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I think your case on this debate is more sound however > To do that, you have to be able to generate scarcity, which is exactly what corporate investors aren't

by conductr 10mo ago

I think your case on this debate is more sound however > To do that, you have to be able to generate scarcity, which is exactly what corporate investors aren't doing. But they did. When inventory was low and then zero percent rates where available, they bought everything they could and drove prices up and created an appreciation bubble. I don’t think they have some other dark patterns for manipulating the market but they had access to a lot of basically free cash. Inventory of houses for sale is a tiny portion of the total market and they could and did contribute to driving prices up. But so did everyone that had the opportunity and inclination to do so, and why not when money is free leverage the shit out of it in an asset class that will generally appreciate without much risk. I don’t know what ever came of that now that rates have increased. Are they still holding those homes? Did they sell them after driving prices up? (But not fast enough to make prices go down again obviously). Are they landlords now? Etc. The market is still reeling from that economic situation that created this. Prices may eventually float down but no seller is eager for that so it’s a bit sticky.

tptacek 10mo ago
My case is built on the empirics that corporate investors are a very small fraction of the available houses for sale. Notice the stories you're reading about places where corporations are disruptive: they're in thin markets. A corporate investors can totally (if temporarily) fuck up the prices in a single subdivision. But unless they can do that across a broader market, they don't have meaningful pricing control. My claim would be that in any any of the top 10 markets by transaction volume (just to pick a handy metric out of the sky; you could choose others), corporate investors are literally a nonfactor.
- conductr 10mo ago
  They don’t have to buy to fuck up the market. They just have to bid. If there’s low inventory, people that actually need to buy a home are forced to beat/match the bidding. They can also target just specific areas of specific major metros and there are ripples throughout the entire market. The housing “market” does work the same as the stock or commodity markets. People aren’t buying an intangible share. They’re buying this specific and unique house and if they’re told “we just got a cash offer for $50k over ask”, they may be tempted to beat it. That doesn’t happen when people buy AAPL. The shares are fungible. There’s only empirical evidence of their buying activity. We’ll never know how many deals they bid the price up on but didn’t buy. This auction like quality is evident in any market like this; watch Storage Wars and one disinterested buyer will bid up the price just to fuck with his competing bidders.
  - tptacek 10mo ago
    Respectfully, I think this is just made up. "They just have to bid" to manipulate prices in the real estate market: I don't think you can show that's a thing. Please by all means make the attempt.
    - conductr 10mo ago
      As I said, there’s no data on this. Unaccepted offers don’t get tracked anywhere and don’t show up in anyone’s financial records. However, have you ever participated in a “multiple offer, best and final” type RE market? There’s plenty of opportunities for what I explained in market conditions we saw in recent past in many parts of US.
      - tptacek 10mo ago
        So you're saying there's no evidence to support your claim. That's what I just said.
        conductr 10mo ago
        I said it in the comment you replied to asking for evidence
        tptacek 10mo ago
        Fair enough!
  - WalterBright 10mo ago
    > They just have to bid. You can't "just bid". A bid is a contract. If you back out, you'll lose your earnest money.
    - conductr 10mo ago
      No, making an offer is a bid. It’s cost nothing to make an offer. Multiple offer situations were the norm for a few years in much of the US. Many listing agents will post on the listing “multiple offers, best and final due by X date”. Nobody knows if that’s true or has spent any money yet by making those offers (earnest is put down only once an offer is accepted). This is US I don’t know if you’re from elsewhere or just misinformed but you’re wrong. There’s a lot going on between making an offer and losing earnest money. I’m selling a house right now that’s in bad shape so getting lowball offers. They don’t even submit an offer, they text me or call me and tell me what price they would offer. They don’t want to do the paperwork for something I’m just going to ignore. Yet, if it turns into 2 or more people floating numbers I like I will tell them to write it up then I will tell them there’s another offer and try to get them to go higher. All that is before I accept there offer and earnest money is put down after that. So the bidding war is over by that time. Even if earnest money did work how you describe, it would tie up a few thousand dollars per property for a few days max then be returned and redeployed on another property. These companies have deep enough pockets to fund that. There earnest money only ever enters the picture of their offer is accepted.
linkregister 10mo ago
> When inventory was low and then zero percent rates where available, they bought everything they could and drove prices up and created an appreciation bubble. Where did this occur? Is this substantiated?
- conductr 10mo ago
  I’m speaking mostly from memory of it when it occurred in the US , was Covid era housing market 2020-2021 is when prices surged the most and was when they had a marked increase in their activity. Again, it seems small overall but they were the cash offer 50k over ask that everyone trying to buy a house was competing with. It doesn’t take much to move a market this size as it’s relatively low inventory and volume. It’s like how a whale could transact move bitcoin price so easily because so much of it is illiquid. It’s gotten more difficult as the price is much higher, but still possible. Also, prices tend to correct faster in that market than they would in housing market. Googles AI overview of my search for “ covid era corporate home purchases”, also plenty of substantiating references in those search results; > Corporate home purchases surged during the COVID-19 pandemic, driven by factors like low mortgage rates and increased demand for single-family homes. While this trend has plateaued since the peak, investor activity remains above pre-pandemic levels and has sparked significant public debate and legislative action. A tidbit from an article indicates they doubled their prior investment activity. Probably more than double because investors bought homes increased and their share of that metric doubled. > Prior to the pandemic, mega investors averaged about 7% of overall investor purchases and their share increased to 14% during the pandemic — it has now slowed
  - linkregister 10mo ago
    What article? Which markets were impacted? I do not think it's unreasonable to request a single example, statistic, or attributable fact.
    - conductr 10mo ago
      You don’t have to agree with anything I said but I’m not here to be your research assistant, I gave you my thoughts and some paths to references. It’s evident by this debate nobody is certain on anything and were hypothesizing. If you want a mathematical proof before you can grasp concept of gravity, or form any opinion of your own, I can’t help you.
WalterBright 10mo ago
> they had access to a lot of basically free cash What? Cash is never ever free. If it's your Scrooge McDuck cash vault, you're losing money by not investing it. If you borrow it, you're paying interest on it. https://romanroyce.com/wp-content/uploads/2022/02/ScroogeMcDuckVault-W-bgrd_600x.jpg https://romanroyce.com/wp-content/uploads/2022/02/ScroogeMcD...
- conductr 10mo ago
  Mortgage rates were below inflation. That’s same as free money and why so many investors bought as much as they could leverage

tptacek 10mo ago

My case is built on the empirics that corporate investors are a very small fraction of the available houses for sale. Notice the stories you're reading about places where corporations are disruptive: they're in thin markets. A corporate investors can totally (if temporarily) fuck up the prices in a single subdivision. But unless they can do that across a broader market, they don't have meaningful pricing control. My claim would be that in any any of the top 10 markets by transaction volume (just to pick a handy metric out of the sky; you could choose others), corporate investors are literally a nonfactor.

conductr 10mo ago
They don’t have to buy to fuck up the market. They just have to bid. If there’s low inventory, people that actually need to buy a home are forced to beat/match the bidding. They can also target just specific areas of specific major metros and there are ripples throughout the entire market. The housing “market” does work the same as the stock or commodity markets. People aren’t buying an intangible share. They’re buying this specific and unique house and if they’re told “we just got a cash offer for $50k over ask”, they may be tempted to beat it. That doesn’t happen when people buy AAPL. The shares are fungible. There’s only empirical evidence of their buying activity. We’ll never know how many deals they bid the price up on but didn’t buy. This auction like quality is evident in any market like this; watch Storage Wars and one disinterested buyer will bid up the price just to fuck with his competing bidders.
- tptacek 10mo ago
  Respectfully, I think this is just made up. "They just have to bid" to manipulate prices in the real estate market: I don't think you can show that's a thing. Please by all means make the attempt.
  - conductr 10mo ago
    As I said, there’s no data on this. Unaccepted offers don’t get tracked anywhere and don’t show up in anyone’s financial records. However, have you ever participated in a “multiple offer, best and final” type RE market? There’s plenty of opportunities for what I explained in market conditions we saw in recent past in many parts of US.
    - tptacek 10mo ago
      So you're saying there's no evidence to support your claim. That's what I just said.
      - conductr 10mo ago
        I said it in the comment you replied to asking for evidence
        tptacek 10mo ago
        Fair enough!
- WalterBright 10mo ago
  > They just have to bid. You can't "just bid". A bid is a contract. If you back out, you'll lose your earnest money.
  - conductr 10mo ago
    No, making an offer is a bid. It’s cost nothing to make an offer. Multiple offer situations were the norm for a few years in much of the US. Many listing agents will post on the listing “multiple offers, best and final due by X date”. Nobody knows if that’s true or has spent any money yet by making those offers (earnest is put down only once an offer is accepted). This is US I don’t know if you’re from elsewhere or just misinformed but you’re wrong. There’s a lot going on between making an offer and losing earnest money. I’m selling a house right now that’s in bad shape so getting lowball offers. They don’t even submit an offer, they text me or call me and tell me what price they would offer. They don’t want to do the paperwork for something I’m just going to ignore. Yet, if it turns into 2 or more people floating numbers I like I will tell them to write it up then I will tell them there’s another offer and try to get them to go higher. All that is before I accept there offer and earnest money is put down after that. So the bidding war is over by that time. Even if earnest money did work how you describe, it would tie up a few thousand dollars per property for a few days max then be returned and redeployed on another property. These companies have deep enough pockets to fund that. There earnest money only ever enters the picture of their offer is accepted.

linkregister 10mo ago

> When inventory was low and then zero percent rates where available, they bought everything they could and drove prices up and created an appreciation bubble. Where did this occur? Is this substantiated?

conductr 10mo ago
I’m speaking mostly from memory of it when it occurred in the US , was Covid era housing market 2020-2021 is when prices surged the most and was when they had a marked increase in their activity. Again, it seems small overall but they were the cash offer 50k over ask that everyone trying to buy a house was competing with. It doesn’t take much to move a market this size as it’s relatively low inventory and volume. It’s like how a whale could transact move bitcoin price so easily because so much of it is illiquid. It’s gotten more difficult as the price is much higher, but still possible. Also, prices tend to correct faster in that market than they would in housing market. Googles AI overview of my search for “ covid era corporate home purchases”, also plenty of substantiating references in those search results; > Corporate home purchases surged during the COVID-19 pandemic, driven by factors like low mortgage rates and increased demand for single-family homes. While this trend has plateaued since the peak, investor activity remains above pre-pandemic levels and has sparked significant public debate and legislative action. A tidbit from an article indicates they doubled their prior investment activity. Probably more than double because investors bought homes increased and their share of that metric doubled. > Prior to the pandemic, mega investors averaged about 7% of overall investor purchases and their share increased to 14% during the pandemic — it has now slowed
- linkregister 10mo ago
  What article? Which markets were impacted? I do not think it's unreasonable to request a single example, statistic, or attributable fact.
  - conductr 10mo ago
    You don’t have to agree with anything I said but I’m not here to be your research assistant, I gave you my thoughts and some paths to references. It’s evident by this debate nobody is certain on anything and were hypothesizing. If you want a mathematical proof before you can grasp concept of gravity, or form any opinion of your own, I can’t help you.

WalterBright 10mo ago

> they had access to a lot of basically free cash What? Cash is never ever free. If it's your Scrooge McDuck cash vault, you're losing money by not investing it. If you borrow it, you're paying interest on it. https://romanroyce.com/wp-content/uploads/2022/02/ScroogeMcDuckVault-W-bgrd_600x.jpg https://romanroyce.com/wp-content/uploads/2022/02/ScroogeMcD...

conductr 10mo ago
Mortgage rates were below inflation. That’s same as free money and why so many investors bought as much as they could leverage