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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#141

Post by Havoc »

roboror wrote: post #90
zipy124 wrote: post #53

Earlier quoted context omitted.

This is not true at all. Corporate loan rates are generally pretty damn high, only exceptionally can they borrow for low rates. Mortages however are a special case since they are basically mandated to be low and safe by most governments in exchange for letting banks exist. Or in the US explicitily guaranteed through freddie mac and fannie may.

>This is not true at all. Corporate loan rates are generally pretty damn high, only exceptionally can they borrow for low rates. Are these companies going to banks and applying for a loan? I'd think they are privately backed and invested in.

Privately backed isn't necessarily cheaper. In fact PE funds often have a big fat bank loan on their books because it pushes down the average cost

Re: How private equity is changing housing

#142

Post by lotsofpulp »

SoftTalker wrote: post #68
beisner wrote: post #65

Earlier quoted context omitted.

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?

There is no purpose for a cash buyer to pay an appraiser to appraise a house. They have already decided to pay the price, so who cares what an appraiser thinks?

Re: How private equity is changing housing

#143

Post by Spivak »

hypeatei wrote: post #84
quamserena wrote: post #73

Earlier quoted context omitted.

this sounds nice, but neglects the fact that (1) materials cost has gone up and (2) zoning requirements exist. (1) means its just more expensive to build overall, and (2) means that a lot of proposals for apartment complexes get voted down.

Part of building more is getting government (mostly) out of it so that things like zoning laws don't hamper new development. Obviously that is very hard to do at a local level when incumbent homeowners' housing values would be cut in half overnight.

Well duh because "just make everyone underwater on their mortgage" is a bit of a silly solution that definitely won't have any second order effects.

Re: How private equity is changing housing

#144

Post by ProllyInfamous »

vondur wrote: post #49

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

Thanks for sharing the DR link — hadn't listened to him in many years, but he definitely helped me start my debt-free journey (although his long-term investment opinions aren't aligned with my own planning / re$ult$). I am not religious I just started listening.

>"If you're 25 or 26 years old right now YOU ARE GETTING SCREWED RIGHT NOW (by large banks) like has never happened ever before... record debt debt debt" —Dave Ramsey [0]

I am definitely doing "better than I deserve."

[0] He actually says this at 6m in above-comment's link

Re: How private equity is changing housing

#145

Post by mx7zysuj4xew »

hardtke wrote: post #18

One of the issues the article doesn't mention is that these houses are effectively cheaper to purchase for corporate owners. Generally they can borrow money at a lower rate, but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant. Effectively they are redirecting money that would be paid in taxes into the payments on the new purchase.

This^, this is how you end up with serfdom

Re: How private equity is changing housing

#146

Post by ssl-3 »

gruez wrote: post #129
HexPhantom wrote: post #75

Housing is more than a market - it's where people live

Do we apply that logic to any other market that's served by for-profit companies? "corn/egg/beef is more than a market - it's what people eat" "cars/gas is more than a market - it's how people get around" "natural gas is more than a market - it's how people stay warm"

So what if we do apply that same logic to those other categories? Or what if we do not?

Is there a point to this line of questioning?

Re: How private equity is changing housing

#147

Post by samdoesnothing »

lwansbrough wrote: post #88

Lots of ideas in here that fail to properly identify and address the root cause, which is disappointing given how many of us are programmers. Trace the problem back. Where does it start? Why is PE investing in homes? Because they can make money. Why does buying a home make money? Because the value appreciates. Why does the value appreciate on an asset that literally deteriorates over time? Because of restricted suppl…

You're absolutely right of course. Even a child could look at the present situation and determine that the solution is to simply build more housing, but for some reason many grown adults cannot accept such a simple solution and insist that what's actually needed is more government regulation or something.

Re: How private equity is changing housing

#148

Post by maxerickson »

hardtke wrote: post #18

One of the issues the article doesn't mention is that these houses are effectively cheaper to purchase for corporate owners. Generally they can borrow money at a lower rate, but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant. Effectively they are redirecting money that would be paid in taxes into the payments on the new purchase.

Build enough housing and all of the sudden it isn't such a sure thing investment.

Not easy to do of course, but the problems that come with building more housing are better then the problems we have now.

Re: How private equity is changing housing

#149

Post by quesera »

the_sleaze_ wrote: post #107
mrDmrTmrJ wrote: post #57

Earlier quoted context omitted.

Well, I want more multifamily housing (apartments or condos) to lower prices in good cities near pubic transit. So let me propose: a wealth tax on land! ("Georgism"). But not a tax on the "value of improvements," i.e, buildings. This disincentivizes single-family homes near train stations (widespread in the town I grew up in) and is very low-cost to collect. I don't know where you're writing from. But here in Califor…

Now my corporation owns my house, I rent from myself and since the rent my corp is charging is so incredibly low its essentially a write off.

That arrangement will not pass IRS muster.

Not that the system would not be abused, but the obvious exploit is not going to work.

Re: How private equity is changing housing

#150

Post by Teever »

maxerickson wrote: post #148
hardtke wrote: post #18

One of the issues the article doesn't mention is that these houses are effectively cheaper to purchase for corporate owners. Generally they can borrow money at a lower rate, but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant. Effectively they are redirecting money that would be paid in taxes into the payments on the new purchase.

Build enough housing and all of the sudden it isn't such a sure thing investment. Not easy to do of course, but the problems that come with building more housing are better then the problems we have now.

That may be the case but it would still be a good idea to look at regulating these run away feedback loops writ large so that people can't just play a game of whack-a-mole where they play the same old tricks in different sectors or invent whole new mediums to play the same old games afresh
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