Earlier quoted context omitted.
Then renters can afford the larger rents, and after the dust settles all you've done is take money from one of the state's pockets and put it in another, no?
Yes. Seems like I typed before I really thought about it. :/ I guess what you'd want is to tax the hell out of rental properties, then put that money to first-time mortgage assistance.
Zillow seeks to sell 7k homes for $2.8B after flipping halt
621–630 of 634 posts
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#622Earlier quoted context omitted.
> companies have insufficient cash flow from rents to pay the new debt service. If they are pouring their own capital into purchases, why would there be any debt? Are the entities (companies) in scenario B actually borrowing money?
Given the current interest rate market, I think it's safe to assume they are borrowing money to purchase homes. They aren't taking out individual mortgages but I would be shocked to learn that they aren't borrowing millions through other forms of financing and then paying "cash" for homes.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#623Earlier quoted context omitted.
I've seen this argument touted frequently in housing related threads and it always confuses me. Housing prices have soared over the majority of the developed world - dozens of countries[1]. Is NYMBYism and prop13 driving the housing crisis in Luxembourg? Chile? Estonia? Do you think the entire world property market, taxation and legislation is structured exactly like in the California bay area? The whole "just zone m…
What do you mean "obviously reductive"? Why wouldn't it work?
That doesn't mean 'cheap' if demand is also increasing, but it does cause prices to be lower relative to cities that restrict supply. This is just basic economics, people twist themselves in knots to come up with reasons why the obvious supply/demand is somehow not applicable in this case.
If you allow building in capitalist markets then increased supply will reduces prices as demand is met.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#624Earlier quoted context omitted.
Decades of under-building due to restrictive zoning laws will do that.
Do you have numbers to back that up? If anything, underbuilding came from a moribund housing market after 2008, as many left the industry and it took way too long to ramp up on talent when housing began to boom again (a lack of people skilled in building houses is still a problem). But I doubt this is an under building problem at all. Look at Seattle and the area, and there isn’t a shortage of new housing projects at…
https://www.aeaweb.org/articles?id=10.1257/mac.20170388
>>We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by 36 percent from 1964 to 2009.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#625Earlier quoted context omitted.
I'm not sure what you look for is realistic. As a seller, I'd surely prefer to avoid all those contingencies, inspections, etc. - just give me the money, take the property and be done with it! As a buyer, though, I surely want something that I pay multiples of my annual income for to be thoroughly inspected, and be absolutely sure everything is ok (or at least if something is not OK I know it and it's priced in). Ris…
I get it but I’d imagine there’s an actuary table that could be put together to insure against issues in most cases. I mean the entire process today is so dated, isn’t it? A bunch of people submit offers and then 1 gets picked and then a variety of inspectors come by to make sure nothing glaring is broken. What if the intermediary scaled the inspection part (pro services are hard to scale, yes) and when you buy from…
Certified used car is under control of the certifier so their risk is minimal, and my risk is as much as I trust a big brand not to cheat me. There's a risk, but a known and identifiable one. When buying a house, there's no such control, so exposure is much bigger. Of course, if a big brand has a house and is willing to guarantee it, it'd be an attractive offer to me as a buyer, but they'd need to somehow reduce their own exposure to the risks first.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#626Earlier quoted context omitted.
Doesn't this just trickle down to the renter, who has few alternative housing options?
No. Landlords do not "produce" rooms by taking raw materials and transforming them into goods. In the current market, the rent is determined by how much the marginal renter is able to pay. Increasing the cost to the landlord doesn't magically increase the renter's ability to pay
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#627Earlier quoted context omitted.
You don't think that cost would just get passed along to the renter?
No, there's competition from landlords who own fewer properties
I mean in general the only possible solution is more housing ... which would mean
1) zoning up neighborhoods
2) make it financially interesting to convert properties and make them denser
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#628Earlier quoted context omitted.
The answer to this dilemma is to have an offset mortgage. Your savings offset the amount borrowed, and you only pay interest on the difference. Once you've saved enough to cover it, you pay no interest.
Though something to keep in mind is that offset mortgages are not an option in all locales. The US for example doesn't have them.
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#629Earlier quoted context omitted.
Your local bank can only "print" the money because that amount of money is in its account at the Fed. It's the Fed that's actually creating the money.
More modern theories that strongly dispute that assertion. And certainly the money needed to pay compound interest on the loan has not been created. (Apparently it's expected that borrowers will materialize it.) "Banks first lend and then cover their reserve ratios: The decision whether or not to lend is generally independent of their reserves with the central bank or their deposits from customers." [ https://en.wiki…
Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt
#630Earlier quoted context omitted.
the money being lent is bank money.. not printed by the fed but by your local bank.
Your local bank can only "print" the money because that amount of money is in its account at the Fed. It's the Fed that's actually creating the money.
But what if no other bank has any reserve to lend? Why then you have a banking crisis as collectively the banking system is short of reserves, at which point the Fed steps in and injects whatever quantity of reserves are necessary to make up the shortfall. So the idea that the Fed would allow a banking crisis in order to limit reserves to some arbitrary quantity is ludicrous. The Fed was created to make sure banks always had enough reserves. That's why we have a Federal Reserve system in the first place.
And in fact there are guarantees -- the bank can take a government bond and automatically borrow reserves with the bond as collateral, directly from the Fed, so the Fed stands ready to convert any bond given by the banks into reserves whenever the banks want. This is the repo market, so you don't need to borrow overnight from another bank if you have a treasury bill or bond, you can borrow your reserve directly from the Fed itself.
https://www.newyorkfed.org/markets/domestic-market-operation...
In short, the Fed controls the price of reserves -- the interest rate paid when borrowing reserves -- and it stands ready to provide banks with whatever reserves they need at the policy rate. Thus the Fed sets the price, and lets the quantity float.
You may also be interested in other nations such as Canada that have eliminated reserves and switched to a corridor system.
That the Fed doesn't care about monetary aggregates is aptly described in this FRBNY note: