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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#61

Post by gjsman-1000 »

orwin wrote: post #58
gjsman-1000 wrote: post #40

Earlier quoted context omitted.

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…

If the tax is set at say 2% of wealth (excluding primary home and _displayed_ artwork/collectibles), and that's above your income, just pay with your stocks at the valuation they have at tax day.

This assumes everything can be paid in liquid public equity, which is often not the case in any private or offshore investment. Additionally, the government now owns stock they can't realize without by definition causing a stock market decline. Sell stock that previously wasn't on the market, you exhibit permanent downward pressure.

Re: How private equity is changing housing

#62

Post by SirFatty »

When we bought our first home, a townhouse, in the early 1990s the builder only sold to people that were going to live in said home. They helped save the down payment and made sure that utility payments (gas/electric) were under a certain amount each month (super insulated and heated with a hybrid hot water system). Bigelow Homes, they were on a few This Old House episodes in the 80s.

It would be nice to see that again, the new housing market is ridiculous now.

Re: How private equity is changing housing

#63

Post by mylifeandtimes »

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…

almost, but rent-seeking is an odd form of capitalism, because in its pure form it isn't providing value.

nothing in the real world is in its pure form, and some business are able to provide value which they cannot charge for because they can rent-seek on other areas, so there is always nuance.

but an economy where rent-seeking is the main path to wealth is an economy in really poor shape.

Re: How private equity is changing housing

#64

Post by SoftTalker »

> Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash?

I don't see why the seller would care. They're getting a check at closing, that's all they care about.

I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But most buyers are pre-qualified (at least if they're working with an agent). The main reason they would not get financing is if the appraisal came in lower than the sale price.

Re: How private equity is changing housing

#65

Post by beisner »

SoftTalker wrote: post #64

> Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash? I don't see why the seller would care. They're getting a check at closing, that's all they care about. I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But…

Closing certainty is a major reason people will take all-cash offers over financed ones. Even if you're pre-approved for a loan.

Re: How private equity is changing housing

#66

Post by TheChaplain »

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.

I've had the same idea, but with no property tax on ownership of a single dwelling place.

If the burden is lessened to have your own place, hopefully we could see less homeless on the street or living in cars when times are tough.

However if you have more than one, then you pay significant property tax on all of them. I would hope that could free up more places for more people getting a home.

But of course if you earn more than $180k a year, I guess you could afford some property tax.

I am also thinking foreign ownership of property should be taxed heavily. I know that is not popular, but honestly if you not living full time in the country then you are effectively taking up a spot for someone who needs a place to live.

Re: How private equity is changing housing

#67

Post by dragonwriter »

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?

The socialist sense of “private property” refers specifically to ownership of physical (or at least, nonfinancial) means of production, other than by the workers whose labor is applied to it.

It does not refer to all ownership by individuals of real and personal property, restrictions on other personally-held property are separate concerns from the abolition of private property, and socialists regimes, including those in the Soviet bloc, frequently have retained private home ownership, which is not fundamentally inconsistent with socialist theory.

Re: How private equity is changing housing

#68

Post by SoftTalker »

beisner wrote: post #65
SoftTalker wrote: post #64

> Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash? I don't see why the seller would care. They're getting a check at closing, that's all they care about. I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But…

Closing certainty is a major reason people will take all-cash offers over financed ones. Even if you're pre-approved for a loan.

A cash offer will still fall apart if the appraisal comes in too low, I would think. Or does the term "cash offer" imply that no appraisal will be done?

Re: How private equity is changing housing

#69

Post by orwin »

api wrote: post #38
collinmcnulty wrote: post #16

I recently learned about Singapore’s seemingly excellent public housing system that is used by over 75% of its population. Singapore being so capitalist about everything else while carving out housing I think provides evidence that capitalism can be made stronger by keeping certain things away from strict market forces. https://en.wikipedia.org/wiki/Public_housing_in_Singapore

We don't have a free market in housing at all. It's a cartel with restricted supply.

You can't have a free market if supply (or demand) is constrained.

You either go the liberal+regulated free market way, which will get lobbied, then overregulated, or you go the socialized way, where you allow local government and associations/unions to compete in the market... with the exact same rights as the companies, and no weird rules that prevent them to truly compete.

And if you have a natural monopoly (energy distribution is the worst offender), you have to go the central planning way I guess, until we find something better.

Re: How private equity is changing housing

#70

Post by stego-tech »

Everyone wants to finger someone to blame rather than (before trying to) fix the fucking problem.

Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property.

Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing.

Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems.

EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of.

Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.

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