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Comment by toomuchtodo | Hacker News Reader

People who need housing are harmed. Stronger controls around housing investment is the problem. People will say "build more" but aren't mindful that we're 15-20 years behind building housing, and it'll take years, if not a decade, to catch back up to make housing affordable through increasing supply. Capital can always move faster than the physical world, hence the need for capital controls.

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How are people who need housing harmed by renting the housing?

My best possible understanding is that it helps people that need housing. In particular, these are single family homes, which usually require a 20% down payment in order to have access, unless somebody rents them out. The best schools and public amenities are hidden behind that 20% down payment, excluding those with less wealth. Those with more wealth are still able to rent if they want to, but this option to rent opens up housing to a lot more.

Now, if the only people that you care about are those that can afford a 20% down payment, and you want to maximize their ability to exclude people, I could see how this might "hurt" them, if they will only consider housing when there are not renters. But that's an odd definition of "people."

Housing that is owned by corporations have no price controls. They will charge what the market will bear [1] [2] [3]. Rent increases can and do outpace income increases. Housing owned by corporations is housing that can't be owned by homeowners; when owned by homeowners, they are insulated from rental price increases due to a fixed mortgage.

Your 20% down payment assumption ignore 3-5% down FHA mortgages, accessible to anyone who can fog a mirror (based on their underwriting guidelines). But no mortgage is obtainable if your can't meet the debt to income requirement [4], which most can't because the price of real estate has accelerated so far beyond what wages will support.

Certainly, not everyone wants to be a homeowner. But if you wish to a remain a renter, there is nothing preventing your rent payment from going up until unaffordable, and you end up homeless [5].

[1] https://www.moodys.com/web/en/us/about/insights/data-stories... ("Spending 30% of income on rent is the new normal in many US metros")

[2] https://www.nytimes.com/2024/01/25/realestate/rent-prices-ho... | https://archive.today/txKrg ("A new Harvard report says 22.4 million households in the United States now spend more than 30 percent of their income in rent, with 12.1 million spending more than 50 percent.")

[3] https://www.npr.org/2024/01/25/1225957874/housing-unaffordab... ("Housing is now unaffordable for a record half of all U.S. renters, study finds")

[4] https://www.cbsnews.com/news/homes-for-sale-affordable-housi... ("Homes "unaffordable" in 99% of nation for average American")

[5] https://www.npr.org/homelessness-affordable-housing-crisis-r... ("Homelessness in the U.S. hit a record high last year as pandemic aid ran out")

> Homelessness in America spiked last year, reaching a record high, according to an annual count that provides a snapshot of one night in January. The report, released today by the department of Housing and Urban development, found more than 650,000 people were living in shelters or outside in tents or cars. That's up a whopping 12% from the year before.

> To advocates, it hardly comes as a surprise.

> "We simply don't have enough homes that people can afford," says Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness. "When you combine rapidly rising rent, that it just costs more per month for people to get into a place and keep a place, you get this vicious game of musical chairs."

(was a contract mortgage underwriter for a brief stint a lifetime ago, still very familiar with underwriting guidelines [Fannie, Freddie, FHA, USDA, VA] from a residential mortgage perspective, yet another tool to solve problems with when possible)

> Housing that is owned by corporations have no price controls. They will charge what the market will bear

That has nothing to do with corporate ownership, that is all housing in the US except for the tiny tiny fraction of deed-restricted LIHTC financed means-tested housing and the minuscule amount of public housing left in the US. Corporations can own deed-restricted means-tested price controlled housing, but that's not SFH.

So there's zero change in profit seeking when corporations own homes versus anybody else owning homes. The entire real estate industry focuses on maximizing property values. Homeowners sell based on maximum price, there are zero price controls on any of it. Plus, primary residences get capital gains tax exemptions that corporations do not, further incentivizing homeowners to profit even more than corporations.

> Housing owned by corporations is housing that can't be owned by homeowners.

I think this makes it clear, you only consider the homeowners the "people" and view corporations as competitors in the housing market. I think we should have a broader view and consider the interests of renters too, as full people.

Those 3.5% down payment mortgages have additional mortgage insurance payments that are outrageous and drive up the mortgage price considerably.

I think we just fundamentally disagree; I don't believe institutional ownership of some classes of residential real estate should exist and there should be rent control when needed, when supply simply will never meet demand. The evidence in my citations above demonstrate why. Housing > profits, it's really that simple. Institutional investors can find another asset class for exposure.

Every single home owner is an investor, and often it is there primary asset, that they put all their effort into maximizing financially, as much as possible.

We do fundamentally disagree, I do not view homeowner profits as more virtuous than corporate profits, and in fact corporate profits will be less than resident homeowner profits, due to tax incentives.

Housing is more important than profits, but corporate owned single family homes actually result in less profit than the current homeowner-run system.

Do you support rent control? You're making the argument the fight is between homeowners and renters, but you're not addressing landlord profiteering. How will you ensure rent is affordable for renters (as I've shown, it clear isn't for 30-50% of Americans) if increasing supply does not increase affordability?

This is a completely unrelated issue, but I do support rent control. Rents were completely unaffordable before the corporate story entered the picture, and at only 11% of the SFH market, it's not the main issue, and perhaps most importantly, nobody ever complained about corporate ownership of apartment buildings. Rents are completely unaffordable even in places that have rent control. The only affordability measure that works is providing enough housing to meet people's desire to live in a place.

I ask you, what are homeowners' profits virtuous but corporate profits not? The corporate ownership of SFH is a sign that there are huge profits in owning homes, not the cause of it.

Homeowners should be taxed on their primary residence gains just as corporations should be. I am fully in favor of removing the primary residence tax exemption.

We can agree on this! Would you be in favor of changing the system such that homeownership is no longer such a profitable endeavor, where it leads to unaffordability for future generations? This is the core of the problem in my view, and corporate ownership is a way of distracting people from taking political action on the core problem confronting our housing situation.

Of course! Housing should be housing, not a pyramid scheme asset class.

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