Zillow seeks to sell 7k homes for $2.8B after flipping halt • Hacker News Board

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#461

Post by mywittyname » Tue, Nov 02, 2021, 7:40 PM UTC

dgfitz wrote: post #437

pwned1 wrote: post #364

Earlier quoted context omitted.

We have that in Michigan. Non-homestead property taxes. All it does is make apartments more expensive for renters. The cost is just passed on to the renter.

This, this will be actual result. "Just add more taxes" === the renters pay that delta. Scale it per property === take the average of taxes / homes, pass it along to the renter. About the only way I can the cost not getting passed to the renter is for a "the government" to set the rental prices as if the home was under a rolling 30-year mortgage, taking into account PITI. Adding a property tax on top of that ONLY to…

Well, up until renters can't afford it.

Raising property taxes on SFH rentals, but not apartments will make apartments more attractive. Sure, renting a house has advantages, but those advantages have a price, and how many renters are going to be willing to pay 40% more per square foot for a SFH over an apartment.

At some point, even an expensive mortgage is a better deal.

Apartments are great, we should incentivize apartments. They are high density and can be built in a variety of sizes.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#462

Post by davidw » Tue, Nov 02, 2021, 7:40 PM UTC

gonehome wrote: post #374

game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

This framing feels backwards to me - I thought the reason institutional investors see it as a valuable asset is because of NIMBYs constraining supply for them via local policy and obstruction. The institutional investors are a symptom of that policy, but the NIMBYs (and incentives that exist for existing owners like prop13) are the cause. Real Estate scaling supply to meet demand is in direct conflict with old proper…

This is exactly right. You show up to a local planning commission meeting or city council and it is not Blackrock there ranting about new homes being built. It's your neighbors.

Fight back: https://yimbyaction.org/2021/ - and have fun and meet cool people while doing so!

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#463

Post by gifnamething » Tue, Nov 02, 2021, 7:42 PM UTC

dgfitz wrote: post #439

cwkoss wrote: post #384

Earlier quoted context omitted.

Every person or corporation that owns more than one residential dwelling should pay increased property taxes based on the number of residential dwellings they own. This is an easy problem to legislate away, our politicians are just too cowardly to decommodify housing.

You don't think that cost would just get passed along to the renter?

No, there's competition from landlords who own fewer properties

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#464

Post by gizdan » Tue, Nov 02, 2021, 7:43 PM UTC

BizarroLand wrote: post #197

ineedasername wrote: post #159

Earlier quoted context omitted.

I'm not so sure: At current rates, assuming excellent credit, that's about $1700/month. If you're anywhere near the suburbs of a city, you can add another $500 to $1500/month in property taxes, and sometimes another $100 to $400/month in HOA fees. on that for a total pre-utility rate of ~$2400-$3600/month or roughly $30k to $43/ year. I live in the higher end of that range even though I'm in a modest home in a lower-…

I think you're overlooking married millennials, many of whom are in their late 20's-late 30's and many of whom have no children, and many of whom are two-income families. A $400k home would be quite affordable if each of them were earning an average of $24/hr or more, which isn't too crazy.

What the sibling comment said, but also, the minimum wage is still $7.25, with some companies only now pushing this up to ~$15. For many, including married couples, $24 an hour is a pipedream.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#465

Post by mywittyname » Tue, Nov 02, 2021, 7:43 PM UTC

ajsnigrutin wrote: post #406

the-pigeon wrote: post #296

Earlier quoted context omitted.

This would be easy to fix with legislative that makes property taxes much higher for investment home properties. I don't think I've ever heard of a politician even talking about that though.

I mentioned the idea in another thread... but yeah... 0% property tax on your first property and primary residence, 1% on the second, 2% on the third... Still makes it possible to own several houses/apartments (eg. summer home), but makes it impossible to do at a scale that those companies do.

Own a bunch of shell companies that own a single property each.

Real estate ownership is a mess. It can be nearly impossible for people to figure out who actually owns property if the entity buying wishes to remain secret.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#466

Post by acdha » Tue, Nov 02, 2021, 7:46 PM UTC

ajsnigrutin wrote: post #436

acdha wrote: post #422

Earlier quoted context omitted.

> even if the value goes up, they need a place to live in, and the high prices are pretty much everywhere, people actually want to live. The only ones profiting from baby boomers are their kids when they inherit the houses. This leaves out one major factor: they need somewhere to live but that doesn't mean it needs to be the same real-estate market or size. Someone who sells a house large enough to have a family in a…

This would be true, if someone old sold a house in san francisco and bought a house in bumfuck alabama... But considering that people tend to move to a few urban locations, the house prices in eg. florida got very expensive too... yes, they earn a bit more, but I don't believe that single house owners, moving from SF to FL (or wherever) are causing the housing crisis.

It's also true if you sell a house in San Francisco and move to South Florida, or North Carolina, or all of the other places millions of people do exactly what I described. Retirees don't need massive houses, to minimize commutes to downtown, or being in the best school district, which opens up many options which other people might pass up. If your goal is “on the beach in South Beach”, yes, it'll cost a fortune but if your goal is “near the beach, any beach” you have plenty of options for well under $100k.

I don't disagree that this isn't driving the housing crisis — my point was simply that it's not like many older people aren't strongly in favor of the housing market staying high until they can cash out, because for many people their home equity is the largest component of their retirement plan and they aren't interested in continuing to need to deal with the maintenance required by a single-family house.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#467

Post by davidw » Tue, Nov 02, 2021, 7:47 PM UTC

xibalba wrote: post #144

drnonsense42 wrote: post #67

Earlier quoted context omitted.

I disagree strongly with this sentiment. Clearly Zillow is not going to buy all the houses in America and turn us into serfs overnight - that is an absurd strawman. What? Zillow is far from the only actor here trying to enter this space. It's quite ridiculous to claim, as you are, that industrial-scale home speculation is doomed to fail since there are boom and bust cycles and therefore we don't need to worry. That's…

> Quant firms for the stock market in the early 90s False equivalence. The real estate business which Zillow failed is massively capital intensive, whereas figuring out a quant strategy is not necessarily so. In other words, it is very possible to go out of business before a business model is worked out (assuming there is an undiscovered, workable business model). Investors will not endlessly fund money losers, and Z…

> Also, don't YIMBY's want to eliminate SFH anyway?

No, only the zoning designation, meaning that if you want, you can build a SFH. Or a 4-plex. Or maybe a corner store.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#468

Post by rozap » Tue, Nov 02, 2021, 7:53 PM UTC

MrKristopher wrote: post #458

subsubzero wrote: post #447

Earlier quoted context omitted.

100% agree. Institutional investors are setting themselves up to be landed barons that will seek perpetual rent from working people who can no longer afford housing as the supply has shrunk and housing prices skyrocket. Oh and if these institutions fail they get bailed out by govt(they are too big to fail!). Imagine if these 7000 houses were offered to buyers, this would allow so many families opportunities to homeow…

What would you ban?

No ban, just huge property taxes for non-primary residences.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#469

Post by rozap » Tue, Nov 02, 2021, 7:56 PM UTC

mywittyname wrote: post #465

ajsnigrutin wrote: post #406

Earlier quoted context omitted.

I mentioned the idea in another thread... but yeah... 0% property tax on your first property and primary residence, 1% on the second, 2% on the third... Still makes it possible to own several houses/apartments (eg. summer home), but makes it impossible to do at a scale that those companies do.

Own a bunch of shell companies that own a single property each. Real estate ownership is a mess. It can be nearly impossible for people to figure out who actually owns property if the entity buying wishes to remain secret.

Could you get around this by requiring the residence be owned by a natural person to qualify for a primary residency tax rate?

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#470

Post by bdxn » Tue, Nov 02, 2021, 7:58 PM UTC

VBprogrammer wrote: post #403

grey-area wrote: post #375

Earlier quoted context omitted.

You’re not allowing for leverage, inflation and incredibly low interest rates. In real terms cash is losing significant money every year while assets are gaining money. Debt makes sense as long as you have a margin of safety and can multiply the impact with leverage. IF you believe inflation will be significant over 30 years say, and can lock in a low rate, it is better to go with a longer term.

People use all kinds of accounting tricks to convince themselves that some purchase or other makes financial sense. Trading in their perfectly good 2 year old car for a brand new one, buying on finance when they could buy a cheaper one outright. I'm sceptical that it ever pays off that way.

It's not an accounting trick; it's historically low rates. At the beginning of 2021 would you rather have paid 350k cash for a house or taken a 30 year mortgage and invested the remaining 80% (after a 20% down payment) into the sp500? Your house might be up around 10-25% depending on the market making your 20% stake worth more. and your 280k cost-basis that you invested would be worth 350k. You'd have already earned your down payment back before the end of the year.

If you think the return of your investments will >= 3% mortgage rates then you're losing money by not taking on debt (albeit with a bit of risk).