Hacker News Reader

Comment by dbspin | Hacker News Reader

This would be true were private equity not buying up housing stock. That being the case income is now to some extent detached from housing prices.

[1] https://www.washingtontimes.com/news/2024/mar/15/in-shift-44...

View on HN

These companies literally say in their SEC filings that "this is profitable only because municipalities artificially restrict supply; allowing more housing to be built would be a material threat to our business":

“We operate in markets with strong demand drivers, high barriers to entry, and high rent growth potential, primarily in the Western United States, Florida, and the Southeast United States.” [0] (emphasis mine)

"The continuing development of apartment buildings and condominium units in many of our target markets increases the supply of housing and exacerbates competition for tenants." [1]

You have the power to wallop the private equity housing buyup strategy by building more houses! Building fewer in order to spite them is literally giving them exactly what they want.

[0]: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001687229/a154763...

[1]: https://www.sec.gov/Archives/edgar/data/1562401/000119312513...

Washington Times is not a reliable source, and that 44% claim has been thoroughly debunked: https://www.housingwire.com/articles/no-wall-street-investor...

private equity is no different than any other buyer in a diverse market of buyers here. it sounds bad but they are just bidding like any other buyer

This is of course true, and the extreme aversion to private equity buying houses versus any other investor such as a person buying a second house to rent out, has puzzled me.

Those small time landlords have been the worst landlords I have ever had. Give me a large corporate landlord which knows that laws exist and at least tries to follow them over the greedy, ignorant, and desperate small-time landlord any day.

As someone who has lived in both, I can't agree. The small time landlords have differed between incredibly kind and deeply unreasonable, but they've all charged under market and responded to issues with their properties in a timely way. I've hit brick walls even attempting to contact owners / get building management to respond with institutional ownership. Both your experience and mine however are anecdotal and while persuasive to us individually, don't evidence the issue one way or another.

This story (as I said in a reply to the parent comment) is bunk, but institutional buyers do have a significant advantage over regular people in the form of access to cash. You have to get a real estate agent, find a bank that will lend to you, get your financial info together, probably have an in-person meeting, hope you get approved for a mortgage, and finally close the sale. Some junior trader at Blackstone can just wire the full cash price of the home and have the paperwork signed the same day.

They're not constrained by income as an ordinary purchaser would be. So they're not at all like an ordinary buyer. Further, if private equity buys to rent at scale they can fundamentally alter the availability and pricing of housing in a market. These firms effectively collude to raise home prices.

Investors and Housing Affordability FEDERAL RESERVE BANK OF ST. LOUIS (2020) https://s3.amazonaws.com/real.stlouisfed.org/wp/2020/2020-04...

Relationship between rents in NYC and ownership concentration https://www.cesifo.org/DocDL/cesifo1_wp8864.pdf

Consolidation of rental market bt private investment firms https://journals.sagepub.com/doi/10.1177/0308518X221135612

The Impact of Institutional Investors on Homeownership and Neighborhood Access https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4554831

Algorithmic collusion in the housing market https://apnews.com/article/algorithm-corporate-rent-housing-...

I'm so tired of people parroting this argument as if removing PE would solve the housing crisis. PE bought something like ~15% of new homes in 2024 (using the metric "flipped" is just a dumb way to get a headline), which turned around mean 85% of new homes were purchased by regular people.

But even that doesn't matter. Because PE is just investors, and guess what, the regular people buying the other 85% are investors too.

I live in an area where there is almost zero PE owned homes, and guess what, home prices are still exploding. There are still bidding wars and still crunchy moms chaining themselves to dilapidated warehouses to stop new builds from going up.

Comparing individual investors to managed funds isn't useful. The amounts involved, methodologies employed for return and potential for collusion aren't comparable. I can't speak to your market, but here in Ireland private equity (or vulture funds as they're known) have purchased 46% of new homes since 2017 [1], which has enormously heated up the housing market.

The fact that the housing crisis is global evidences the impact of private equity - especially purchase to rent and purchase to hold. Regardless of the demographics of a given country we have simultaneous house price explosions transnationally, which are detached from wage increases.

[1] https://www.businesspost.ie/news/revealed-how-many-apartment...

The useful distinction is between speculators and homeowners. The distinction between private equity and individual speculators is not so useful. The latter also collude and vote in their investment interest.

Personally I think what has been happening globally is that members of governments have been learning collectively how to manipulate the housing market. It seems like a win-win situation that makes (almost) everyone happy. Except of course for renters. They will push on whatever levers they have until it breaks again.

Reply on news.ycombinator.com