > Gold, cocoa, mustard seed, electricity I can easily live a full and meaningful life without owning gold, drinking cocoa or eating mustard. Those aren't essential and have decent substitutes. Electricity is essential, just like housing and it's very highly regulated.
  - mhb 10mo ago
    That's overly reductive. I was hoping that the specific commodities weren't going to be the focus, but I guess that was naive. If you're going to use "housing" as an umbrella for its substitutes, let me do the same. Instead of wheat, beef, pork, cocoa, sugar, etc, let's call that "food". So now food is as essential as housing. Why doesn't the housing complaint against speculators work for food speculators?
    - quantpunk 10mo ago
      The argument is either intellectually dishonest or you just really haven't thought this through very deep and are just puppeting this neoliberal bullshit. We could start with I have traded wheat futures and could hedge with future contracts on all those commodities. You can't trade single family home derivatives in the same way because it is not the same. This is unthinking market religion stupidity and the result is going to be a massive over correction towards socialism. You don't help free markets with this bullshit. You are helping to destroy them in the long run.
      - mhb 10mo ago
        So on one side, we have a theory which suggests increasing supply to reduce prices. And on the other, we have playing whack-a-mole with the bogeymen du jour who are manipulating a vast market. One solution makes economic sense and the other appeals to populists who favor state control. And you're claiming that the reaction to opposing state control and socialism is socialism? Not compelling.

WalterBright 10mo ago

> They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. Raising prices when you only have a tiny portion of the market does not work. People won't buy them when there's another house for less.

observationist 10mo ago
It's not just raising prices - it's holding prices steady at some point without the concurrent pressure to sell, for example, or manipulating other markets in order to raise or lower prices in an area, or using other mechanics to manipulate pricing, across the entire market, depending on the intended actions. If they intend to purchase properties, it benefits them to depress pricing in the area, if they intend to rent, they can afford to impose artificial scarcity until they force renters to meet their rates, and so on. Normal landlords don't have effectively infinite money with no forces bearing prices down, nor do they have the capabilities to influence markets. Even tiny percentage shifts can result in significant fluctuations in the prices consumers see. It's a very nuanced and complex system in which these institutional investors have very outsized influence.
- estearum 10mo ago
  This is extremely silly. Prices are high because we don't build enough houses which is mostly because it's really expensive to build houses, then the houses we have built are all owned by empty nesters and people with 1 - 3 investment properties. Everything else you're describing is completely ridiculous.
  - fc417fc802 10mo ago
    > which is mostly because it's really expensive to build houses, Assuming you're referring to the typical high CoL areas, the shortage has very little to do with the expense of building. The zoning laws don't permit sufficient supply in those areas. And that's quite unlikely to change (at least quickly) because anyone pushing such reform would be obliterating the average Joe's net worth.
    - packetlost 10mo ago
      In areas with low CoL the cost of building houses and the cost of selling a house has a massive impact on the number and type of homes that get built. If it's not profitable for a builder to build a home they simply won't, whether it's because of bureaucratic red tap or economic conditions. There's very strong incentives for builders to take the path of least resistance and highest margin.
      - hparadiz 10mo ago
        The profit margin has to be significantly higher than simply plopping that cash straight into an index fund. The risk of a project failure is simply too high.
        packetlost 10mo ago
        I imagine the margin necessary scales with the size of the project.
      - fc417fc802 10mo ago
datsci_est_2015 10mo ago
Define "tiny portion of the market", especially "market". There are many houses in the US. Not all of them are for sale. There's a difference between having a "tiny portion of the market" when you define "the market" as all houses in the US, and "tiny portion of the market" when you define "the market" as the houses that are actively being bought and sold. I would not be surprised if corporate involvement was a significantly higher proportion of the latter rather than the former. It takes a lot less to put your thumb on the scale of the "liquid" portion of a stock if it is significantly smaller in size than the total stock.
- ToucanLoucan 10mo ago
  To add to this: the "total stock" is also completely different to any other asset in terms of market forces, because it varies widely depending on the buyer in question. People don't shop for "a house" and address the entire available market of houses in the country. They shop for a house in a particular area/city, of a certain value, with certain amenities, in proximity to other things, etc. etc. etc. In this way houses are virtually unique in terms of financial vehicles and it introduces all manner of complexity and otherwise strange forces into the market. You can't simply treat it like any other commodified asset.
- observationist 10mo ago
  The market meaning all real estate, residential and commercial, and tiny, as in under 3%, with regards to what is owned by the institutional investors. That's probably higher with regards to properties that are or have been on the market in the last ten years or so. From what I can tell, the other ~97% is owned by individuals and smaller funds and mom&pop companies, with fewer than 20 properties involved. In some dense urban areas, up to 10% of the local residential properties are owned by funds or investors. There's also overlap with investment networks where you're not getting to BlackRock levels, but you'll have a web of companies with mutual interests and a network of private debt and collateral, and these make up around 20% of the whole. For the most part, though, the majority of single family homes are not institutional. Even multi-family units, apartment complexes, and other rental properties are only in the ~10% range of institutional ownership, with the remainder owned by individuals, mom&pops, and small investment networks. The conjunction of capabilities and incentives in combination with a huge buffer of wealth allows institutional investors to manipulate things in ways that aren't healthy for private home ownership, and the downstream social and economic impacts of being forced to rent, or hold debt that's not properly reflective of the value of the property. We should impose reasonable policies that serve the interests of the people, and not simply maximize wealth building at the expense of citizens and families that would benefit from home ownership.
tshaddox 10mo ago
I don't think that's quite what the comment is claiming. They're not saying that some small portion of homeowners are working together to raise prices. I think they're more talking about the concept of "marginal buyers." It's the marginal buyer that sets prices, not the average buyer. And particularly when supply is heavily restricted, the marginal buyers can be a very tiny portion of all buyers, and can look very different from the average buyer.
- xvedejas 10mo ago
  Marginal buyers have a big impact by adding a lot of liquidity, but I'm not sure they manipulate prices that much, given that if they ever tried to move prices far from the margin they would cease to be marginal buyers.
  - tshaddox 10mo ago
    But again, I don't think we're talking about a concerted effort to manipulate prices. We're talking about the effect that particular marginal buyers just so happen to cause.
  - deleted 10mo ago
    [deleted]
kortex 10mo ago
Going by the graph in the article, that's still ~13% of homes owned by investors with >5 properties. And that's total of what is currently held, it speaks nothing of liquidity. That number likely includes investors who have had that property for a long time, the current property buy-up likely means far greater than 13% of the market right now is going to those sorts of aggregators. Dropping the price of a house by a few percentage points can be the make-or-break for some families. And small changes in availability can have large impacts on price. If we banned (or severely penalized) all entities from owning more than 5 residential homes, this would probably reduce cost by a few percentage points across the board. That's thousands of dollars. Personally, I think unoccupied homes in general ought to be penalized (beyond just tax burden, an actual vacancy tax).
- no_wizard 10mo ago
  You may be interested in learning about the Land Value Tax[0] which will in effect, taxes become more burdensome for leaving land unproductive (e.g., empty housing or land). It also shifts the calculus on home improvements, which means remodeling your home or doing other perhaps large pieces of upkeep will not trigger a property tax increase as it does today, which is better for median home owners as well. [0]: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
  - throwaway2037 10mo ago
    > home improvements, which means remodeling your home or doing other perhaps large pieces of upkeep will not trigger a property tax increase as it does today I have heard this complaint here a few times, but very few specifics. I would call getting your roof replaced or your kitchen/bathroom remodelled as major home improvements. Do these actually property tax increases?
    - no_wizard 10mo ago
      In many jurisdictions they do, yes. A general guideline is that if it requires an permit it will typically trigger an assessment and thus increase in property tax
Horffupolde 10mo ago
The theater on fire has a small exit door.
immibis 10mo ago
It can in an extremely illiquid market.
m00x 10mo ago
The thing is that there is only a tiny portion of houses ever selling at any time. The only ones that would benefit from selling are people who are downsizing or moving away. If you buy 60% of the properties on market, the rest will see this and adjust their own prices. Usually this only works when the macro is favourable (low interest rates, easy mortgage applications, etc.), but it is definitely a large factor. It sometimes creates a even hotter market, with people thinking that real estate goes up forever, then they sell. You're right that it's not always large investment groups. Vancouver in Canada had the same thing happen, but mostly from foreign investors and criminals washing money. The latter was facilitated by politicians who cashed in big on this.
- sokoloff 10mo ago
  I don’t understand the last sentence in your second paragraph. If “people [think] that real estate goes up forever” why does that trigger them to sell?
yulker 10mo ago
When a strongly capitalized minority cohort can sustain positions that are untenable for normal market participants, they can act as a kingmaker by shaping outcomes at the margin.
somenameforme 10mo ago
I generally agree with you on market discussions, but I don't think you're considering this one correctly. Imagine a country responsible for just 10% of global oil production decided to stop producing. What's going to happen oil prices assuming no other country starts producing more? They're going to skyrocket in a seemingly irrational way. But it's completely rational. The reason is that they're a finite resource that is needed, and so there is very minimal price elasticity. People will pay as low as they can, but simultaneously must have oil and so have a practically uncapped price ceiling if that's all that's available. The same is true of housing. You're right that people won't, generally speaking, buy a house for $100 when there's another one for sale for $80. But what you've done there is greatly increase the demand for that $80 house, which is now going to naturally send its price upwards. --- Finally there's the issue that figures on the percent of homes that are owned by investment groups are misleading, because they aren't just buying homes randomly. They're going to pick up lots of houses in precise areas, and so the impact on prohibiting this behavior will be dramatic in these areas.
- WalterBright 10mo ago
  > so there is very minimal price elasticity. Having lived through the various oil crises, I can confidently assert that there's a great deal of demand elasticity. For example, when the 70s oil crisis hit, people stopped driving to the store for a loaf of bread, but would shop weekly instead. For another, people buy more fuel efficient cars when gas prices are high. For a third, people switch to electric cars. There are regular major disruptions in the flow of oil. Pump prices change on a daily basis, and that results in the amount of gas available == number of gallons customers pay for. No gluts and no shortages.
AngryData 10mo ago
You don't have to control the whole market to manipulate it. Housing is localized and the ideal situation is people hold onto their homes for decades before going on the market again and spend months if not years looking at purchasing a home. But investments into single family homes operates on completely different timescales and pace with an entirely separate list of considerations and values.
class3shock 10mo ago
But if you bought that tiny portion of the total market all at once or in concentrated areas you better believe you can influence it. https://papersourceonline.com/wall-street-has-spent-billions-buying-homes-a-crackdown-is-looming/ https://papersourceonline.com/wall-street-has-spent-billions... https://www.kut.org/texasstandard/2022-06-14/texas-home-sales-investors-bought-nearly-a-third-of-all-homes-2021 https://www.kut.org/texasstandard/2022-06-14/texas-home-sale...
antonymoose 10mo ago
> People won't buy them when there's another house for less. As others have pointed out housing markets are illiquid and tend to have a limited set of sellers at any given time such that the race-to-the-bottom doesn’t happen very often. Rather, an institutional investor buys high on houses in desired neighborhoods then charge high rents on their portfolio. Subsequent sellers in the same neighborhood see the high closing price and ask for even more.
HumblyTossed 10mo ago
There won't BE another house for less, because of the way the real estate market works. If a house goes up in price, others do to.
- brewdad 10mo ago
  There is always another house for less. You will almost certainly have to sacrifice on something (size, location, condition) in order to find that lower price but you can get there if price isn’t flexible. Does no one remember “drive til you qualify”?
aaravchen 10mo ago
That's the problem, they don't care if people will buy or rent them. They literally just sit on them writing off any losses against other business units. When enough institutional investors are all doing that same thing, the market suppply becomes restricted, especially in focused regional areas. It ends up indistinguishable from collusionary antitrust, though there's no actual communicated collusion so it's not technically illegal. In a normal situation like that, all it takes is a single participant to cave and drops prices to take advantage of the demand. But in this case the institutional investors can keep taking the losses indefinitely so no one ever feels the need or benefit to "break" first, and they can maintain it forever.

appreciatorBus 10mo ago

The vast majority of land in the country has been owned by capitalistic profit motivated players since 1776 - individual home owner occupiers. If you doubt they will lobby to increase their profit, try proposing anything that has a 0.1% risk of their property value going down and see how they react.

deleted 10mo ago

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EugeneG 10mo ago

“properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives” Spoken like someone has no clue what they are talking about and just throwing out jargon

john-h-k 10mo ago
I think specifically spoken like someone who saw The Big Short very recently
whatshisface 10mo ago
The truth is that BlackRock buying rental properties is the opposite of that. The foundation of the MBS market is in its name: mortgages.

ASinclair 10mo ago

> you allow for policy that doesn't maximize the cost of real estate over the interests of the majority of the population. How do you think homeowners would feel about a policy that doesn't maximize the value of their homes. That's just another way to phrase "maximizing the cost of real estate"?

pandaman 10mo ago

I somehow doubt these institutions are market makers in the housing market, if they had been ones then they'd be offering to sell and buy houses all the time, this is a market maker's function.

johncolanduoni 10mo ago

If you have a model where you can do price manipulation of something while owning 1% of it, I understand why you wouldn’t share it. Where are you on the Forbes Billionaire List, out of curiosity?

mi_lk 10mo ago

Not buying this. Have you seen studies that support this line of arguments?

conradev 10mo ago

An article making that case: https://www.thebignewsletter.com/p/messing-with-texas-how-big-homebuilders https://www.thebignewsletter.com/p/messing-with-texas-how-bi... A rebuttal to that article from Derek Thompson: https://www.derekthompson.org/p/the-anti-abundance-critique-on-housing https://www.derekthompson.org/p/the-anti-abundance-critique-...

pfdietz 10mo ago
Noah Smith on "Corporations aren't the reason your rent is too high", with nice things to say about Thompson: https://www.noahpinion.blog/p/corporations-arent-the-reason-your https://www.noahpinion.blog/p/corporations-arent-the-reason-... Quoting Thompson: "The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, the real-estate rental company Invitation Homes—in which BlackRock is an investor—owns about 80,000. (To clear up a common confusion: The investment firm Blackstone, not BlackRock, established Invitation Homes. Don’t yell at me; I didn’t name them.) Megacorps such as BlackRock, then, are not removing a large share of the market from individual ownership. Rental-home companies own less than half of one percent of all housing, even in states such as Texas, where they were actively buying up foreclosed properties after the Great Recession. Their recent buying has been small compared with the overall market."

BenFranklin100 10mo ago

Supply and demand sets prices. The gobbledygook you posted, “ properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing”, is just that, gobbledygook. Just because a buyer as Inc. behind its name doesn’t give it magical powers to set market prices. If you think it does, then please explain it to us like we are really slow.

mrcode007 10mo ago
It’s not gobbledygook. I think for most people it’s hard to grasp the scale of the entire industries outside of their area of professional expertise so you can look at some numbers here: https://www.milliman.com/en/insight/mortgage-market-and-housing-trends-q2-2025 https://www.milliman.com/en/insight/mortgage-market-and-hous... https://www.sifma.org/issues/market-structure/housing-finance https://www.sifma.org/issues/market-structure/housing-financ...

throwaway2037 10mo ago

> because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. I assume that you are already aware that regular home buyers use debt, and, thus lots(!) of leverage to buy their homes. The average down payment for first time buyers in the US is about 10%. That is a lot of leverage! Probably much more than corporate buyers of residential homes. > instrumentalized What does this term mean? I have never seen it before. My spell checker does recognize it as a word. > securitized Regular home buyers almost always enter into borrowing agreements with their bank that fit loan buying programmes with Fannie Mae and Freddie Mac. This allows for most of these loans to be securitized into MBS. > with derivative products Can you give an example scenario / product? Else, this feels like handwaving. CDS on MBS is an absolutely tiny market these days. > speculation There is already plenty of speculation from regular home buyers in the US. Do you have any suggestions to reduce the existing speculation by these regular buyers?

rayiner 10mo ago

A “market maker” provides liquidity that allows trades to clear and keeps prices stable. They make money on the bid-ask spread. They don’t have leverage to raise or lower prices.

throwaway2037 10mo ago
Another thing: Residential homes are never considered liquid assets. They don't need professional market makers.
- rayiner 10mo ago
  Liquidity doesn’t make something more or less of an investment, it makes it easier to buy and sell. Liquidity in residential homes is a good thing. It means that it’s easier to sell your house and buy a new one if you need to move for whatever reason.
  - munksbeer 10mo ago
    If we're still talking about big investors, they're buying, not selling. They're not "market makers" if they're one side only.

bjourne 10mo ago

If what you say is true, wouldn't the same argument apply to practically every market these institutions are in? Oil, timber, steel, AI stuff, cars, you name it.

eek2121 10mo ago

Based on the data I've seen, respectfully, you are wrong. No, I can't share it. The data is publicly available, however. Feel free to dig it up and aggregate it. The data is publicly available, the effort to dig into it, finding meaning, and sell it to folks, however, is not.

sounds 10mo ago
What I don't understand is how this new type of asset is above reproach. I mean BlackRock and Blackstone creating securities backed by real estate in general, not only single family homes. What if this new type of asset signals to the broader real estate market that regulators favor large investors? Even more likely, what if this new type of asset succeeds at the expense of first time home buyers?

njarboe 10mo ago

The majority of the US population (65% https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N) are home owners. I agree that high home prices are not in the interest of the majority of the population, but I bet the majority think so.

mhb 10mo ago

Why doesn't your explanation apply to every commodity? Gold, cocoa, mustard seed, electricity? These are also essential products subject to the influence of markets and market makers.

ivewonyoung 10mo ago
> Gold, cocoa, mustard seed, electricity I can easily live a full and meaningful life without owning gold, drinking cocoa or eating mustard. Those aren't essential and have decent substitutes. Electricity is essential, just like housing and it's very highly regulated.
- mhb 10mo ago
  That's overly reductive. I was hoping that the specific commodities weren't going to be the focus, but I guess that was naive. If you're going to use "housing" as an umbrella for its substitutes, let me do the same. Instead of wheat, beef, pork, cocoa, sugar, etc, let's call that "food". So now food is as essential as housing. Why doesn't the housing complaint against speculators work for food speculators?
  - quantpunk 10mo ago
    The argument is either intellectually dishonest or you just really haven't thought this through very deep and are just puppeting this neoliberal bullshit. We could start with I have traded wheat futures and could hedge with future contracts on all those commodities. You can't trade single family home derivatives in the same way because it is not the same. This is unthinking market religion stupidity and the result is going to be a massive over correction towards socialism. You don't help free markets with this bullshit. You are helping to destroy them in the long run.
    - mhb 10mo ago
      So on one side, we have a theory which suggests increasing supply to reduce prices. And on the other, we have playing whack-a-mole with the bogeymen du jour who are manipulating a vast market. One solution makes economic sense and the other appeals to populists who favor state control. And you're claiming that the reaction to opposing state control and socialism is socialism? Not compelling.