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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#181

Post by JumpCrisscross »

ryanmcbride wrote: post #22
postflopclarity wrote: post #12

build. more. and this problem will go away.

Not if private equity just snatches it all up. Yes build more. Also regulate the oligarchs until they no longer exist.

> Not if private equity just snatches it all up

"As of December 2022, the five largest investors owned about 300,000 homes — just under 2% of single-family rental homes nationally."

Where institutions dominate is in rentals: "institutional investors own roughly 2% to 25% of single-family rentals in major markets" [1];.

[1] https://www.npr.org/sections/planet-money/2025/09/09/g-s1-87...

Re: How private equity is changing housing

#182

Post by SoftTalker »

NickC25 wrote: post #163
SoftTalker wrote: post #80

Earlier quoted context omitted.

Many valid reasons for a property to be vacant. It may need renovations or repair and that can take a lot longer than 30 days. But maybe there's some time frame that makes sense. I'm not convinced that commercial ownership is the problem. Or if it is, it's not a new problem. Slumlords have been around forever. The main problem is we just don't have enough housing supply. Investor-owners can only hold units vacant to…

> If there are enough vacant units available and enough supply that property values are not appreciating like crazy, someone will crack and cut the rent or sell out so they can get a better return on their money. Your thesis here is disproven in large cities like the one I live in, Miami. Many investors / property owners here don't give a damn on getting a return on their investment so long as it doesn't go to $0 - t…

Why would they buy properties and not assets that are even easier to buy and sell such as stocks, ETFs, mutual funds, bonds, etc.

That said, I would probably not be opposed to restricting foreign ownership of residential real estate, if indeed it is that big an issue.

Re: How private equity is changing housing

#183

Post by cyberax »

FireBeyond wrote: post #52
cyberax wrote: post #19

Earlier quoted context omitted.

It won't change anything. Private equity is always a nice scapegoat, but it just exploits the same market forces as any other economic actor. If you ban private equity, it's going to be mom&pop redevelopment companies doing the same. I give you an example of Vancouver. It banned foreign purchases: https://www.kelownarealestate.com/blog-posts/canadas-ban-on-... The impact was literally non-existing. The prices continu…

I don't know the specific rules in Vancouver, but yeah, a lot of those attempts were illusory/perfunctory... If you can afford to have one, or multiple, $2M+ condos that you just "park" your wealth in to leave them vacant, the presence of a $10K or $20K fee/tax a year is in the "chump change" category.

Vancouver has fewer vacant units than the average for the country.

> The number of vacant homes in Vancouver has fallen below 1000 as of 2024. The latest Annual report shows low vacancy rate of 0.49%. [the average is 2.7%]

Guess what happened with the housing prices? Right. They kept increasing. The housing density went up, so the prices must also increase.

Re: How private equity is changing housing

#184

Post by JumpCrisscross »

ssl-3 wrote: post #146
gruez wrote: post #129

Earlier quoted context omitted.

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?

> Is there a point to this line of questioning?

That "housing is more than a market - it's where people live" is a platitude. It sounds nice. But it doesn't tell us anything meaningful nor solve any problems.

Re: How private equity is changing housing

#185

Post by AnthonyMouse »

triceratops wrote: post #104
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.

What is this special depreciation corporate owners get? IIUC any landlord can use depreciation to lower their tax bill. Wouldn't the depreciation from a new purchase also apply to the rents from that new purchase? Somewhat more outrageous is the 1031 exchange. Sell VTI at a profit to buy VOO and the government hits you with a capital gains tax. Sell your primary residence for $250k more than you bought it - same thin…

> IIUC any landlord can use depreciation to lower their tax bill.

This is also not really how depreciation works for assets that retain their value. If you buy a building to rent it out, the cost of the building essentially a cost of doing business, i.e. a tax deduction. You pay tax on the profit which is revenue (rents) minus costs (building, interest, maintenance, advertising, etc.) Depreciation is the building, they make you take it over time instead of all at once when you buy it.

But the depreciation lowers the book value of the building, which is your tax basis when you sell it. If you buy a building for a million dollars, depreciate it down to $500,000 and then sell it for $2M, you have a $1.5M capital gain from the sale. You basically have to give back all the depreciation unless the building actually lost that much value by the time you sold it, and in practice it usually goes up instead of down.

It's really the homeowners who have the advantage here because there is a large capital gains tax exemption from the sale of your primary residence, and that's actually a reduction in taxes instead of just a deferral.

Re: How private equity is changing housing

#186

Post by BeetleB »

NickC25 wrote: post #174
BeetleB wrote: post #105

Earlier quoted context omitted.

And ...? Not sure what you're asking. As the report points out, institutional investors purchase only 3% of homes nationwide (but much higher in some cities). Regular smaller investors likely buy more homes than the institutional ones.

> institutional investors purchase only 3% of homes nationwide (but much higher in some cities). This is crucial. People are in cities - in the day and age of corporate consolidation, less and less jobs are available, and they are increasingly in-office, and increasingly in only a select few metro areas. Nobody would give a damn if a glut of housing was built in the middle of South Dakota or Maine or Wyoming. That's…

Most people are in cities, and most rentals in cities are not owned by then - except for the exceptions pointed out (Midwest and Southeast).

If you're having trouble buying a house in Atlanta, yes - they are a big factor.

In Austin? No - not a big factor.

Re: How private equity is changing housing

#187

Post by seethishat »

burnt-resistor wrote: post #175
hippich wrote: post #102

Earlier quoted context omitted.

Afaik, property taxes are due no matter what, at least in Texas.

A lot of veterans live in TX because they have reduced or no property taxes, and also no income taxes. It's probably ~ 8-10% of disabled vets in my neighborhood.

The reduction in property taxes is just for vets, right? I read that, in general, property taxes are high in Texas compared to other states.

Re: How private equity is changing housing

#188

Post by asdff »

the_sleaze_ wrote: post #101
phkahler wrote: post #24

Earlier quoted context omitted.

>> If these corporations can't invest in housing, they'd direct their money elsewhere. I think that's why they're buying residential - there aren't any other traditional investments that aren't in a bubble or just have low returns. If you anticipate economic collapse or hyper inflation or whatever, physical assets make sense - when you measure wealth in houses you don't care what the dollar does. Gold people can do w…

There will be a squeeze on real estate as the sea level rises and insurance increasingly withdraws from coastal and fire-prone areas.

I'd expect to see a surge in self insurance. These areas are so valuable already in a lot of cases where rich people are content to pay six figure property tax bills. Especially with cost of construction being a fraction of that property's value.

Re: How private equity is changing housing

#189

Post by oldjim798 »

tptacek wrote: post #173
oldjim798 wrote: post #7

Ban corporate ownership of residences. Only individuals, Coops or condominiums. Cap how many rentals an individual can own. The government should also build massive amounts of housing. Everywhere of all types - apartments, townhouses, single family. After built transferred to the residents as coops.

I love that there are people that can't even conceive of the idea that entities that let out apartments are providing a service to residents. In their view, the natural state of every resident is a desire to own their home. A fun knock-on effect of this policy proposal: it would effectively halt all new development of dense multifamily.

Yes, the natural state of every resident is to live in their own home. To be clear by home I don't mean "single family detached house on a suburban street", I mean a place to live with water, electricity, and a roof.

Landlords provide no 'service'; they are merely an existence tax.

The market already does not build dense multifamily; what is there to halt?

Re: How private equity is changing housing

#190

Post by tptacek »

oldjim798 wrote: post #189
tptacek wrote: post #173

Earlier quoted context omitted.

I love that there are people that can't even conceive of the idea that entities that let out apartments are providing a service to residents. In their view, the natural state of every resident is a desire to own their home. A fun knock-on effect of this policy proposal: it would effectively halt all new development of dense multifamily.

Yes, the natural state of every resident is to live in their own home. To be clear by home I don't mean "single family detached house on a suburban street", I mean a place to live with water, electricity, and a roof. Landlords provide no 'service'; they are merely an existence tax. The market already does not build dense multifamily; what is there to halt?

You can't fathom that someone might not want an ownership stake in the property they happen to reside in, that there could possibly be a downside to that.
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