Wall Street scooped up a third of Texas single family homes sold last year (2022)
therealdeal.com
therealdeal.com
The idea of houses being owned by people will decline over time until it's only for the mega wealthy - everyone else is a renter.
The companies building up their portfolio of residential housing include Blackrock Capital and JP Morgan - say hello to your new landlords.
The governments could do something about this but they won't.
It's coming to Australia too - the Treasurer Jim Chalmers has met with these corporate mega landlords and he has explicitly stated he is working to "clear away the barriers to investment".
The socialists in Berlin are working to stop the corporate megalandlords - filthy socialists - all they think about is "the people" - no-one consider the needs of Blackrock Capital and JP Morgan...
High interest rate policy isn’t fighting inflation it’s just transferring wealth upwards even more.
Can I get a source on that? As an Australian this affects me.
https://ministers.treasury.gov.au/ministers/jim-chalmers-202...
"addressing barriers to investment within the housing sector;"
Read the list of attendees.
While there is balance, overall it's more; investors or community, choose one.
You are assuming from the attendee list that this is about these banks and super funds outright owning the housing asset whereas a more reasonable interpretation is about those organisations funding construction and financing of the assets for private ownership.
Housing supply is a massive issue in Australia. This takes investment from developers to buy bulk land, subdivide, permit, build and then sell to families. Mom and pop don't do this...developers do. We need more of it and this is what the government is trying to help.
The government is trying to "grease the wheels" of this process by supporting investment to create more housing supply. I don't particularly support the current federal government but assuming they are plotting a corporate takeover is misguided.
"Assuming they are plotting a corporate takeover" is hardly misguided. It's an already-well-trod and completely-legal path for banks and developers to take, and they stand to make money hand over fist for it. And if you're saying that no-one in government would support them in this then I have a bridge to sell you.
If anything, assuming they wouldn't do it is misguided.
Is here. Was having an ethics chat with a friend involved with one group and their main point is this makes it better for renters as corp owners give long term stability for a 'home' vs private investors who turnover property.
That was the only point that resonated to me but overall I see this as a real loss for society to take away home ownership from people, or make it so difficult. There something in most peoples core that wants to own their home.
Given the pain points it's inflicting on so many people it's amazing how little political reform there has been other than the first home buyers grant, which was really more about economic stimulation that helping property ownership.
Overconcentration of ownership doesn't benefit society. Not only the extremes of monopolies or oligopolies, but generally shifting away from a single person being able to own and run a business. It feels we are regressing from last centuries significant gains here. Its particularly bad in downstream areas like abattoirs where 4 companies control most of the industry.
Bill Gates might only own 300,000 odd acres now, which is huge but hardly taking over the industry, but its growing and the historical norm is for this to concentrate over time and something we should actively avoid so we dont end up like Scotland or other places where a handful own the majority, which I think will happen if its not actively worked against.
The home ownership still belong to the people. It's just that some people are more people than others
I can't take this seriously. Given who writes the rules the end result will always be "better long term stability for whoever can afford it" - if the corporate owner things they can get more money then they'll kick out the current renter by raising prices again - like they're doing with the private market now.
And it is not all upside. Changing from one "owned" "home" to another has high transaction costs compared to renting. This has all kind bad consequences: people wind up living in the wrong shape/size of house for their family size. It makes it expensive to move to follow economic opportunity.
And then there is all the downside from having such a large portion of your savings tied up in a single, often highly leveraged, asset. Nobody would let you lever up your retirement portfolio 20:1 on any other kind of asset. And home ownership turns otherwise reasonable adults into NIMBYs.
As for the demise of home ownership, the last few decades have seen it fluctuate in a relatively narrow band. See these charts: https://dqydj.com/historical-homeownership-rate-united-state... https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
I’m astonished that you’d think the impediment to your proposals would be the left.
Centrism discourse has run amok.
Elite Democrats, Republicans and members of the capital class are very experienced at fanning the flames of that divide so it continues to distract the working class from a historic multi-decade privatization and consolidation of wealth which these real estate acquisitions are just the next leg of.
America has fallen for that trick hook, line and sinker quite frankly, more so than seemingly any other country on earth
The point isn't that there are no culture war issues that matter - for example I'm pro choice and pretty disturbed by recent right wing activity on that front
It's that the culture war is basically unwinnable and if people fixate on that to the exclusion of economic issues, everyone but Blackrock and Goldman Sachs will end up owning nothing.
Blackrock is laughing its way to the bank every time you start a flame war with some imaginary bigot. Classical Marxists, classical liberals, hell classical conservatives have actually been making this point for years and they've all been called bigots for it
If you start a conversation by encouraging people to view my basic civil liberties as a "trick," there is no hope of elevating it. I won't bother dignifying you by responding further.
According to the source data for the article:
42% OF SINGLE-FAMILY PROPERTIES PURCHASED BY INVESTORS WERE CONVERTED TO RENTALS
45% WERE SOLD BACK (flipped)
So they are in mostly back on the market.
This is where the data from the article is from:
https://cdn.nar.realtor/sites/default/files/documents/2022-i...
And if most people end up renters, they've killed their middle-class allies against a robust LVT among home owners.
Wall St. invests in homes for the same reason they invest in anything: because they think the price will go up. Housing policy in the US seems designed around the idea that housing prices should only go up, since it’s the largest asset of the majority of voters.
If we want to fix the housing crisis, housing will have to become a bad investment, and that will fix the Wall St. problem too.
By whose definition? Certainly the massive suburban expansion in the 60's and 70's resulted in affordable homes to young Baby Boomers entering the market and also to wealth appreciation for the same.
If we built more housing, prices would go down for millennials, and those boomer’s investments wouldn’t look as good.
One way of putting it: pick a number of hours the average person should have to work over time to buy a house. If you want that number to stay the same, housing can only appreciate as quickly as wage inflation.
What we have is the result of decades of making owning a home the main way to accrue wealth and then giving homeowners outsized power.
Wall Street is just following the money.
Having said that, the major banks shouldn't have got bailed-out either. Smaller banks that were responsible would have had the opportunity to grow when the larger banks faltered due to their bad decisions.
As another commenter here quipped, the first houses Wall Street bought were in Congress.
It absolutely does by offering 30 year fixed rate loans with no prepayment penalty and all the underwriting waivers for people to be able to pay more than they can afford, such as no money down and 5% down mortgages.
Just like home (land) prices in certain parts of the country.
But the prices in the overall market, just like “Wall Street” is backed (and juiced) by the federal government.
I remember as I approached 20, I was watching the real estate market weekly and bought my first property at around 22 (which felt two years later than I wanted). I expected that the market would grow slowly, but that aforementioned control over the home was the main factor for me at that time. Now I bet it feels like you buy ASAP or get priced out of the market for the duration of your working life.
The best way to fix the problem is to keep interest rates high and work against inflation.
The last 25 years of essentially free money has people with their heads screwed on backwards.
Everyone said it was a bad time to buy a house.
It was a great time to buy a house! You know when it's generally a bad time to buy a house? When everybody is buying a house! It's like the stock market. When the market crashes those are the best times to pick up stocks on the cheap. Same with houses. That's how you make money.
Do they believe that eventually these will be sold back to single families to build equity?
Do they think that, the primary asset which has driven middle class wealth growth for ~100 years is now perfect for liquidating into - what?
Is the goal to make everyone a renter forever?
And this article was written when rates were still stupidly low.
I know multiple people who have secured their life doing that, though with smaller homes (and of course, they prefer duplexes, but the right SFR works).
And, i don't know that many people!
Because gambling on single family appreciation has been a great winning move for decades now, but if you factor out that almost all SFRs have negative cash-flow.
Well, they have negative cash flow but people endure that because of the leveraged appreciation.
The people I know that are doing this seem to do well.
I do not know if that is because of the low mortgage rates up until last year or if they have some other secret, like only buying houses they can get a positive cash flow from.
But appreciation cannot go on forever or each property will be infinitely expensive and nobody will be able to afford them. It is a dance that will end at some point.
The biggest hurdle now is the jump from renter (or living with parents) to homeowner; there used to be "starter homes" that could get you on the treadmill but even those are quite high.
Once you're on the treadmill it's not that bad as house prices in an area tend to be in lockstep, but that first step can be a big one.
Land can be subdivided as lifestyles change. A house can be extended or rebuilt with a second storey. An apartment can generally be updated internally on the same footprint, but not much more. Institutional buyers would be well positioned to redevelop a house to semi-detached dwellings, or apartments, or retirement facility.
Here, over 30 years to mid-2022, houses rose 453%, units 306%. In the last ten years only, that same change was 82% for houses, 47% for units.
Buy a lot, pace it as a parking lot which earns enough to cover taxes, and wait 10/20 years.
You buy homes in a region if you think the population will rise, interest rates will be relatively low, job prospects will be stable, etc which will lead to increasing home values.
Whether they want to profit by flipping the homes or by renting them, I don't know. But it's a bullish bet on texas home prices by people who could politically influence human migration policy ( both domestic and foreign ), fed policy/interest rates and even jobs/economy. Meaning they can place the bet and pull the strings to make the bet pay off.
2. Corner the housing market
3. The population keeps growing but the restrictive zoning means more housing doesn't get built
4. More people competing for the same housing stock means prices increase
Whether they keep the housing forever or not isn't what they're thinking about, they can decide later.
From the original study: "We defined institutional buyers as companies, corporations, or limited liability companies (LLCs)."
It's very common for mom and pop landlords to buy homes through LLCs for liability protection.
It would be more fair to say "up to a third of Texas single family homes were bought as investments", rather than say "Wall Street" which infers some massive PE firm bought them up.
If you go to Canada, it's closer to 70% of recent purchased in the lower Niagara region of Ontario.
"Investors own 77 per cent of new condos in Waterloo region"
https://kitchener.ctvnews.ca/investors-own-77-per-cent-of-ne...
And though I think you acknowledge this point, but a lot of people with mom and pop landlords don’t realize that mom and pop are definitionally real estate investors.
As a side node, for mom and pop landlords this is more of a myth than actual liability protection.
It's arguably more useful to keep various properties separate so you can sell them easier than anything else. Maybe some liability protection if the LLC is named such that people don't realize you own it, but any actual liability lawyer will see right through it.
No, I did not bet on this though, I bought my apartment in 2021 since... You know, I needed a place to stay and felt at the moment the inflation was bound to hit hard.
Say it ain't so!
People have been saying this for next to forever and their concerns are always pooh-pooh'ed.
Seriously, if the free market doesn't work for the housing market, one of the most transparent and elastic markets that exist, then what does it work for? I find it hard to believe Americans are seriously proposing limiting the property one can buy. After all, "Wall Street" is a useful fiction - at the end of the day it's just people.
...But to refer to the housing market as "elastic" just strikes me as patently absurd.
Unless I'm deeply misunderstanding what you're referring to, elasticity requires that the product be fungible and the demand be non-urgent. Every single person needs a place to live, which means that in many, many cases, the demand is extremely urgent. Furthermore, a house in Houston is not at all interchangeable with a house in Wink, TX (a random town an hour west of Odessa I just picked out on a map). Even two dwellings of comparable price within the same city may not be at all interchangeable due to different locations, amenities, etc.
All of this just goes, however, to prove your broader point: that the free market doesn't work, because there isn't one.
I hate to be conspiratorial but there are times when I think this market is so irrational that there is some kind of larger force at play. It's not like the pandemic created more demand for homes -- if anything (and I hate to be morbid about this) there should be fewer buyers in the market and yet everything continues too tick up. And on top of that the rental market is completely irrational as well.
It's really hard not to give in to the idea that the market for housing isn't being manipulated by larger forces.
It can issue as many dollars as it wants at will. There is nothing to stop it except the destruction of the global economy if it becomes too reckless. See Zimbabwe Hyperinflation to see what happens when the central bank becomes unhinged. My friend still has a 100 trillion dollar note on his fridge from that period.
Prior to May 2020, M1 included currency in circulation, demand deposits at commercial banks, and other checkable deposits.
After May 2020, the definition was expanded to include other liquid deposits, including savings accounts. This change was accompanied by a sharp spike in the reported value of the M1 money supply."
Property taxes cannot be set too high in some areas, though. For example, it is pretty common in Minnesota for families to own a primary home in the big metro areas and a second vacation property in northern Minnesota on a lake, to the point where it is basically an institution in Minnesota. It also has a very positive effect on the tourist economy in northern Minnesota. Since families cannot claim the homestead exemption on the vacation properties, property taxes cannot be set too high otherwise the tourist economy would collapse, so the city, county, and state administrations need to walk a fine line on non-homestead property tax amounts to prevent institutional investing in homes while still enabling families to own vacation properties.
Banks running rampant purchasing assets from distressed sellers seems as American to me as apple pie.
Wallstreet buying houses is a continuation of the on-going wealth entrenchment that betrays the ideal of fluid social mobility.
I'd guess more generally people are playing that game purely based on borrowing rates -- if they think they'll be even a bit lower in 12 months, it might make financial sense to wait.
Interest rates? Good point. But I’d jump now, refinance later.
I’ve been burned more often waiting than getting in too soon.