Investors bought a quarter of US homes sold last year
pewtrusts.org
pewtrusts.org
Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it.
We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.
There definitely needs to be some rentals, but I believe that there needs to be controls over how many and the rental price.
Renting is very much a poverty trap where the poor with bad credit get poorer and worse credit.
Only a fool treats their dwelling as an appreciating asset anyway. It's subject to market forces.
* It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you.
* If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.
Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".
2. So does a fixed-rate mortgage. Even better, refinancing a mortgage during a low-rate period (e.g. 2012, 2020) actually lets you reduce your payment, while contributing more to equity. How often do you have an opportunity to reduce your rent?
3. Saving 50% of what exactly? You can put the down payment into an index fund, yes, but remember than the house is an asset that gives you 5x leverage initially, assuming 20% down. You can't get 5x leverage at your broker, and even if you could, playing with 5x leverage on the stock market is insanely risky compared to real estate.
> But from a purely numbers game, it's not so clear "rent is just losing money"
It's pretty clear actually. They've compared retirees who rented all their life vs home-buyers. The difference in wealth was striking, a factor of 6x-7x if not more.
What's not clear is whether that trend will continue in perpetuity under the conditions of declining population.
Home values rising historically is good, but I don't think a clear win through all time. There is no instrinsic reason a house value should rise faster than inflation. You can always build a new house for cost X. Buying existing means that new house supply is too low or too costly.
But for what I've paid in rent over the years, I could have paid for entire dwellings. And had the freedom to fix and alter things per my desire.
Renting is the opposite of a fixed monthly cost, since rents go up all the time. If you rent, you can't tell me what your rent will be in ten years. I can tell you what my mortgage will be, exactly the same as today.
> No "10k new roof" or "1k new stove" suprises hit you.
If these bother you, you can sign up for house maintenance insurance programs to give you a fixed monthly cost. I'd recommend against that since they make a profit off you, you're better off putting that money into an investment account and withdraw from there when you neeed it.
When the new roof goes in, what happens to you as a renter? I'm pretty sure you still have to pull together 4k for moving/security deposit/first several months
New roof costs are pretty much never a surprise. You should know when you buy the house how much life is left in the roof and plan accordingly. If a natural disaster occurs that destroys your roof, insurance will cover it.
Appliance costs? Yeah, they are often surprises. Hard to find reliable appliances any more.
Oh, and it's hard to get a $10K roof these day :-)
> If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.
Yeah, I always wondered if I should do this analysis for my house, and I'd be curious on studies on how this would play out in most cases. For me, right from the get go the rent on a comparable house exceeded the monthly interest + tax + insurance (excluding principle). The tax benefits more than paid for all the maintenance costs. So the main questions would be:
1. How much would the down payment be worth in an index fund?
2. How much would the principle payments monthly in an index fund be worth?
I suspect that I'm ahead of the market significantly, what with all the crazy house appreciation (that alone is about 8x my down payment), and rents are quite high - easily increased by over 70% since I bought the house.
But once it's paid for, it's paid for. Now you just need maintenance and taxes, easier on a fixed income. And it's easier to build intergenerational wealth if one of your children doesn't need to blow money at all on rent or home purchase.
It's still a roof over my head regardless of how much it's worth. And more importantly, how much it's worth is completely irrelevant unless/until you want to sell. And if you do want to sell, and home values have crashed, then the next house you buy will also be cheap!
Yes, it often seems the rental cost will be less than your monthly payments, but do realize that you lose all the rental cost, but not all your monthly payment.
There are online rent vs buy calculators that you can use to generate these scenarios.
https://www.calculator.net/rent-vs-buy-calculator.html
Plug in negative appreciation for property values and watch how the comparison tilts.
Also, rentals tend to be higher density than houses that are owned. If there is a housing crisis, this seems like a desirable thing. Ex: roommates (yes, possible with a house, but less likely), etc.
aside from the federal tax breaks and very high amount of leverage ($40k to get a loan on a $200k unit that you _might_ be able to resell at $300k to get into a larger $400k unit that you _might_ be able to resell at $500k to get into a larger $600k unit...), I never saw, and still don't see, the benefit of home ownership.
actually, that's not true. for people with families who need (or "need") stability, home ownership makes a lot of sense. you're going to be in the same town until the children reach maturity...might as well get a loan on a house since you're going to stay put for a while. cheaper than hoping that your landlord doesn't bump the rent up.
however, we are not having children, have moved three times in the last six years, and spend a lot of time traveling. i very much like emailing my landlord "hey, weird noise" and they bring in their contractor friends to look into it on their dime
i do hate how there is this sense that you should feel "bad" for not owning, i.e. renters are always pictured as troubled people in financial distress who don't have a choice but to rent.
Rent controls are unfortunately very similar in key ways. They've been tried, and the results may not quite line up with what you might be hoping for.
Technically true, but practically false. Yes, zoning exists in most of the US. And yes, most people have no trouble converting a region to residential zoning. I've known people on both sides, and most of the problems are the opposite - people who want to run businesses in a residential zone. I've yet to meet a single person who couldn't go the other direction.
There's a process to getting approval to build a house/apartment complex. You simply follow the process and get approval. Most of the US is not the Bay Area, Seattle or NYC.
So yes, you're absolutely right, technically true. In practice, they fundamentally don't do what the user wants them to do because that's not what caps are capable of doing. The tools don't work that way.
One of the biggest benefit of owning is a hedge against housing inflation. Its not a perfect hedge, I do acknowledge. As property values increase my taxes go up, as housing materials increase in cost the cost to repair it goes up. But the amount my taxes will go up in a year is far less than how much I've been seeing rents shoot up.
They're "small" expenses but if you track out the various things and divide them over the ownership period, they do add up.
E.g. - current house, here 5 years, so far: furnace and A/C, $9k, fence, $14k, landscaping and misc, $2k, tools and supplies, $3k, plumber and window repairs, $2k. So about $6k a year, double my taxes and half my mortgage again. And I haven't even hit the big ones (and didn't count appliances as those were "optional" purchases).
Owning is still a good idea for many, and has benefits, and renting will almost by definition be more overall, but it's not a given. You note the main advantage - stability. If you're on a fixed loan (whether it be 5, 10, 20 or 30 years) your payments are calculable years in advance and you get to pay much with tomorrow dollars, which are almost always worth less than today dollars.
But you do have to want to stay in the area for years.
On the other hand, you have to count the mortgage interest as a cost but not the mortgage principal repayment.
Obviously, this won't hold true for all time-frames, and I'm not even necessarily a fan of thinking of primary residences as investment vehicles, but if you're going to compare it for opportunity cost it's still not necessarily a home run comparison.
If I understand your solution correctly it also puts a higher burden on the rest of the population who then have to pay higher land taxes each year (politically unpalatable) and I would argue that REITs probably have more capital to be able to pay off higher taxes where cranking up land taxes on the population makes home ownership more challenging.
The strictest Georgist philosophy would hold if you happened to homestead in the heart of Manhattan your family will eventually have to choose between paying the price for holding that piece of land hostage from the rest of society or letting someone else make use of it.
In practice, places like Denmark and Estonia make exemptions for owner-occupied dwellings.
You're literally proposing a scheme that views removing people from their homes as beneficial. Your values don't match with others. That's the disconnect.
And by the way, that increase in value over the years is because other people want to live in that area. Perhaps we should disincentivize that instead of punishing the people who made it a nice area to live in.
I expect most citizens would recognize this and any effective LVT would be politically DOA.
The LVT as envisioned by its advocates isn’t like that. It’s a fee—largely determined by market forces—to continue to occupy and make use of “your” land. If the government can insist you pay some market-set cost to remain on a plot of land, you don’t own it in the way we classically think about land title ownership. You’re not the market participant, the government is.
I don't see how this follows. Would you mind explaining?
My point is that Americans who own one or more plots of land definitely do NOT believe they are renting that land from the government. Ownership is, of course, a degree of control and everything is a matter of degree. Meaningful LVT would be a qualitative change in a home- or farm- or business-owner’s degree of control over what they heretofore considered their property, and they’d recognize that.
Suppose you do a “buy and hold” strategy on a neighborhood that is gentrifying. The increased taxes you pay each your will eat into your profits. If you sell, the buyer will have have to pay those taxes too, so the value will be lower.
Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will.
Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.
For those concerned about sovereign debt, that should’ve been thought about before running it up on unnecessary conflicts (which there have been many!) and other unproductive efforts (tax cuts for the wealthy). Real needs coming up, and no excuses because of previously suboptimal governance. Lots of assets and wealth in the US to tax for those who really want the debt line go down, but if debt line doesn’t go down, nbd.
You could imagine other programs that could encourage renting, for example (no thought has been given to this, just an example/idea) - federal guarantee that you would pay NO capital gains tax if you could prove that you continued to rent out the property and never increased rent more than 1%, say.
With regards to the IRS, even though there are occasional delays, I’ve always had a top notch experience even when my own mistakes would have incurred thousands of dollars in penalties (which were waived more than once). If you want effective delivery of government services, you must fund them at the necessary levels. Effective government is not free.
If you recall how these things were done before credit scores it was not pretty. Without them lending would virtually cease to all but the most obviously creditworthy people.
I generally agree the system for credit scores needs to change. In particular it should not be controlled by a veritable monopoly. But this does not discount the utility of it in general.
A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years.
Also large rental complexes don't build communities.
Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.
I used to live in a large, over 100 unit, town home complex.
Central to the complex was a very large open green space, larger than most suburban yards.
Over the years, about 50% of the units are now rented out, typically at a price lower than in the nearby built for rental apartment complexes. Individual landlords prize stability in tenants more than maximizing short term value, also if a person is only renting out 1 unit, that unit being vacant for a month or two is a lot of lost income, raising rent by $200 and then losing out on 4k of rental income due to having to lose then find a new tenant is not something a smart landlord does on a yearly basis.
Prior to that I lived in a luxury condo complex in a very nice area that was again, lots of rental units. From what I gather, soon to be retirees had bought in and were renting the units out until they they needed to move into them. They also prized stability and boring tenants over maximizing monthly income.
The point here is, within reason, today's fancy high end condos are tomorrows reasonably prized housing.
Will the 50 story skyscraper condos ever be reasonably prized? No, of course not, but if someone dropped 150,000 units of medium density housing into Seattle, I bet that in about 5-10 years housing prices would start to come down.
The other issue I have is the absurd number of 4 story town homes being built, which should instead be 4 story condo complexes. Insane square footage is wasted on stairs, and no one over 35 can live in those places, and raising a family in them is either impractical or horribly annoying. (Good for baby gate sales though...)
If it were up to me I'd remove elevator requirements for 4 and 5 story condo complexes in return for having the bottom floors requiring ADA units.
For example, many small-time landlords would have been better off just buying a much more valuable property to live in themselves, than buying one to live in and one to rent. Eg, buy a $400k house instead of two $200k houses and renting one.
The owner-occupied mortgage interest deduction serves to put owner-occupants onto the same footing as businesses; it’s not an incentive that gives them preference, but rather (closer to) equal footing.
Stuff like bonus depreciation - yeah, let's get rid of that. Or 1031 exchanges. Regular folks cannot benefit from it.
Of course the more attractive we make home ownership as an investment, the more investors will flock to the market. We need policies specifically benefiting owner occupied homes or we need to stop treating the basic human need for shelter as an avenue for investment.
Neither seems likely to happen because we have already waited so long that the moneyed interests now have too much to lose and won't allow what needs to be done to happen.
https://www.vox.com/platform/amp/22524829/wall-street-housin...
> The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach.
I'm involved with a local YIMBY group, and what I see over and over again is my neighbors stopping homes from being built. No wonder investors think it's a great place to put some money - other people do the dirty work for them!
Plus even at low levels NIMBYism is often about investment. Sure, many object to new housing for reasons like "it will change the character of the neighborhood". But many others object because they are worried about the value of their own home going down. They are treating their home primarily as an investment because that is what they have been told to do their whole life. If I could snap my fingers and magically realign our political goals to maintaining stable home values instead of having them ever-increasing, many NIMBY objections would fade away.
Go to a planning meeting about some housing that people are pissed off about because reasons ( https://news.ycombinator.com/item?id=32569768 ) and you'll find a whole bunch of your neighbors. It's not institutional investors blocking this stuff, by and large.
> they are worried about the value of their own home going down. They are treating their home primarily as an investment because that is what they have been told to do their whole lives
Yes, that's much closer to what I've observed in person fighting these fights.
Yes, the institutional investors aren't going to be in your local council meeting. They will be meeting with your state assembly members. They will be meeting with your Congresspeople. They won't be literal NIMBYs focusing on anyone's "backyard". However they will be working towards the same goals at NIMBYs, just at a larger scale.
It's amazing the power those subjects have to turn "YIMBY" into "regulate me harder daddy".
The cognitive dissonance required to enable this about face is a bad thing and seems to be becoming more and more prevalent and accepted in all sorts of public policy contexts.
Now lobby dollars are another story. But renters can fix that by actually voting.
Local to me, we've had a few causes pop up with surprisingly well-run NIMBY efforts opposing them in recent years. The amount of money raised and the signs and slogans are way too good to be the product of the actual locals who speak out on behalf of these groups - somebody else is clearly funding them and doing some marketing.
I don't know of any local councils that grant local votes to anyone -- they vote themselves. This should spark an idea of how rich people's dollars outweigh poor people's input. They only have to convince half of the council to vote one way. This can be done through wining and dining, sending "experts" to make presentations, making promises, and so on.
At least in my area, it's all about people wanting the area to remain semi-rural. They generally aren't opposing low density SFH in independent builds. The people in my area are against many development and medium density homes.
But, yeah, it's all because they have brown skin. Oh, wait, the tenants in question are whiter than I am.
We know how people treat rental cars. I don't know why it's a big shock that people will treat rental properties in the same manner, and why other folks would rather not live next to that. Blame race and class if you like, but to not allow at least a little more nuance to the discussion is silly.
If people are going to do restrictions about who lives where, HOA's are probably better than zoning. They're more localized, and the costs of administering them are born by those who perceive them to be beneficial.
I'd never live in one, but to each their own. I'd rather have someone choose one of those in a free market than get involved to zone the entire city one way.
If you want to know why we don't bother, it's because the owners of the surrounding houses use our place as dumping grounds and the owners have been there for decades and know all the housing inspectors and police. It seems pointless to even bother when the landlord wants the house to fall into disrepair and the neighbors will use their connections to authorities to dump on our grounds again as soon as we clean it up. On one occasion I was sent a notice that I would be imprisoned because of trash my neighbor put somewhere not even on our property and before I even moved in. I dutifully cleaned it up because it was clear I was going to be framed, but as that took the entire weekend I had little energy leftover afterwards to do yard work around my own place after being exhausted dealing with the neighbor owners.
Meanwhile the neighbors' house indeed did look spotless because they dumped all their trash on the renters' yards.
It's not some psyop that has duped an entire nation, it's people accurately recognizing that their home is the biggest purchase they will ever make in their life, it's almost completely done with debt, and most don't want to end up underwater.
What is those people's second biggest purchase which is also usually done with debt? Does anyone believe that the government should enact policies to ensure that car prices always increase so they would be a better investment? Houses obviously have a longer lifespan than cars, so I'm not suggesting they should necessarily depreciate the same way, but there is also no reason housing should always be appreciating.
We have this idea that the price you sell your home for should always be higher than the price you bought it for. There is no reason for us to preserve that idea beyond the fact that people have now internalized that idea and plan their financial lives around it. The longer we allow that to continue, the harder it becomes to change, but the idea itself is not some fundamental requirement of society.
The government could put the same energy to keeping housing costs in pace with inflation. They don't. Instead, the government tries to keep housing costs rising faster than inflation because housing is viewed as an investment. They have been successful in that goal as housing is greatly outpacing inflation.
> The government could put the same energy to keeping housing costs in pace with inflation. They don't
That's exactly what they did. Not just housing, but also food, cars, ... It's just that housing costs respond a lot better to credit availability than most other things. And yes, generally it's things that are seen as an investment that respond to credit availability.
The government has no direct control over any kind of pricing except the price of money. Also known as credit availability. They raise house prices 5% per year, so that when food and fuel refuse to adjust to inflation, it averages out to 2% per year. This caused larger price rises on everything that is seen as an investment (houses, education, cars, ...) than on things that are not.
Housing costs greatly outpacing inflation is not a recent phenomena of the last 15 years. In fact, home prices increased faster in the prior 15 years than the last 15 years.
>The government has no direct control over any kind of pricing except the price of money.
I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.
Only because the averages get pulled down in places where people don't want to live. Plus effective inflation going up (you know, the inflation including housing and education, not the made up government inflation number)
> I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.
Repealing it would create a big advantage for investing in homes rather than buying them to live in them. This sounds to me like the opposite of what you want. But maybe I'm an idiot.
Reality: for any resource there is supply X and demand Y, in specific markets.
X > Y: it matters a lot less what the exact policy is.
Y > X: someone will be very, very unhappy.
Rent prices, what we really care about, are not determined by who owns a house. They are determined by the amount of houses.
Except until you have a chip supply crunch, and used cars are selling higher than their original buying price.
Reliability is way, way down the wish-list. People don't really consider it until all the other key features they want are very solidly satisfied. And even then the take rate is maybe 50%. For every jerk in a 4Runner or Pilot there's an equal and opposite jerk in a Landrover or Tiguan.
However I’m likely not to be representative.
- People who like to frequently change cars, not so frequent as to lease but still prefers to let it go between 50-100KMi. (Contrast folks who sell past 100k or drive cars into the ground, they care more about long term repair cost.)
- People who are using resale value as a proxy for reliability.
I suppose 'lease-e' may fall into this category, also by proxy (as high resale value means lower depreciation, lower lease cost.)
There's an over reliance on 'ideas' in this message thread, and an under reliance on simply trusting people to reason their own self-interest.
absolutely. If anything investors provide for liquidity of the market.
The real issue is that investors, ie. the rich, are getting more and more ability to buy real estate while the middle and the low class are getting less and less capable of doing so. The reason is the huge sloshing amounts of money being given to the top, and thus those money causing a strong push for the price rise of the assets (back at the beginning of pandemic i said that it will result in the biggest redistribution of wealth https://news.ycombinator.com/item?id=23924777 toward the rich and large ones)
No, no, no. "providing liquidity" is not a good thing unless liquidity is actually a problem almost everywhere people talk about this.
The "liquidity" provided by high-frequency traders in the stock market does not benefit anyone but themselves. For everyone else the difference between trading in minutes and hours (or even days) is near-meaningless. And they don't provide liquidity for seldom traded stocks.
And on the housing market they are not providing liquidity for the market in general. They are buying and then renting those properties out. Since they are all-cash offers they often trump "regular" buyers out of the market, even when offering the same price. Again, the only ones who benefit by this are those investors themselves.
These investors are one of the major forces pushing up the prices, the are part of the problem, not the solution.
That liquidity is also what's driving the price of executing a retail trade to or below zero. You used to have to pay fees whenever you bought or sold stock.
To be honest, I just figured they were able to eliminate fees by front running and/or selling my trading information.
You could make an argument of the form "HFTs have made trading so cheap that people are hurting themselves more than they used to, and we need to bring the price of trading back up so that people won't be tempted". But that is a pretty different argument than "HFTs don't provide any value". They clearly do. When you place an order to buy or sell stock, you pay lower fees and you get better prices than you otherwise would, because you look just like a million idiots.
Yes there’s a few rich in there and it’s not like they’re egalitarian, but it isn’t Jeff Bezos either.
Make it so neighbors are competing to host whatever they are NIMBYing about currently because it comes with a package of goodies that will offset the problems. It doesn't have to include much new spending, rebalancing or reprioritization of existing resources to ensure fairness can be part of it.
Is this the norm? I feel like I haven't heard it often during debates over unpopular new developments.
* cheap land is usually cheap for a reason. Land in the middle of the desert West probably doesn‘t have the required water rights to support habitation. Land in the middle of nowhere in general has few services and high logistics costs. Former industrial land requires environmental remediation. Foreclosed land may require paying outstanding tax bills. And those are the relatively straightforward problems, to say nothing of places with high crime, bad schools or other complex societal issues.
* a lot of these places are going to turn NIMBY if a bunch of outsiders come, buy up housing and export their cost of living crisis to their community. It doesn‘t take that many people to tighten up the housing market in a town of 10,000.
It seems every city has areas within it with these issues. So this shouldn't affect the possibility of moving to areas that have decent schools. And there are solutions to many, like private schools can be a good option especially if the yearly cost is less than the property tax in a HCOL area.
"It doesn‘t take that many people to tighten up the housing market in a town of 10,000."
It doesn't have to be a huge influx, nor all at once. The point is that zoning is less restrictive and land is cheaper, so people can build. The depressed areas have relatively high vacancies anyways.
"Employers want to be where their clients and employees will be, residents want to be in a place with decent shops and services."
Some people want nature. Shops aren't as much of a concern today with internet delivery. I find it highly suspect that people all want exactly the same thing. It might be more likely that the people in one group are just being left behind.
It doesn't, but how much cheap land in Goldilocks-type areas really exists? The housing price problem is already becoming national in scale.
> It doesn't have to be a huge influx, nor all at once.
That ship sailed a long time ago. It already is. It turns out 1% of Californians leaving annually is still half a million people swarming other places. You cannot run into a town in the Mountain West or PNW where locals aren't complaining about Californians driving up prices. Encouraging more people to do this is going to exacerbate the problem.
> Shops aren't as much of a concern today with internet delivery.
There's still a baseline. To use your example of Appalachia in a different comment chain, consider that people in 40 counties in West Virginia today are food deserts without easy access to fresh food. Instacart is more expensive and not available everywhere.
https://www.wvpublic.org/podcast/inside-appalachia/2015-10-0...
That's my point - it doesn't have to be perfect. Otherwise nothing will solve it.
"Encouraging more people to do this is going to exacerbate the problem."
They should be moving to places that are shrinking. That's what I'm suggesting.
That food desert thing is a joke. They're talking about supermarkets, yet there are other sources like farm stands. 10 rural miles is nothing. That might be a 10-15 minute trip if you've ever driven in WV and seen the speeds people drive.
The biggest issue/cost isn't the actual building codes, as those are easy to meet in most places. It's the sanitation requirements. Those old shacks were allowed to have outhouses, or at least septic systems that would no longer pass. Septic systems are a pain to put in and are quite expensive.
> They should be moving to places that are shrinking. That's what I'm suggesting.
And we're back to "you can lead a horse to water but you can't make it drink."
> That food desert thing is a joke. They're talking about supermarkets, yet there are other sources like farm stands. 10 rural miles is nothing. That might be a 10-15 minute trip if you've ever driven in WV and seen the speeds people drive.
* Supermarkets in the US provide all kinds of out-of-season produce throughout the year. This is what consumers have come to expect, and is an inherent limitation of farm stands.
* Those most struggling with COL also struggle with the cost of transportation in the US, so driving a dozen miles is a non-starter.
1. https://maxread.substack.com/p/the-man-who-bought-pine-bluff...
I’ve spent time in Western, PA and while it’s definitely a lot safer than Pine Bluff, feels like there’s lots of issues with pollution, blight, and opiates even with fracking jobs and money coming into the area.
I'm sure there are plenty of candidate cities throughout the overall region, and it would likely depend on what the industry is. Someplace around Indiana PA would be good if you need semi close access to a commercial airport, a larger city, or a college. Erie could be similar. Johnstown PA area is good if you have government contracts, defense work, or need a regional or shipping airport. Bedford or Breezewood PA can be good for warehouses and shipping with the highways. Medium to small companies would be well served to position themselves between two medium/small towns for cheap land and larger workforce pool without being near the larger cities, like Millville and Stillwater as an example.
Workers don't want to move to sparsely populated areas because there aren't many jobs, and companies don't want to do it because there aren't any workers.
E.g. I wouldn't mind working in a sparsely populated area, but there's a good chance my employer would be the only one I could work for (without giving up and working retail or something). My employer doesn't want to relocate there because good luck convincing people to relocate there given the above.
There are infrastructure problems, too. Good luck getting a business class 40Gbps Internet connection in Nowhere, Wyoming.
It would go a long way if remote work was normalized (or legislated), and the FCC actually forced ISPs to run reasonable Internet connections outside of major metropolitan areas.
The above linked Vox article refers to another Vox article to back up its general claim that "Housing undersupply is the result of decades of locals opposing new home building."
https://www.vox.com/22264268/covid-19-housing-insecurity-hou...
Then, this referenced Vox article references the following study as if it applies to all housing in general:
"In 2017, Yale Law professor David Schleicher wrote a paper called “Stuck! The Law and Economics of Residential Stagnation.” In it, he documents local restrictions on housing development, arguing they have become so overbearing that the increase in the cost of housing and rents has made moving to a better place impossible for millions of Americans. Local zoning regulations are strangling opportunity."
https://www.yalelawjournal.org/article/stuck-the-law-and-eco...
This study however is clear that the impact of restrictive zoning policies is localized particularly to coastal metro regions beginning in the 1970's:
"Something dramatic happened to land-use regulation in the 1970s and 1980s: it became much, much stricter. Importantly, while this phenomenon affected all types of municipalities—from urban downtowns to inner-ring suburbs to exurbs—it only occurred in particular regions of the country. In particular, coastal metropolitan regions like San Francisco, New York, and Boston restricted construction in cities, suburbs, and exurbs. Because these popular regions restricted new housing, demand for living space outpaced supply. Housing prices soared, but population growth did not.
In contrast to these coastal regions, Southern and Southwestern metropolitan areas like Houston, Phoenix, and Atlanta continued to impose minimal land-use restrictions. Though demand to live in these regions grew as well, this demand led to increased housing construction and population, rather than substantially higher housing prices."
Most of the recent growth and migration in population has been occurring in these Southern belt areas, which have limited restrictions on building. Housing prices is a demand driven problem, not a supply problem throughout most of the United States.
It astonishes me how many people in that town are complaining how it used to be small and full of farm fields, and now there are all these new people and houses and neighbourhoods, and we need to stop the expansion.
Every.Single.One. of them moved there within their lifetime. NONE of them were born there. THey did the exact same thing they are now complaining and trying to stop others. None of them, when asked, are even remotely willing to move to a high density downtown condo, if they are so committed and passionate to preserving the fields and small community.
It absolutely astonishes me, the utter lack of self-awareness: why are you expecting others to be different than yourself?
---
(it's like when you're stuck in traffic, and somebody in your car gets frustrated "Why are all these people here? Where are they going??". It's not like everybody else has conspired to harm us - we are in this traffic, going somewhere else, contributing to it and making everybody else slower. It is US, not "them" )
So one group wants to maintain a financial investment that was sold to them as a sure-fire way to make money with little work and little risk, and another group wants...shelter. If it truly is the case that the desires of these two groups are butting up against each other and are mutually exclusive, is it really hard to decide which group should get what they want?
Even just a note to the city council saying "thanks" when you notice a new development is way more than most will ever do.
Of course, if responsibility suddenly means losses instead of effort-free gains, investors will try to squirm out of their responsibilities. Morally, though, the situation is crystal clear.
Well, kinda? It's more like getting paid to know the risks better than the market, or getting paid to be able to predict the future better than the market.
Home ownership is a key part of retirement, as reducing monthly bills is critical and rent is a big one. It has been a fairly profitable investment for 30 years of decreasing interest rates, but it is no longer so.
I don't know in the US but in many European locations building of new housing has drastically slowed down over the past decades, which naturally puts am upward pressure on the market.
There is no need to demonise investing in property, which not the root of the problem (and frankly is often an ideological stance).
If anything, there should be more investment in new buildings to boost supply but very often the problem is planning restrictions.
Little did I know when I went to claim the loss on my taxes: I could not claim the loss at all. Since it was an owner occupied house and not a house owned by a corporation, it did not count as a loss I could deduct from my income nor from my capital gains.
Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
The system is a racket designed to continuously inflate home prices.
Everyone participating in it should be ashamed for making their children serfs & homeless while they live in castles.
I.e, did you buy for $200k and sell for $130, or had you bought for $200k and sold for $330 which was $70k under the current market value?
The latter isn't a loss; and likely wouldn't be even for a corporation. You'd have to sell at full value and donate the $70k or something to get it to "work".
Amusingly enough, if one of the 87k IRS agents hears about it, they could go after the deserving family for taxes on the $70k windfall they got (though this one is really hard to prove, they will do it on forgiven loans).
It cuts both ways. Had you had a gain, you would not have had to pay taxes on the gains. If you had it as an investment, you would.
> Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
Hyperbole. For the majority of folks, home ownership outweighs the costs. Often significantly.
I, for one, would find it better to not spend my final days at the most profitable nursing home.
Answering your last paragraph: Worst case scenario, it'll probably take a couple of generations of literally living at our parent's house, waiting for the investor class to die out clenching the deeds to all houses and then finally being able to take back the world and start responsibly owning stuff. The cynic in me says that living at one's parents would be outlawed by political cronies.
I'm looking forward to hearing how Vancouver's vacant house tax affects their market the next few years. It sounds like a good idea and I'm glad they're running that experiment. It's hard to predict how these things go over time.
Turns out having 10 people and 9 homes remains a problem, even if you enact more policies.
They’ve tried everything, except build enough homes. I’m under the impression this is the popular modern across North America
You made me go look and I think you're wrong. It wasn't a silver bullet (shocker!) but it did add 18,000 units to the rental market in 2019 and 2020 and raised $231 million in tax revenue that was used to support affordable housing developments.
https://news.gov.bc.ca/files/SVT_Annual_Mayors_Consultation_...
By what metric? I'm not sure that's accurate [0]. It looks like the vacancy rate has seen a steady decline and the money raised ($86.6m) helped Community Housing Incentive Program (CHIP) and Land Acquisition/Development opportunities.
[0] https://vancouver.ca/files/cov/vancouver-2021-empty-homes-ta...
> Vancouver continues to experience the lowest rental vacancy rates and highest rents among Canada’s major cities, making rental housing affordability and availability a significant challenge for those who live and work in Vancouver, and those who would like to in the future. In an effort to address this and increase the supply of rental housing in Vancouver, in 2017, the City of Vancouver introduced the Empty Homes Tax (EHT), also known as the Vacancy Tax.
Edit: assuming the situation is where there are vacant homes and people willing (but not able to afford) to live in them.
Is there antitrust statute for housing stock?
What I think you are trying to say is that it is preferable that the investment in housing be made by the people who are going to live in the house (or by the government) and not by entrepreneurs.
In fact, we should probably repeal it altogether - in theory it subsidizes home ownership for the poor and middle class, but in practice the only people who take it are those who itemize deductions, which the poor generally don't.
I'm aware that interest is generally deductible for businesses, and I'm suggesting that houses should be an exception to that. We subsidize most business borrowing because we want businesses to borrow and invest in stuff, and we should have exceptions for things we want to discourage investment in. Sure, it's difficult to imagine how to keep a giant corporation from finding a way around this, but we have difficulty getting giant corporations to pay taxes generally. It would still make sense to narrow or end the subsidy to discourage individuals and small businesses from investing in RE so heavily, and consider other approaches to discouraging larger corps.
As an investor, you don't have a mortgage interest deduction benefit. You have a business expense benefit.
Other laws which discourage investment will also discourage construction.
That it's come sooner than most predicted is likely making those ghouls salivate even more.
Needless to say, we turned him down and just plunked our money into index and sustainable funds and chose handpicked stocks instead.
People in ivory towers whipping black-box abstractions of businesses into needing to produce more profits through wage theft, cost-cutting by skirting regulations, or outsourcing to unregulated places.
There's little oversight throughout the process, and filled with the kind of people that want to turn everything into a business... and that have proposed "treating but not curing cancer" [1].
[1] https://www.cnbc.com/2018/04/11/goldman-asks-is-curing-patie...
There’s a difference between owning two properties and owning a fund of thousands of homes (PE and REITs). The former is fine, the latter should be banished
I am philosophically opposed to "investing" in real estate, as your industry exists entirely to snatch up affordable housing from actual homeowners as a get-rich-quick scheme, benefiting those who are already rich at the expense of those who would otherwise be rising up out of their own financial situation.
Nothing personal, but I wish you - and everyone in your predatory industry - swift failure in your endeavor, for the benefit of the average homeowner.
Have a good day!Hi there!!
You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again!
Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
But on the short run, everything even in knowledge economy work, money is made literally by moving it from person A to person B. Hence A wins at the expense of B.
Even on the longer run most people lack the resources, patience and overall life situations to make decision over such long periods of time.
> For economy to work beyond pie fallacy you need situations where most of the economy is driven by people who make wealth by creating things out of nothing.
It's unclear whether you're trying to propose an alternative model here ("beyond?") or are expanding upon something you call a fallacy but still use as the basis of your argument.
> Almost any where, where you need a raw material as an input to make a thing, the supply of that is limited, and therefore subject to these demand-supply issues(predatory behaviour/rent seeking).
I don't see how rent-seeking fits into that, so I'm going to assume you're talking about predatory investments here. Why we are fixating on goods and specifically on acquiring them for some process I don't know either.
> But on the short run, everything even in knowledge economy work, money is made literally by moving it from person A to person B. Hence A wins at the expense of B.
The other way around maybe? Does either make sense? If I invest in your company, I am giving you money: Am I winning or am I losing? Am I behaving predatory? Are you?
To most people the answer can be found by looking at the transaction in a broader context, you don't seem to even care.
I get that predatory is ill-defined in economics, but your interpretation of it seems to be useless at best. If "predatory investment" means the same as "investment" to you, then predatory is not a useful qualifier in this context. You'll have to come up with a new word to describe what others simply call predatory.
The only way for your construction to make any sense would have been to show that all investments must be made with the goal of rent-seeking and/or be predatory, while both terms each would describe only a subset of investments.
There is no point to having this conversation if we don't even share the same useful terminology.
But even if we sorted that out, the argument likely would still be incomprehensible to me. I wouldn't know where to add the words "Therefore all forms of investment are either predatory or rent-seeking." if you held a gun to my head.
Except that the same argument needs to be applied to housing. Look at it in the broader context. Everything will make sense.
What is equitable? and to whom? This argument is moot.
Why do you think you should get to decide how much profit somebody should make. Would you agree with the same if somebody decided to cap your salary, to make some end service/product affordable?
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is:
* flippers
* middle class individuals buying a second property as an investment
* small time property management firms run by local businesses
Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up.
[0] https://moodys-talks-inside-economics.simplecast.com/episode...
Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states:
> Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases.
So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors.
[1] https://www.corelogic.com/intelligence/single-family-investo...
Flippers are a necessary part of the market... lots of old people stop maintaining their home as they age. When they finally die, their homes are in extremely bad shape and no one would want to live there. A flipper makes the home habitable again.
Investors Are Buying Mobile Home Parks. Residents Are Paying a Price https://www.nytimes.com/2022/03/27/us/mobile-home-park-owner...
It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD.
So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
So, while investors don’t get the same rates as homeowners, they still got very good rates. If I had had capital, I would have bought a dozen more units at that time.
<5% == Free money.
Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown.
Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.
https://krscpas.com/the-tax-cuts-and-jobs-act-tcja-and-code-...
> In a letter to U.S. Treasury Secretary Henry Paulson, industry organizations have asked that the $200 billion Term Asset-Backed Securities Loan Facility (TALF) provide guarantees or financing, or purchase highly rated asset-backed securities collateralized by new or recently originated mortgages.
https://www.reuters.com/article/us-commercialproperty-idUSTR...
I am not alright with paying absurdly high rent.
At the very least, replacing all SFH with townhouses would give 2x density increase. Removing the height limit on new construction and allowing rebuilds of old apartment buildings without excessive permitting would probably give another 3x increase.
Then you should either:
1) Buy a house to live in
2) Buy a house to hedge against rents going bananas
The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
The Federal Reserve MANDATES that consumer prices go up 2% per year. If house prices ever go down, they'll be there - waiting - to pump them up.
Prices will rarely ever go down substantially for a long period of time unless the Fed completely changes (I doubt it).
You can either:
1) try to time the market (difficult in housing, I'd argue not as impossible as equitities)
2) buy into the bubble
3) hope that the US basically turns into a different country
4) be ruined financially by missing out on the biggest handout in the history of the world (the 30-year fixed negative real interest rate mortgage)
Pick your poison.
How? Dollars are worth $0.5 in 1990. Yet your mortgage payment is unchanged. Your house payment is much less.
Rents are much higher.
You won.
They didn't "win." They broke even. The people that sold them won. The people with no house but inflated away cash/salary lost.
Someone else is allowed to win, too.
It's a zero sum game, and the only losers have been renters.
That can change if there's a massive, sustained housing crash. But I won't hold my breath for that.
I'm willing to bet, like always, house prices won't decline. The value of the dollar will decline instead (because the Fed can just easily QE until the only people that lose are renters).
If you go back to 1900 you see home ownership rates in the US at less than half of households[1]
The interesting thing to me is how conflated home ownership has become with housing affordability. As we’ve doubled the numbers of home owners we’ve dramatically removed the options for housing.
[0] https://fred.stlouisfed.org/series/RHORUSQ156N
[1] https://www.census.gov/data/tables/time-series/dec/coh-owner...
Gen Z and the generations to come have a real reason to be pissed at the rest of us.
I'd assume every country is its own special mess:)
In Canada last year we had a stat released that said 1 in 5 Millennials that own property own more than one. This was inline with both GenX and Boomer stats.
Millennials are just as much a part of the problem as any other generation, assuming you think speculators are part of the problem.
I mean, by definition that property would have sold to either a new home buyer or another speculator like yourself.
And by definition, if you own a property you rent out, you are a speculator:)
i have no problem with you being a speculator:)
In a lot of markets here (I’m Canadian) average people who bought average homes in the mid 2010’s (millennials) have already made over a million dollars. Most home owners make way more money from their home than their job. This will never happen to my generation.
Agree. I bought a house around a decade ago. Refied into a sub 3% rate. The house next door now rents for 2.5x my mortgage. That's 10s of thousands of dollars/year extra I have in my pocket.
But that's just how mortgages work, right? Lock into a rate, and have that for 30 years? Only in the U. S., AFAICT. Canadians will correct my details, but as one example in Canada one gets a mortgage for, say, five years at x%. After five years, go renegotiate? (Help me out here, Canucks; as soon as I went to write it out, I knew I had it wrong.) Anyway, point is, the "lock it in at 2.5% for 30 years" seems to be unique to the U. S., and assuming that your wages increase, after a period of years you will keep more money in your pocket than the neighbor that rents.
Your interest rate is probably 5% or so?
The real interest rate is probably 3% or so. That means your REAL interest rate is 2%.
When you inevitably get the chance to refinance at below 3% - your REAL interest rate will be negative.
The 30-year fixed mortgage is a product that would not exist without a government guarantee on Fannie & Freddie's debt. Even if you have a jumbo loan - it's only because of the MBS market created by Fannie & Freddie.
In essence, the tax payer is paying you for you to have a mortgage on your house - regardless of whether Fannie securitized your mortgage.
The more leverage you have - the more you're taking advantage of The Federal Reserve mandate that prices go up at least 2% per year.
2%x33 = 66% return GUARANTEED by yours truly, the Federal Reserve.
If prices appreciate 2% = $2000.
$2000 / $3000 = 66%
My wife and I were able to buy a house in Baltimore City while both attending graduate school
Increasing rents are a kind of distributing risks of costly maintenance that renters doesn't want to care about.
But yeah in general rents being more expensive than mortgages is a function of risk. Renting is generally less risky for renters are more and more risky for the owners, so it's only fair that the owners be compensated for the risk. The question is where do you draw the line on fair risk compensation vs outright usury. In states like California and New York it's getting to be insane. Even in the low CoL area I am in I have no idea how people pay $1000 for a shoebox studio.
Sure fair wear and tear does cost something to service/repair over time, but generally things seem to last.
This sounds akin to feudal peonage.
I also manage to save some money monthly, which I invest in diverse markets. So my thinking is that at there isn't (or "shouldn't be") any rush for me to buy property.
But news like this obviously goes against that and will have me revisit the idea.
https://la.curbed.com/2015/4/8/9972362/everything-wrong-with...
https://www.google.com/maps/@34.0767638,-118.2917173,3a,75y,...
There is low hanging fruit but people with smaller pockets need to go after what is available. I looked at every multi family listing for months in LA until I found something that wasn't bleeding cash and was zoned for more units. Most listings were just unrealistic and had some hold out tenants. It turned out to be bleeding cash, but still a good buy.
On this post I wrote:
> A couple ideas for how to fix some real estate problems:
> 1. A zoning rule that requires home owners to live in the owned home. ...
And the general response?
> The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors.
> None of this would have much impact.
> This would reduce the housing stock.
Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.
Hopefully they got a fixed rate mortgage that way their payment never goes up
OTOH everyone argues that there’s not enough housing and now here you say that homes will actually be vacant for months- which is it ?
I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough.
But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
Would this apply to apartment complexes as well? As in, it won't be profitable to own more than 3 complexes? Would that result in most capital going into megacomplexes and fewer people wanting to buy small apartment complexes with only, say, 10 units?
Not disagreeing with you, but there are nuances involved.
They're "regular" in that their income is not high - significantly less than me, and I earn significantly less than SV folks. Nurses, journalists, people working at the bank, etc. Many don't have a degree. None come with money.[2]
My wife would bug me often to "look into real estate", and a cursory look always seemed insane - no way is it outperforming the S&P long term! Finally I decided to look at it in depth, and although I personally did not get involved in RE investing, I did see how it works.
Owning 5 extra home sounds like a wealthy person, but the reality is most of these people aim to earn about $200/mo net profit on each of these homes. The rest of the money goes into paying off the loan, repairs, saving for vacancies, property management, etc. You can make a lot if the property/rent appreciates significantly, but most of these folks do not rely on it. And then on top of that there are some tax benefits.
The trick is finding ways to finance it, and finding good deals. The typical house for sale on the MLS will not earn you money and will likely be a loss unless it happens to appreciate. So most of these folks are looking for deals: Properties that banks will not approve loans to purchase because they are in such bad condition. Say a house, if in good condition, would sell for $300K. However, it's in very poor shape and the owner needs money. His balance on the loan is $100K. You pay him $150K or $200K in cash, spend $50K to get the property up to code, and rent it out.
But who has $150K cash lying around? Not these guys. So they find rich people who'll lend it to them (including the $50K to repair) at 12% interest rates. The idea is that it will take 3-6 months to bring the property up to code, so even though the rates seem high, the absolute amount you pay on that interest is not that high. Once it's up to code, the house is worth the market rate of $300K. You refinance, pay the original lender his balance, and can either sell the house (flip), or rent it. You often get some extra cash this way to help finance the next deal.
The beauty of it all? It's low risk. These are non-recourse loans. If you miscalculated and the deal isn't going to be profitable (e.g. the cost to repair is a lot more than estimated), the lender cannot come after your home, car, bank account, etc. They only get to keep the property you bought. You get no hit to your credit.
Of course, because of this, most such lenders will want you to put in some money (e.g. $20K). And they'll want to see how you made the repair estimates, etc. They'll lend you money only if they agree with your analysis.
Real estate is really one of the few options accessible to most - as opposed to, say, a 401K that requires an employer to offer it. It's a lot safer and simpler than most other investments. If you compare it with trying to understand the stock market, you begin to wonder why people invest in the stock market at all. Within a few months of reading and studying, you'll know all you need to know to start making money. So yes, that's why so many "regular" people are in it: It's simple[1], and they don't have access to other ways of making money. Few will lend you $150K to put into the stock market. But many will lend you that amount for real estate investing.
[1] "It's simple. Buy low, sell high. It's so simple even Donald Trump can do it!" (Common refrain you'll hear).
[2] Now above I'm talking about traditional real estate/rentals. If you go into AirBnB, the profit margins can be much higher. Over $1000/mo net profit per unit. I know one guy who was probably earning less than $70K/year in California study how to do STRs, and he's doing very well now. 2 years in made over $350K net/year, and growth is rapid - he expects to hit $1M/year soon. Obviously, he's an outlier, and he did have to work hard at it (quit his real job) but everything he did is very accessible to regular folks.
That is shockingly bad. I was going to make a comment about how ridiculous your comment is..until I did the math! Kudos
I'll also be curious to see what happens when remodels need to happen. Many trade labor markets are hyper localized and difficult to scale across a property portfolio, this is where RedFin and Zillow struggled to "flip" effectively.
But there's been a general backlash on the internet the past few years about giant pools of money like Blackrock buying up housing supply. I don't think it's that different from your typical "mom and pop" real estate investor buying up homes to rent out. Ultimately, much of Blackrock's funds are held by regular mom-and-pop investors.
Re: Zillow, it actually did well in the flipping business when relying on its models to make the buy decision. It got into trouble after tweaking the model to say "buy" on more (and more expensive) homes.
If there is more damage the Fed could have done to GenZ since the bailout, that was reckless Covid spending. I sincerely wish these agencies are shut down someday. But alas we are going the other way.
Investors are buying up property for rental because it is profitable because there is huge demand for it because a lot of people simply are unable to own their own house and that is because housing is getting expensive faster than salaries.
The problem is government tied in stupid games while important problems like encouraging new, more affordable housing is set aside as some kind of communist agenda. A house does not need to cost the equivalent of your entire life's savings.
Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics.
Seems intentional at this point. Keep 99% of the population as useful, financially-illiterate workers who don't realize they are being exploited by the 1% ruling class to whom laws don't apply.
If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely.
Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.
I think this is only possible when large scale investors 'corner the market' by buying up a large percentage of homes in a given area. They can then control the rents because there is little competition.
On the other hand, if nearly every rental home is owned by a separate investor then each owner is competing with all the other small investors for tenants. They have competition and might be forced to keep the rents lower.
Rents are being affected by every investor, including those that own only two houses. Perhaps more explicitly by large companies with hundreds or thousands of properties, perhaps not. I've certainly spent enough time on threads in which people who own only a single rental property in addition to their own home compare notes on how to raise rents for more income in their pockets.
Honesty the best thing I can do is to build more units on the land I own. That is challenging though so it takes time and capital.
You can thank single family home zoning and how difficult the city makes it to build for the rising rents. The landlords I know are very pro building. 14 units is more income than 4.
With all of the regulations, risks, and high interest rates forced on landlords, I am wondering what you mean by "unfairly"? One bad tenant in Seattle, could mean months without income and even massive property damaged with no ability to recover damages.
As a small time landlord (I rent a few rooms in my primary residence), I feel that the rent I can charge is way below the risks of a bad tenant.
Buying something to rent it out is clearly investing.
Buying something to fix it and re-sell it is usually also seen as investing.
Buying something to use it (live in it) could also be an investment but usually isn't seen as such because it's assumed that you only live in one place.
If it appreciates, cool. I can make more money when I move somewhere else and use that to leverage my next house WHICH I LIVE IN.. If it goes down, bummer, but I can still use that to leverage my next house WHICH I LIVE IN.
I bought the house to live there, not as a financial instrument. The financial thing is secondary.
If the market goes up or down, I cant do shit about that.
But you pick on the fact that I'm talking about a primary (and in my case, sole) residence, and this article is talking about parasites that buy hundreds or thousands of homes to then turn back around and gatekeep living spaces.
Id say tax those vultures out of a company. They do nothing good, and cause boundless suffering.
It's not like OP is going to buy the home and let it sit vacant.
as they should.
Sounds worse when you put it that way though.
Not everyone can afford a SFH, there isn't enough land. Not everyone can afford to build. Not everyone wants to have massive switching costs when they need to move.
Tenants are more than welcome to form LLCs and collectively purchase land and build or buy existing housing. This is called Tenant in Common. Maybe that is a business (non profit) idea for you, make TiC easier.
My point here is that a blanket statement such as "landlords bad" doesn't match the experience of everyone out there.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So most of the percentage increase is done by mom-and-pop investors rather than groups like Blackrock, Vanguard, etc. With that said the article definitely tries to paint the picture that all of these investors are institutional ones, and burying that important lede.
I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.
Having recently bought a home, I think there isn't so much of a gap and in many cases the gap is inverted: it's cheaper to buy than to rent.
By that time their fixed mortgage will be far below local rent, so the money they save vs. renting every month will easily cover those repair costs.
Only $10k? I've planned for and budgeted for repairs and additions averaging 20% of the loan for the lifetime of the house. It's still cheaper to buy than to rent even with 20% on top of PITI.
It's cheaper because I'm paying myself when I pay my mortgage: if I decide to sell then a lot of that mortgage is now returned to me. You will never pay yourself the same way by renting.
If I don't sell then 20% on top of PITI is what I was paying in rent anyway.
As opposed to... being able to afford the rent with the same added costs? Take my area for example: rent in my neighborhood has increased to $2000/month. My mortgage remains at $1500/month (taxes, insurance, HOA included). What added costs amount to $500 extra/month? It's not water, sewage, trash, electricity, or gas! Those costs exist for renters just as much as owners. It's not basic maintenance... that has not cost me anywhere near $6000/year. So what are the added costs that landlords are "saving" renters from?
Utilities will generally cost a bit more. But the real killers with home ownership tend to be large expenses that come due all at once. Roof needs to be replaced, AC unit needs to be replaced, major appliance replacement, foundation problems, any number of expensive things can and will come up.
In my case I had to replace the dishwasher. I wanted a quiet one, so it ran about $1200. I bought it on credit and got 0% financing. So my housing price increases by $100 for the next year.
Now if I were renting? $2000/month. The landlord gets the absolute cheapest dishwasher they can find. It maybe runs them $300. So the landlord would be saving me ... $-475.
Paying $5700 extra a year to avoid a $300 added cost makes no sense. Paying $6000 a year in perpetuity for a one-time expense that lasts the next 20 years also makes no sense.
The point is that the tenant is not being protected from any added costs, they are paying way above market value for them.
All these expenses (plus a profit margin) are built into the rent, of course.
Two ways the owner handles them: Either they have enough money saved that they can absorb the spikes in cost, or, they contract some maintenance plan they have to pay every month but smooths out the costs to avoid surprises.
Compare this with the home-ownership rate graph here:
https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
Remarkably steady at around two thirds over the past ~50 years which of course is less than three quarters.
(Not an american, so I may be confused by some terminology.)
1. Are there a scheme to vilify them? Bcoz it's not even mentioned why they oppose (maybe they see Bad Things™ far ahead).
2. Are they not elected by the people?
For example, there was the irony of multiple cases of people voting for Trump because immigrants are bad, and then having their spouse deported for some visa violation. Or one can look at the people who have opposition to abortion voting for Republicans. Then someone who cannot consent is raped or someone has a non viable pregnancy and neither is eligible for an abortion, which has happened since Roe v Wade was re decided. In the USA, the Senate is decidedly unrepresentative of the people of the United States as a whole, the House less so with the limit to 435 members, but not as bad in some ways.
You can also look to Brexit post vote interviews where people who voted in favor of it said they didn't care if it hurt the UK, they wanted it to happen.
An older example in the USA, the Reagan administration characterized AIDs as the "gay plague" and played down the effects and had no official response to the health crisis other than to joke about it, delaying an effective national strategy. Today there is still a gay faction of the the GOP called the Log Cabin Republicans that is barred from some party events but still back the GOP, Peter Thiel has become a big GOP backer in spite of most state party platforms calling gay people abnormal and most subsequent federal GOP administrations sending and supporting people in Africa to criminalize gay sex.
That's his take on how campaign finance influences which candidates run or are “taken seriously” by the media - presidential primaries or congressional candidates alike.
The republic is unfortunately not “dependent on the people alone” if money has a too tight grip on who gets to run for election.
This then gets reinforced by a media-industrial complex that is happy to continue to feed you points you agree with to get you to keep clicking.
Disclaimer: I am not saying I support the Republican party or that I agree with them, but that doesn't change that tons of people cannot possibly conceive of someone having a different viewpoint than them being anything other than morally deficient.
Perhaps many houses in red states are owned by corporate landlords but housing is way more affordable in those states.
So this is a case of lawmakers simply not seeing the problem amongst the people they represent and thus being unwilling to pass what they view as unnecessary regulation.
Ultimately housing affordability is a blue state problem.
Moreover for all the lip service democrats pay to housing, in my state of Oregon, where the democrats have supermajorities of both houses in the legislature and the governorship, they do nothing.
I think that if you spent time on American politics you'll find that the democrats rarely vote for actual regulation, they just promise it to you and then make excuses.
"88% of U.S. Republican voters own homes, 78% of U.S. Democratic voters own homes, and 73% of U.S. independent voters own homes"
It's easier to buy a home for the average person in a red state, as evidenced by higher home ownership
I am making the point that there is no political coalition, Democrat or not, that wants lower home prices (from where they are right now).
And I disagree with that point anyway - see abortion rights post Roe. The blue/red state policy differences are stark.
Here is the home price futures market on the Chicago Mercantile Exchange. It's a thinly traded market, but it's in clear backwardation. Expected to hit -12.7% from current levels if you wait 2 years. Will take a while to get back to where it is now. https://www.cmegroup.com/markets/real-estate/residential/San...
They have more specific futures markets by metro
Owning a second house for rent-seeking behavior should require a license like using any other scarce natural resource.
Like occupying a river for selling bottled water or digging ground oil.
It should not be a no-barrier free-for-all speculative endeavor.
In this case I'm convinced that constantly rising housing values is the reason investors buy up housing, not the other way around.
Surely it makes sense that investors buy assets that continue to appreciate more than other investment types?
- The History Wars and Property Law: Conquest and Slavery as Foundational to the Field, K-Sue Park, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3793972
- Racialized geographies of housing financialization, Desiree Fields, Elora Lee Raymond, https://escholarship.org/content/qt5gd214jn/qt5gd214jn.pdf
- Race and uneven recovery: neighborhood home value trajectories in Atlanta before and after the housing crisis, Elora Raymond, Kyungsoon Wang & Dan Immergluck, https://www.researchgate.net/profile/Elora-Raymond/publicati...
- Race for Profit: The Political Economy of Black Urban Housing in the 1970s, Keeanga-Yamahtta Taylor
For owner occupancy protections, the real answer was to never to give tax breaks to investors in the first place. Only owner occupants should have any tax breaks. But this is not going to happen.
So let the speculators burn and go bankrupt.
If they go bankrupt it will wipe out 401k, retirement plans, and cause massive layoffs due to businesses going under as their primary sources of funding (debt) dry up. They already did it in 2008 and called the governments bluff. Now that they know they can do it there's no way they're turning back.
Edit: bringing back the glass steagall act would be a good start. But it will take decades to unwind the standoff.
There is so much to be said for this problem, but...its exhausting. I give up.
* Assuming that they never sell, they never pay capital gains taxes. Meanwhile, if I move and sell, I get hit now. * Ability to cross-collateralize a bunch of houses lets you tap into institutional capital. No pesky appraisal fees, no payoff for a mortgage broker, etc. Result is that their cost of capital is way below an individual's. * Better management -- ability to hire a bunch of actual skilled handymen to work across multiple properties means that they have specialization/ gains from scale. Typical homeowner is a jack of all trades who has to hire specialized talent which is vastly more expensive. * lots of pricing data with which to price as optimistically as possible. * ability to write off expenses
So basically, tax regime changes have created the rise of the REIT.
Just make it illegal for a corporation to own residential property. Or heck, even just make it illegal for one to own > 5 properties or some number of acreage. That would put a damper on this shit.
At the core of a lot of this is the NIMBY behavior and downzoning that started in the 1970s. It's hyper-commodified housing, while decommoditizing out places to live. (Please note that the difference between commodify and commoditize, here.)
We don't block SFHs anywhere, there's no minimum density. However we block higher densities nearly everywhere.
So blaming the people wanting higher density makes zero sense.
The price increases seen in the market are driven by the rising cost of energy, materials, and the lowering value of the dollar through inflation.
If governments, state and local, were receptive to construction, you'd see the market compensate for higher prices with increased supply. With building heavily regulated in many areas you've got government driving prices up through their limits on supply.
I don't think I agree, at least under current conditions, but then, I own my house.
Yes I love the idea, the only thing that will be more efficient and effective than the mega corp, property management companies that cause most of the problems, due to size and bureaucracy will be the federal government. I love this idea, they are always a paragon of efficiency of virtue, they never succumb to politicians and bureaucrats selling out those they serve for political reasons, and of course who could object to the government having ownership of every non-occupied home in America, I see no problem with that. Especially giving the government the implicit right to then dictate all future housing that will be built.
I can see it now optimized for efficiency, compactness, and equality everyone lives in "the pod". Of course since you may move pods and it would be difficult to move your stuff you can't really have anything, but the American Housing Bureau would love to lease you everything you need for a much better price because they don't have to worry about "profit". It will be great we'll own nothing, we'll live in a pod, and of course at that point meat is going to be untenable so we can get protein from alternative sources like insects.
I can't wait for it, I'll live in a wonderful pod, I'll own absolutely nothing, I'll eat bugs and I am going to be so HAPPY!
Insert meme of Eric Andre shooting the government and then asking why the government would do such a thing.
In truth, governments around the world deliver a wide range of services at a wide level of efficiencies, and even here in the US, any reasonable comparison of government-provided services with their direct non-governmental equivalents reveals that the government does better than popular image suggests.
I mean, Fedex and UPS don't even deliver to many of the places the USPS does, and when they do, they charge more. Amazon relies heavily on USPS to deliver where they can't efficiently do so. And this is despite heavy-handed handicapping of the USPS in the form of onerous funding requirements by the same party who now tell you that the government is incapable of doing anything well.
There is public housing available in many countries around the world that doesn't carry the legacy of the USA's past efforts. Public housing that is desirable for more than just the economic reasons. Public housing doesn't have to mean total government control of housing. Really good public housing is possible if people want it to happen more than they want to score political points by strangling any efforts in that direction.
The biggest reason I don't support such a push in the USA is because I think there are too many people who think like the parent comment, and will not allow such efforts to succeed. That's not the only reason, though.
So you want to outlaw renting?
You could make an argument against private renting. Personally I think the right step at this point in time is a relaxation of anti-construction laws such as zoning or parking requirements combined with charging sky-high taxes for unoccupied units. I also think owning single-family dwellings you don't spend at least three months a year in should be taxed so outrageously it's effectively illegal.
Owner occupier < owner landlord < owner vacation home < owner investor(vacant)
But I think you should also encourage density, like if you have a 5000 sqft house for two people, that should come with a sort of extra property tax than a 5000 sqft house for a large extended family or multifamily building.
What do you guys think happens when you get what you want, and nobody can "own" property anymore? Do you think there is an unlimited amount of single family 3000 square foot homes in San Francisco and that you will all be able to live in them?
Go on zillow and look at cities you've never heard of in that awful "flyover" part of the country. There are scores of homes for less than $200k, and plenty of homes around $100k. Go look at Parkersberg, ~~OH~~ WV.
Here's a house in Indiana for $125k. The payment on that is going to be like $450/mo. https://www.zillow.com/homedetails/51-S-Main-St-Laketon-IN-4...
It's just absolutely insane to me the places that peoples minds go when this topic comes up.
Where I live zoning laws are decent and land cost next to nothing. But you still have to contend with the universal housing codes, which means you're absolutely fucked because grand-daddy built a house that is basically irreplaceable (you can't permit that anymore) that grandson can live in, but fuck you if you want a house like that for yourself because that's all you can afford to build.
Laketon, IN, population 606, had its post office closed in 2010 and, from a quick perusal of Google Maps, probably doesn't have a single traffic light. Doubt there's much public transit out that way. Only 30 miles to a town I might be able to get a job in, though...
I mean, I've got a few skills that might be sharp enough to get me a remote job but I really like the hardware world.
Lots of people in the SF area and lots of other big cities have commutes of 30 miles or more. And I'd bet the traffic on those commutes is a lot worse, so 30 miles in the Laketon area is likely equivalent to maybe 10 miles in SF.
I'd expect entertainment and cultural events are limited in Laketon, but it's a 100 mile drive to Indianapolis and 140 mile drive to Chicago. With all that you'd be saving on housing compared to SF weekend getaways to those cities should be affordable.
And no, "too bad, go live in the middle of nowhere" isn't an acceptable answer.
You need to come to grips with that objective fact.
My read is that the person you're responding to is in the middle of that gap; and your response frames them as being on one extreme edge and then says an acceptable answer is to go to the other extreme edge.
[1] https://www.zillow.com/homedetails/8725-Maple-Ave-Gary-IN-46...
[2] https://www.google.com/maps/@41.6199213,-87.2571163,16z
You can disagree with how we divvy up SF but claiming you should get to live there is in direct contradiction with the idea that everyone should get to live there.
Someone, somehow, will get bumped. You’re just advocating for a system that would put you there at the expense of someone else.
Your argument contributes nothing because it fails to address the real negative consequences of unaffordable housing. After a point (which we most certainly have crossed), it affects society in strongly negative ways.
I don't know what kind of society you want to live in, but I don't want any part of that.
It's perfectly reasonable to be priced out of some areas of the world, there is nothing at all wrong with that as a general concept.
The issue is that we’re seriously restricting growth and innovation in favor of using housing as a financial investment. Yes, it’s necessary to have some degree of inequality and nobody is entitled to to live in any exact spot, but it’s gotten out of hand at this point, it’s hurting our societies, and it’s unsustainable.
Am I entitled to own my investment properties? No.
Am I entitled to block neighbouring housing from being built? No.
But society allows both of these things because they ostensibly should result in a better society. Of course, they may not, and if they don't result in a better society, we should probably turn the dial back on these factors, but not get rid of them altogether.
So should anyone be entitled to live anywhere? No. But should a middle-class person be able to build a life in places where there are opportunities for job growth (and like it or not, right now, that's the big cities)? Probably, if we think that will result in a better society. So we may need to turns some policy dials to ensure this will happen.
No. You are not entitled to access to specific jobs or a specific area.
How does that work out in your mind without abolishing the concept of property ownership? What happens when somebody wants to build their house where you already have yours?
If I moved to a a suburb because I wanted a smaller scale, and my neighbor wanted to build an apartment building next door, I'd probably push back against that. It feels like what is happening in SF is some extension of that.. projects getting caught up in community board reviews that happen slowly and unpredictably, and are staffed by old-timer SF residents who want to keep the city small. Frustrating for sure, but hard to fault them for that, if that's why they moved there pre-tech boom?
I personally live in NYC and appreciate that you can build whatever you want here!
As someone who grew up in a small town, do you understand how condescending this is? People have homes there, have families there, work hard and live decent lives. Just because they live at a pace you're not accustomed to, doesn't make living there some kind of hellish existence. Many would say the same about a filthy, overcrowded, crime-ridden city, of which I've lived in several across the US.
I'm sure where you live is lovely, but I still don't want to move there myself.
Phrased another way, if someone came in for an interview and said "I'm from Laketon, Indiana", do you think it would be appropriate for the interviewer to say "Oh, you're from the middle of nowhere." ? I don't think that would be appropriate at all.
This is a funny comment given the article is about corporations converting massive swaths of housing in the united states into rental properties.
The Fee rentals have all returned when the laws banning them were re-interpreted.
When you say low to middle range, do you include rent-stabilized units in moderate to hot neighborhoods?
I think you might be referring to Parkersburg, WV. It's right on the Ohio river, next to Ohio.
Obviously the nicest areas of the country, with the best weather, most opportunities, low crime, elite schools, etc. are going to be expensive. But it's getting to the point where it's prohibitively expensive for a middle class family just to live in a place without high crime/drug addiction/homelessness, reasonably good schools, reasonable healthcare options, and some measure of community/walkability (forget about weather and jobs).
You can live cheaply if you're willing to sacrifice in some of those areas, but they are major sacrifices that will have a negative influence on quality-of-life and the future prospects of kids who grow up there.
It wasn't always like this. I had a neighbor when I lived in North Berkeley (a beautiful neighborhood that checks every box you could want) who told me he bought his house in the late 90s for 150k. Now it's probably worth 2 million or more. I realized that everyone who bought on that block around that time had almost a six figure annual income for most of their adult lives solely from the appreciation of their homes.
I'm sure there are good deals out there that can still be found, but we really do have a problem if a table stakes decent family life is only affordable by the top 10% (or less).
Now that anyone can start a large company without barely any land investment, it's no wonder people are increasingly concentrating in small portions of the country, while large portions are incredibly cheap, and in some places, depreciating.
I grew up in uninteresting towns in Monterey County and San Bernardino County and both could check off points of 'acceptable places to live' which are affordable to the middle classes. No one talks about them because no one cares.
There’s been an explosion in home prices in the California Central Valley since the pandemic started. In 2019 it was possible to buy a brand new house in Los Banos and Merced for $280,000 and $250,000, respectively. Today you need around $450,000 and $400,000, respectively, to purchase similar new homes. And it’s not just the cost of materials that led to the massive price hikes; the cost of pre-existing homes also boomed in these towns.
I grew up in Sacramento and now rent an apartment in Santa Cruz County. Sacramento, once known for affordable housing with easy access to Bay Area and Tahoe amenities, is no longer affordable for many people. There are massive homeless encampments that I see whenever I visit the area these days. The housing situation is getting out of hand, and while this may not be indicative of a national crisis, in California the crisis has spread outside of the coast.
I've been told that "housing is a right" which, if conceded, still runs into your point - housing may be a right, housing in the most expensive and populated areas in the US is not a right and there's no way to make it one.
> then there needs to be a change
No there doesn't
> Having all the low paying workers commute 2 hours to work every day to make frappes and burgers for the rich locals is not a viable option.
Viable is in the mind of the beholder. Viable solutions include
- low income workers moving to more affordable areas, leaving the wealthy to make frappes and burgers with their Kurigs and air fryers
- low income workers continuing to commute feeling it is still the best option for them considering all factors
- wages raise in high-income areas to compensate baristas and chefs, allowing them to move closer to city centers.
All of these are 'viable' and none of them make housing a right or necessity.
Explain to me why we can't build more housing?
An easy reply to these same people is to ask if they think they have a right to wood, brick, concrete, sewer pipes, electrical wire, all the other materials that go into making a livable house, and, on top of that, if they think they're freely entitled to the labor required to construct a house out of these properties.
Whether or not housing should be a right, rights that are expensive to provide but are nonetheless provided anyway are nothing new.
People had natural rights long before the concepts of infrastructure, investment, or labor were ever conceived.
> Whether or not housing should be a right, rights that are expensive to provide but are nonetheless provided anyway are nothing new.
My point wasn't about expense. It was about a perceived entitlement to resources and help outside oneself. Housing in itself is not a right as it depends on resources and labor that don't belong to you. Such resources and labor are not rights.
There’s no right to property, speech, or even life itself without institutions like the police, military, and courts. There’s no right to vote without a massive election bureaucracy. There’s no right to education without a school system.
Why are we given rights like the ones I mentioned, but not housing or healthcare or basic income? It’s simply because the we haven’t collectively decided that the state should provide them. But it could. There’s no fundamental difference between providing housing and providing police protection, roads, schools, parks, and elections.
Police protection exists because the state has a monopoly on violence. Even if the police were never present however, as in the case of very remote areas with small populations, one always has a right to self-defense.
Roads and schools are not rights. They're paid for by other people's money and built by the labor of others. Parks are pieces of land the government has almost always wrongfully taken by way of eminent domain.
Elections are a complicated case. Individuals have a right to vote, but state legislatures have wide berth to set the terms of voting within their respective jurisdictions. While I would say there is a right to vote, there isn't a right to an election on terms or rules one finds favorable for one's self.
A right to vote is predicated on freedom of association among a nation's individual citizens. A person determines for himself whether he will or will not vote. It's not for society's sake that a vote is cast.
And you absolutely would lose your right to safety without police or some other form of protection. The ‘right’ might exist in your own mind, but it won’t do anything to prevent someone else who doesn’t share that belief from killing you and taking all your stuff. Rights are only meaningful with power behind then.
Semantics matter. If we can't even agree on the meaning of our terms, then we're talking past each other. Political beliefs aren't necessary to define rights.
And I'm well aware of claimed "meaning" of rights. However, as I stated earlier, such a meaning is contradictory. If a provision must be received from others, then it's not a right. It is a privilege. What the state gives, it is able to take away. Housing that is provided, subsidized, or constructed by the state isn't a right as at any point in time as the state can withhold payments to, modify, take, or demolish such housing.
> And you absolutely would lose your right to safety without police or some other form of protection.
People defended themselves long before there were professional policeman. Additionally, police officers can steal from, maim, and kill people just the same. The badge doesn't inhibit them from choosing to violate the rights of individuals. I don't see how that disproves my point. Safety is product of exercising the right to defend or remove oneself from a dangerous situation. I don't need to seek permission or pay someone protection money to secure my safety.
> The ‘right’ might exist in your own mind, but it won’t do anything to prevent someone else who doesn’t share that belief from killing you and taking all your stuff. Rights are only meaningful with power behind then.
Nothing prevents the state from killing people and stealing their stuff too. Governments have done that before, and many still do it today. Every government is composed of people who are little better in a moral sense than the average individual.
However, If you truly think that power is what makes rights meaningful, then you contradict your earlier statement about housing being a right, even in the popular sense of the term. If power makes right, then no rights exist, as people are no different from resources. Resources don't have rights and the state has no obligation to resources.
People grow up and have social connections in these places. There are jobs there. There are political reasons for moving. But most importantly these are cities, not suburbs. It's just wildly ridiculous to disallow dense housing which would allow more residents and lower housing prices.
But in any given region, there is a fixed supply of property that is slow to change to demand. And there is also a fixed demand- everyone needs a home. If one market participant buys up enough of it, they can choose to raise rents on that entire segment of the market. People need a place to live, and if their job, life, livelihoods are tied up in that specific area then leaving isn't a viable option.
The market participant literally is rent-seeking. They aren't improving these homes. They're raising prices by virtue of owning enough of them to be able to manipulate the market. They can charge more for the same service without providing anyone with more value.
Saying that anyone opposing this is some kind of communist against property ownership is a straw man argument. We just want to see a fair free market.
Edit: /s for those who need it
It is really not that difficult to understand.
A lot of my friends are now paying rent that is $100-$200 within my mortgage payment. And that is for an apartment without AC or a yard.
1. In most of the US it is quite literally illegal to build anything other than single-family homes ("SFHs"). This is a form of NIMBYism and reduces housing supply;
2. Part of (1) is that absolute necessity of car ownership in the US. This is by design to keep the riffraff (ie poor people) out;
3. We need robust public transit infrastructure to give people the option of living somewhere where they don't need a car to survive;
4. Pretty much anywhere you can build SFHs, you should be able to build multi-family dwellings ("MFDs"). Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals;
5. More states need to follow California's model of blocking a lot of NIMBYism at the state level. This requires towns to have an housing plan for affordable housing;
6. Ultra-luxury housing needs to be taxed punitively;
7. Cities and states need to be in the business in providing social housing as a significant supplier of housing. Americans in particularly have a kneejerk reaction against this as "socialism" or it'll be propagandized as slum housing. Vienna is about 60% social housing. Use that as a model;
8. Certain classes of housing should be illegal for corporations to buy. I'm fine with a corporation owning and running an apartment building with 200+ units with a management office onsite where they handle all the maintenance. I'm not OK with corporations constricting supply by buying up all the SFHs in a state.
9. We need to remove a lot of the tax benefits for investment property ownership (eg 1031 exchanges);
10. We need to remove a lot of beneficial tax treatment for home ownership period (eg Prop 13 in California caps property tax increases, inheriting property on a stepped up basis for CGT purposes);
11. AirBnB for anything other than a room in your house or a unit on your property (so you too have to live with the consequences) should be illegal.
This isn't a demand side problem. It's a supply side problem but we also need to restrict certain types of demand (eg REITs buying residential housing en masse).
I'd never build or buy a MFD at least partly because I don't trust that the current vilification of landlords wouldn't eventually expand to MFD owners. MFD owners will still raise rents, they will still evict, they will still have disputes with tenants over maintenance and common-area rules.
The righteous anger will still bubble up. Only an idiot would risk it.
But plenty of people will do that. They will want the extra income. The problem is currently that's literally illegal in most of the US.
As for evictions, these vary state by state but evictions are only really a huge problem with housing supply is so restricted. Yes there are some bad actors. But a lot of times eviction means homelessness for some people.
I'd personally be OK with making it relatively easy to evict someone who is living on your property (as opposed to say living in an apartment building).
But a very real problem with treating real estate as an investment is the owner profits by forcing negative externalities on their neighbours without having to suffer through them themselves (eg AirBnB). We need to clamp down on that.
Do people think they're just reselling their houses for the price they bought them at?
Does a duplex count as two? If so that means triplexs higher MUDs are illegal, which will harm low income housing options.
Can companies own property? If so then the problem is easily escapable with a simple LLC. If not, then either existing ones have to be grandfathered, or the housing market is going to be flooded with corporate housing.
The better approach is to increase taxes for non-primary residences. Address the root of the problem rather than legislating it away - if mass-investment of housing is unprofitable, the problem addresses itself.
No it isn't.
>Does a duplex count as two? If so that means triplexs higher MUDs are illegal..
Why would it count as more than one? You can own a duplex or triplex or whatever as your primary home, and then you have the option of renting out portions to generate additional income, or fully occupying the entire thing. If you have no plans to rent out units, it would make more sense to convert it.
>which will harm low income housing options.
It will harm landlords who depend on the current system. Low income housing won't be necessary when homes are affordable for everyone.
>Can companies own property?
Not homes.
>or the housing market is going to be flooded with corporate housing.
Good.
We do need more supply. We also need changes to existing policy to prevent what this article describes.
Both and, not either or.
It's like using potable water or the air we breathe as an investment vehicle.
interesting to consider. I think tax status assumptions and making van life work for a 2-child family are the main blockers. Starts sounding a lot like a high-end trailer park idea too.
Government prevents parking like that? Then just have the vehicle drive around aimlessly while you sleep or hang out, like a limousine. If energy were cheap enough, there'd be almost nothin you could to do stop it.
This is already a very profitable investment. Of course, it can be made more profitable through monopoly through the process of enclosure (conversion of commons to private ownership). The private water companies have even had legislation passed that gives them exclusive rights to the rain falling on your roof so you cannot collect rain water to avoid paying parasitic rents.
> ...a law was passed that appeared to give a monopoly to Aguas del Tunari over all water resources, including water used for irrigation, communal water systems and even rainwater collected on roofs.[68] Upon taking control the company raised water tariffs by 35%.
Fight selfish with selfish.
Take a look at how much a 1980s VW Westfalia is these days. It’s as absurd as house prices.
Soon, banks will prefer to give a 100 year loan for $3 million for a modest home to an investor than the same loan to an individual (because who can pay a 100 year loan, or make the monthly payment on so high a principal).