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19% of California houses are owned by investors

ocregister.com

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Re: 19% of California houses are owned by investors

#121

Post by tptacek »

grafmax wrote: post #120
tptacek wrote: post #118

Earlier quoted context omitted.

You're not answering the question I'm asking. I'm not looking for a treatise. I'm just asking how investors keeping vacant supply off the market could make money in the face of increasing supply. They have to pay to hold the houses. They're not earning income from the houses (they're vacant). Supply of the houses is increasing. Fill in the "???" before "profit".

If investors keep houses off the market that artificially reduces supply. All they need is for the increased prices to outweigh any price decline that comes from increased supply. This can happen with or without vacancies for example by having pricing power in the rental market. House vacancies aren’t my central argument however - they are a symptom of the wealth distribution problem causing our housing crisis.

You didn't answer my question, you defined it away. Obviously, the premise of investors driving housing costs up is that they're artificially reducing supply. Allowing new housing construction increases supply. The question: assume steadily increasing supply --- how are investors making money on this scheme?

It's fine if you just don't have an answer. But then my point is: nobody seems to have an answer about how this is supposed to work.

Re: 19% of California houses are owned by investors

#122

Post by brentm »

taeric wrote: post #35
xoqem wrote: post #10

For anyone who didn't click into the article, the headline may be misleading without the sub headline, which currently is "Relatively speaking, California is not a hot spot for housing investors". The map graphic shows that 19% is lower than other large states (e.g. 22% in Texas, 21% in Florida, 20% in New York). And lower than other west coast states generally (22% in Washington and Oregon, 25% in Nevada, and 23% in…

It would probably be easier to understand if worded the other way? 81% of California houses are owner occupied.

But how is that going to trigger someone?

Re: 19% of California houses are owned by investors

#123

Post by esseph »

bpt3 wrote: post #110
grafmax wrote: post #58

Earlier quoted context omitted.

And yet 20% of the market being captured by those who already have a home, while so many go without one, indicates a shortcoming in our society’s ability to distribute resources from those who don’t need them to those who do.

20% of CA residents are homeless? Citation please!

That's not at all what they said.

Re: 19% of California houses are owned by investors

#124

Post by insane_dreamer »

mystraline wrote: post #96
yojo wrote: post #72

Earlier quoted context omitted.

I’m one of those mom and pop owners. The decent ROI on renting out my starter home financed me adding an ADU to the lot, which I also rent out. I’ve owned the house long enough that I’ve had several tenants churn out when they buy their own houses. This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive…

You're completely off the mark on this, and speaking like a landlord. > This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock. First, when you have a renter, your payment is the "mortgage + tax liability + chunk of profit usually 25-50%" Nobody, except for…

> "mortgage + tax liability + chunk of profit usually 25-50%"

25-50% is absurdly false.

We own a second home which we've rented out for years (wasn't the original intention, but anyway ...). The rent covers mortgage, taxes, and upkeep. Profit is minimal, less than 10%. Once you factor in eventual renovations, like replacing the roof, floors, etc., there is no profit at all, or very little.

Re: 19% of California houses are owned by investors

#125

Post by grafmax »

tptacek wrote: post #121
grafmax wrote: post #120

Earlier quoted context omitted.

If investors keep houses off the market that artificially reduces supply. All they need is for the increased prices to outweigh any price decline that comes from increased supply. This can happen with or without vacancies for example by having pricing power in the rental market. House vacancies aren’t my central argument however - they are a symptom of the wealth distribution problem causing our housing crisis.

You didn't answer my question, you defined it away. Obviously, the premise of investors driving housing costs up is that they're artificially reducing supply. Allowing new housing construction increases supply. The question: assume steadily increasing supply --- how are investors making money on this scheme? It's fine if you just don't have an answer. But then my point is: nobody seems to have an answer about how thi…

Pretty sure I answered your question. As long as scarcity effects outpace price declines investors are incentivized to retain vacancies, and it’s not just vacancies but pricing control over rent. The real housing market isn’t effectively modeled by your simplistic abstraction. If you look at a YIMBY darling like Austin, for example, investor owned housing has actually grown, as well as homelessness, despite a modest decline in median price.

Re: 19% of California houses are owned by investors

#126

Post by tamimio »

breakyerself wrote: post #42

People don't like being told that the problem is a housing shortage.

Not entirely, the major factor is banks' credit creation. When any person can go and take a loan that was created from nothing (literal digits created by your bank), and sometimes based on another "speculated value" of a house you own, you will flood the market with an exponential rise of demand that will ALWAYS be higher than the supply. To solve the housing issue you have to follow the root cause, and always follow the money: first, halt credit creation, disincentivize it (ban interest), no speculation values. Second, make housing a depreciated asset, like cars, etc. Without these two, housing markets will never be solved. The thing is, the government knows that, but it's in its interest to keep the prices up, because that will mean more paid taxes! Which is why they fought WFH and created this hybrid model, to keep people around urban areas and keep prices up. I think Canada even admitted it later -I remember I read it somewhere. It's a multi-dimensional issue and the only losing party here is the average middle class person.

Re: 19% of California houses are owned by investors

#127

Post by tptacek »

grafmax wrote: post #125
tptacek wrote: post #121

Earlier quoted context omitted.

You didn't answer my question, you defined it away. Obviously, the premise of investors driving housing costs up is that they're artificially reducing supply. Allowing new housing construction increases supply. The question: assume steadily increasing supply --- how are investors making money on this scheme? It's fine if you just don't have an answer. But then my point is: nobody seems to have an answer about how thi…

Pretty sure I answered your question. As long as scarcity effects outpace price declines investors are incentivized to retain vacancies, and it’s not just vacancies but pricing control over rent. The real housing market isn’t effectively modeled by your simplistic abstraction. If you look at a YIMBY darling like Austin, for example, investor owned housing has actually grown, as well as homelessness, despite a modest…

Your rebuttal here is a market in which prices declined.

You're clearly trying to route around the question and answer some broader question I didn't ask about how the overall housing market works. I'm not interested. I asked: how can investors make money on this? Your answer is: they don't; they lose money, but I guess do it anyways in order to twirl their mustaches.

Re: 19% of California houses are owned by investors

#128

Post by tptacek »

taeric wrote: post #115
dgrcode wrote: post #109

Earlier quoted context omitted.

I think the 81% group would also include unocuppied houses, right?

I have to confess I'm not sure. :( Searching for vacancy rate shows that is around 9%. I would expect these are owned by someone, though, such that I don't know why they would not be counted as investments? Doing the same search for "owner occupied" shows only around 50%, though. I don't know where to get the data that teases apart housing units and standalone houses.

Where are you seeing 9% vacancy rate in California? According to FRED, the current rental vacancy rate in CA is below 5, and the current home vacancy rate is below 1.

Re: 19% of California houses are owned by investors

#129

Post by tptacek »

grafmax wrote: post #58
xoqem wrote: post #10

For anyone who didn't click into the article, the headline may be misleading without the sub headline, which currently is "Relatively speaking, California is not a hot spot for housing investors". The map graphic shows that 19% is lower than other large states (e.g. 22% in Texas, 21% in Florida, 20% in New York). And lower than other west coast states generally (22% in Washington and Oregon, 25% in Nevada, and 23% in…

And yet 20% of the market being captured by those who already have a home, while so many go without one, indicates a shortcoming in our society’s ability to distribute resources from those who don’t need them to those who do.

Renting a home out isn't "capturing" the house. Rental housing is a desirable product. Lots of people don't want to own, be locked into a particular house for years to offset transaction costs, and to own all the downside and maintenance risk of the property.

Re: 19% of California houses are owned by investors

#130

Post by taeric »

tptacek wrote: post #128
taeric wrote: post #115

Earlier quoted context omitted.

I have to confess I'm not sure. :( Searching for vacancy rate shows that is around 9%. I would expect these are owned by someone, though, such that I don't know why they would not be counted as investments? Doing the same search for "owner occupied" shows only around 50%, though. I don't know where to get the data that teases apart housing units and standalone houses.

Where are you seeing 9% vacancy rate in California? According to FRED, the current rental vacancy rate in CA is below 5, and the current home vacancy rate is below 1.

Hmm... I thought I just took the basic google, but that seems to give a different result now. Maybe I just fat fingered copying into here, not sure.

I know that my main assertion there was it was a relatively lower number. Adding it to the 19 of this story would still leave owner occupied higher than 50ish. Such that I clearly need help to put a lot of this together.

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