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How private equity is changing housing

theatlantic.com

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Re: How private equity is changing housing

#231

Post by bpt3 »

stego-tech wrote: post #89
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…

I refuse to buy that argument of availability alone (or hell, any standalone argument) when we have continued reporting of landlords and PE leveraging services like RealPage that are designed to maximize rents and revenue, including by keeping units vacant. Every time I’m driving through a dark city at night, residences and condos devoid of furniture (or using an interior design motif with no signs of life), I’m remi…

You mean you refuse to believe hard data on vacancy rates over sensationalized opinion pieces or outright misinformation that sounds more appealing to you?

Your proposed "action" is comically obtuse and will be ineffective at best. So no one can renovate a home for more than 30 days?

Number go up on property forever is what the masses want and what works for them, because the majority of people live in a home owned by that household. So you're misinformed about that as well.

Re: How private equity is changing housing

#232

Post by austhrow743 »

The reasons for high housing prices generally come down to "government restriction of supply, as supported by a large amount of voters".

There's no other expense where we talk about it as a market, at least in general layman focused new and discussions. People aren't concerned about the fuel market or the grocery market. They're concerned about fuel prices. Grocery prices.

Housing is an exception due to catastrophic historical policy choices to encourage it as an investment. Government restrictions on housing supply will exist for as long as a significant number of people not only have their net worth wrapped up in housing, but who actually leverage themselves and go in to extreme debt to achieve it. Not to mention the attached cultural issues of then wanting "buying a house" to mean "buying an area staying the same".

Concentration of residential real estate among fewer owners is the only path that doesn't lead to the future being housing based feudalism where your station in life is determined by if you inherited somewhere to live, and how desirable it is.

Re: How private equity is changing housing

#233

Post by UncleMeat »

quesera wrote: post #191
UncleMeat wrote: post #176

Earlier quoted context omitted.

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

A corporation does not provide services to shareholders. A municipality is charging residents for services. Obligations are progressive (by necessity), and indexed to assessed property value (as a practicality), rather than equity or income. Municipal operations get more expensive with inflation, and with resident demands (ballot initiatives, etc). They are never zero, and must be tied to something in the real world.…

Me owning a bigger house than my neighbor does not mean that I use more services than them. My water bill is my municipality charging me for services. My real estate tax is a charge for the general good of my community. I see no reason why this can't simply be a tax for the national good.

Re: How private equity is changing housing

#234

Post by UncleMeat »

orangecat wrote: post #227
UncleMeat wrote: post #176

Earlier quoted context omitted.

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.

The total ownership of all public companies is also a limited resource.

Whether I have 0% equity or 100% equity in my home I still own it. The only question is how much I owe to the bank. "Oh I bought that with leverage" shouldn't change things for home ownership and it should change things for a wealth tax on stock ownership.

Re: How private equity is changing housing

#235

Post by kasey_junk »

tptacek wrote: post #222
BobaFloutist wrote: post #217

Earlier quoted context omitted.

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 prop…

Can I get a waiver due to my home purchase at the height of the bubble before the gfc? Cause I feel like I’ve paid enough for lessons learned.

Re: How private equity is changing housing

#237

Post by dragonwriter »

UncleMeat wrote: post #234
orangecat wrote: post #227

Earlier quoted context omitted.

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.

The total ownership of all public companies is also a limited resource. Whether I have 0% equity or 100% equity in my home I still own it. The only question is how much I owe to the bank. "Oh I bought that with leverage" shouldn't change things for home ownership and it should change things for a wealth tax on stock ownership.

Then it’s an asset/property tax, not a wealth tax, because debt doesn't change the asset (even if it is secured by the asset), but it does change wealth.

Re: How private equity is changing housing

#238

Post by oldjim798 »

bpt3 wrote: post #221
oldjim798 wrote: post #204

Earlier quoted context omitted.

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?

No such thing as a non-ruthless corporation, it is inherent with the legal structure.

Re: How private equity is changing housing

#239

Post by rmah »

HexPhantom wrote: post #77
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.

It's wild when you think about it: a family scrapes together a down payment and pays full freight on property taxes, while a corporate landlord can roll one property's paper losses into the next deal and keep building their portfolio, tax-deferred

You can't use unrealized capital losses (property paper losses) or even realized losses to offset property tax, you can only offset realized losses against realized gains for income taxes.

Re: How private equity is changing housing

#240

Post by bilbo0s »

djoldman wrote: post #167
gruez wrote: post #117

Earlier quoted context omitted.

Did you intend to add something after the definition? For better or worse, "moving out once you reach 18" is widespread enough of an expectation that it can be used as a yardstick for housing shortage.

I think it's interesting how "shortage" is defined across different products. From an economics standpoint, "shortage" isn't a useful word, unless it's applied in the extremely unlikely scenario where there nothing is available at any price. Generally, this is because price dictates supply. "Shortage" for the current housing market is generally used to mean, "relative to historic trends, many people want houses who c…

Let's be honest, it's not even that.

It's more like "relative to historic trends, many people want houses [in desirable areas] who can't afford the current prices."

Building tons of new houses outside of the hot areas that all these people want to live would still elicit cries of a shortage and an affordability crisis. Because there are currently affordable places outside of hot areas, but not very many takers.

It's a really tough nut to crack. Because how do you reorient the demand to those areas that have the supply? It's not easy. We can't seem to do it currently, and there's no real plan to do it if even if we could somehow build even more housing. We'd have to build lots of housing only in hot areas. Which sounds easy enough until you realize the economics don't make sense and even on the off chance that you could, it would only generate more demand.

First order of business however should be to find a clever way to stop abuses like the ones outlined in the article. The housing that would free up in the hot areas would not be near enough to meet the demand, but if we stop that nonsense at least we're not "digging the hole deeper" so to speak.

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