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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#221

Post by bpt3 »

oldjim798 wrote: post #204
tptacek wrote: post #190

Earlier quoted context omitted.

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.

I never said homeownership. Just a place to live thats not owned by a ruthless corporation that spends every day trying to squeeze every penny possible out of the tenant

What about a non-ruthless corporation? How do you test that?

What about the fact that most homeowners get the vast majority of the money for said purchase from a (presumably ruthless) corporation?

Re: How private equity is changing housing

#222

Post by tptacek »

BobaFloutist wrote: post #217
tptacek wrote: post #190

Earlier quoted context omitted.

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.

You know how it's recommended to sell employee stock grants asap, so your not over indexed into your employer? I.E. if the company you're working for performs poorly or goes under, you don't want to lose your job and wealth, and if it does well, you'll keep making money at your job anyway, so there's no advantage to investing more of your personal capital into your employer than you would if they weren't employing yo…

I think everybody has to be obliged, at least once, to move within a year or two of buying a house, just so they can understand what it is to take a huge bath on closing costs.

And that's before you get to things like the furnace going, or the roof failing. Two kinds of people with this "landlords provide absolutely no services" perspective: people so comfortable financially that the y-o-y costs of maintaining a property don't even register, and renters who have never owned and been on the hook for an urgent big-ticket maintenance problem.

Re: How private equity is changing housing

#223

Post by verteu »

ryanmcbride wrote: post #166
Ekaros wrote: post #115

Earlier quoted context omitted.

So build so much they cannot rent all of it. Over supply will eventually drive down prices.

who is going to do the building? Because PE is the one doing that too.

No, private equity appears to be a minority of home builders: https://www.builderonline.com/builder-100/builder-100-list/2...

Re: How private equity is changing housing

#224

Post by quesera »

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.

If insurability becomes a crisis, I'd expect it to reduce housing availability and raise prices for competing (insurable) properties.

Of course it wouldn't happen in isolation, so there are other massive forces to consider.

Maybe wide swathes of formerly-occupied (but now uninsurable) land would sell cheaply enough that middle-income people could build inexpensive semi-disposable vacation cottages, like the old days.

GP's assertion of population collapse in five years is a bit extreme for me!

Re: How private equity is changing housing

#225

Post by carlosjobim »

guyzero wrote: post #195
ahmeneeroe-v2 wrote: post #179

Earlier quoted context omitted.

It's weird that immigration and housing is an off-limits topic for you that you're not able to discuss it objectively.

I just said you're wrong, not that you're prohibited from discussing it.

You also threw a nasty insult at the person, instead of conversing in good faith.

What's artificial about housing demand growth due to immigration is that they arrive into the market as adults. The natural demand growth would in contrast be from births.

Re: How private equity is changing housing

#226

Post by bpt3 »

bell-cot wrote: post #51
shuntress wrote: post #36

My extreme political opinion is that no one (including corporations) should be allowed to own more than one property in which they do not reside.

So I can own a duplex and rent out the other half, but that's it? Or - what if I own a 5-bedroom house, and rent the other 4 bedrooms to roommates?

No, you just do what most people (and corporations) do and create a new entity (normally an LLC) for each property.

There you go, you've sidestepped this inane policy.

Re: How private equity is changing housing

#227

Post by orangecat »

UncleMeat wrote: post #176
quesera wrote: post #154

Earlier quoted context omitted.

That's a very strange way of looking at property taxes.

I do not see the difference between property taxes on my home and property taxes on my stock portfolio. What makes wealth taxes bad?

Property taxes are use taxes. You're paying for the right to occupy an inherently limited resource, and for necessary services and infrastructure. It's not a wealth tax because it doesn't matter how much equity you have; it's the same whether you fully paid in cash or have an interest-only mortgage. It's also not a capital gains tax because the purchase price doesn't matter.

Re: How private equity is changing housing

#228

Post by J_Shelby_J »

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?

The real reason single family housing ownership is the only real option is that society effectively pays people to own; appreciation out weighs all costs of ownership so in the end it’s free or even an investment.

But if it was truly a free market and supply met demand owning housing would be a depreciating asset and renting would be cheaper.

Land ownership is a cultural construct. Their is no natural state.

Re: How private equity is changing housing

#229

Post by NickC25 »

SoftTalker wrote: post #182
NickC25 wrote: post #163

Earlier quoted context omitted.

> 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.

The idea is that tracking it is effectively impossible for a foreign government...and we've made that whole infrastructure incredibly easy via making it legal for LLCs to purchase homes. We don't prevent foreigners from forming LLCs, and often times there are brokers that make their vig on doing just that for wealthy foreigners - they set up a myriad of LLCs to protect the identity of a buyer, who then drops $1mm+ on a property that they will never actually use in a country they will likely never visit.

Plus, to buy stocks or ETFs or bonds or whatever, you have to register with a broker, who has to legally report each sale and transaction to the government. The point isn't the liquidity. The point is that a family can drop 200k-500k in a pretty stable asset in an incredibly less volatile environment and effectively not report it. That is worth it in the age of hyperinflation in LatAm economies. Plus, if the unit in question is in a decent location, they can escape at the first sign of trouble.

Re: How private equity is changing housing

#230

Post by ceejayoz »

AnthonyMouse wrote: post #201
api wrote: post #33

Earlier quoted context omitted.

Our system is far more regressive than most people realize. The poor pay more for things, don't have access to all kinds of tax breaks and cheap money, and can't afford accountants and shell companies and all the other complicated tricks you can use if you are wealthier. I wonder: if you added it all up, would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have?

> would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have? That's an easy one to fix regardless. Use a flat tax with a large fixed refundable credit. Now everyone pays e.g. 30% but gets a $12,000 credit, so someone who makes $40,000 is effectively paying zero, someone who makes $80,000 is effectively paying 15% and the effective rate approaches 30% as the number…

> Now everyone pays e.g. 30% but gets a $12,000 credit, so someone who makes $40,000 is effectively paying zero, someone who makes $80,000 is effectively paying 15% and the effective rate approaches 30% as the number goes up.

This only maybe works if you count capital gains as regular income. Otherwise they do the Steve Jobs $1 salary thing.

Even the capital gains can be largely evaded. https://www.propublica.org/article/billionaires-tax-avoidanc... https://www.propublica.org/article/lord-of-the-roths-how-tec... etc.

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