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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#41

Post by thephyber »

jack_tripper wrote: post #5
christkv wrote: post #4

I'm as pro capitalism as it comes but private equity should not be allowed to operate in the consumer housing market. They can develop and sell houses but cannot hold is my point of view.

Same. I remember growing up in the 90s, after the fall of communism, hearing that capitalism beat communism because in capitalism you can own things. MFW I now live in capitalism and can't afford to own anything.

The only reason capitalism works is because it turns everything into a struggle for existence, which is the best motivator. Every company is forced to compete (assuming there is no moat created by politics eg. Intellectual Property or contract law) or the company will go under.

But it also means that the people who can’t compete in this type of Darwinism only survive because of the empathy of others who do (whether that be family/friends, politics, or charities).

I’m worried about the breadth of industries that PE has infected in the US.

Re: How private equity is changing housing

#42

Post by thephyber »

ReptileMan wrote: post #8
jack_tripper wrote: post #5

Earlier quoted context omitted.

Same. I remember growing up in the 90s, after the fall of communism, hearing that capitalism beat communism because in capitalism you can own things. MFW I now live in capitalism and can't afford to own anything.

One of the things communism did right was housing - in the Eastern Bloc home ownership was above 90%. The quality was not great, not terrible. But bad shelter is infinitely better than no shelter. I also think that it also excelled in K12 education. Whether because the german style system that was common in europe pre WWII was just left alone - I don't know. But until the mid 90s we really didn't had the school refor…

What does “home ownership” mean in a country where there is no private property?

Re: How private equity is changing housing

#43

Post by ReptileMan »

ryuhhnn wrote: post #26
ReptileMan wrote: post #20

Earlier quoted context omitted.

Except whenever you have inelastic demand or supply you are no longer in a free market.

One could argue that PE is both A. ) the ultimate form of capitalism and B. ) explicitly creates inelastic demand. A truly free market will always succumb to dominating forces that create the inelasticity (or at least that's what history has consistently proven).

That is the point. Capitalism has never included free markets in its honest definition. They are nuisance for the capital owners. But when they are forced to participate in the free market - then a big part of the surplus generated by the companies is captured by the society. See that was Marx error - instead of socializing everything, he should have just made sure that no monopolies, monopsonies and enough state capacity exist to make the unfree markets free. Send this message back in time and we will save couple of hundred of million people.

Re: How private equity is changing housing

#44

Post by djoldman »

> The United States is short 4 million housing units, with a particular dearth of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings

The number cited links to here:

https://upforgrowth.org/apply-the-vision/2023-housing-underp...

Which has this as the report:

https://upforgrowth.org/wp-content/uploads/2023/10/2023_Hous...

The number is driven by this definition:

> Missing Households. Households that may not have formed due to lack of availability and affordability, e.g. households with children over 18 years of age still living with their parents or individuals or couples living together as roommates at levels exceeding historical norms.

Re: How private equity is changing housing

#45

Post by Loudergood »

ReptileMan wrote: post #20
ryuhhnn wrote: post #10

Earlier quoted context omitted.

Not to be pedantic, but this would make you not so "pro capitalism as it comes". The ability to develop and sell houses, but not hold them (in service of rent-seeking) runs contradictory to the very core tenant of capitalism, which is private property and free markets. Socialism and supply/demand-markets are not mutually exclusive; it sounds like you're more amenable to a socialist or mixed-market system than you giv…

Except whenever you have inelastic demand or supply you are no longer in a free market.

Capitalism actually prefers to control the markets.

Re: How private equity is changing housing

#46

Post by phkahler »

ryuhhnn wrote: post #10
christkv wrote: post #4

I'm as pro capitalism as it comes but private equity should not be allowed to operate in the consumer housing market. They can develop and sell houses but cannot hold is my point of view.

Not to be pedantic, but this would make you not so "pro capitalism as it comes". The ability to develop and sell houses, but not hold them (in service of rent-seeking) runs contradictory to the very core tenant of capitalism, which is private property and free markets. Socialism and supply/demand-markets are not mutually exclusive; it sounds like you're more amenable to a socialist or mixed-market system than you giv…

>> Not to be pedantic, but this would make you not so "pro capitalism as it comes". The ability to develop and sell houses, but not hold them (in service of rent-seeking) runs contradictory to the very core tenant of capitalism, which is private property and free markets.

I think you're right. A lot of people confuse capitalism for working for a living - because that's what capitalists want the middle class to think it is. Capitalism is really about getting capital to work for you so you don't have to. Building and selling homes is a form of working. Holding homes for rent is capitalism.

Re: How private equity is changing housing

#47

Post by EricDeb »

gjsman-1000 wrote: post #40
stock_toaster wrote: post #29

Wild idea... Maybe tax wealth instead of income? Tax break on single home ownership, but significantly increased tax on multi-home-ownership? It would be interesting to see comparisons between PE ownership in markets with property tax vs markets without.

Wealth taxes don't work because wealth gets extremely fuzzy. For example, unsold stock that I bought 15 years ago; and then got a loan against. I'm wealthy... kinda? But I didn't sell the stock; I have unrealized gains, and you shouldn't tax me beyond income tax on borrowed money? Okay, tax me on my unrealized gains then - but then 2008 repeats itself, stock goes down 40%, do I get a refund? Of course not, I only pay…

What about a law where you couldnt use over a million dollars (to exclude normal people) a year of any asset as collateral for a loan unless you paid capital gains on it at its current valuation?

Re: How private equity is changing housing

#48

Post by FireBeyond »

oldjim798 wrote: post #13
mwkaufma wrote: post #3

Summary: they're pulling "starter homes" off the market, predominantly in nonwhite neighborhoods, and skimping more on maintenance/landscaping.

"Skimping on maintenance" is capitalisms main and really only play. So many issues (housing, transport, utilities) are because "the market" won't ever pay to maintain.

Agreed. When I moved to the US from Australia 19 years ago, the road condition here blew my mind. The potholes, tree roots, all of that? There'd be protests at City Councils for a fraction of that in Australia. Here, just "the way it is".

Re: How private equity is changing housing

#49

Post by vondur »

I just watched a video from Dave Ramsey title "What the Government Should Do to Fix the Housing Problem" He specifically calls out Institutional Investors and Foreign Corporations that have been purchasing single family housing and converting them into rental properties. I think he makes some good point in his video: https://youtu.be/_CrgniwSLLM

Re: How private equity is changing housing

#50

Post by ReptileMan »

thephyber wrote: post #42
ReptileMan wrote: post #8

Earlier quoted context omitted.

One of the things communism did right was housing - in the Eastern Bloc home ownership was above 90%. The quality was not great, not terrible. But bad shelter is infinitely better than no shelter. I also think that it also excelled in K12 education. Whether because the german style system that was common in europe pre WWII was just left alone - I don't know. But until the mid 90s we really didn't had the school refor…

What does “home ownership” mean in a country where there is no private property?

There was a lot of private property in the socialist countries. I am not sure from where this thought even came to you. What was impossible was owning big private enterprise. But small businesses - like a restaurant or a shoe repair shop were allowed. You were also allowed to own houses, cars, appliances, clothes and almost everything else. Land was a bit weird - you could own, but not too much - basically stuff that was small enough to evade the collectivisation process.
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