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US will ban Wall Street investors from buying single-family homes

reuters.com

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Re: US will ban Wall Street investors from buying single-family homes

#541

Post by bjourne »

observationist wrote: post #283
roadside_picnic wrote: post #48

The key word here is "Wall Street". And this statement is playing off a popular misconception around corporate investors buying up American houses. There has been a bit of a panic around "Investors buying up all the property!!!" With people often citing Black Rock and Blackstone as the main culprits. But most of the "investors" buying up property are individuals purchasing investment properties. Here's an article on…

It's not that simple - the problem is that those institutions are market makers. They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing. The things that they do have mass…

If what you say is true, wouldn't the same argument apply to practically every market these institutions are in? Oil, timber, steel, AI stuff, cars, you name it.

Re: US will ban Wall Street investors from buying single-family homes

#542

Post by twoodfin »

kart23 wrote: post #432
gen220 wrote: post #393

Churchill was right! We’ll try everything except for a land value tax, so that we can eventually prove once and for all that LVT is the right thing to do! :) But actually, it’s good to see movement on the underlying problem (affordability of home ownership). This is The Domestic American Problem of our times, and it deserves to be closer to the center of the Overton window of our politics and policy-making. Even if w…

Can someone please explain to me a practical way to apply the LVT? Vancouver used to have an LVT, it was too low and there was a housing speculation bubble in the early 1900s, since property was appreciating much faster than the tax rate. And if the LVT is too high, then you will have very little new development. This isn't even mentioning how you determine the value of the land. Denmark has an LVT and copenhagen aff…

As far as I can tell, LVT only achieves what it sets out to do if it’s equivalent to market rent.

As in, you never really “own” your land, you’re just renting it from the sovereign. If you can’t make good enough use out of it to afford that rent, you should move on. You can find comments on this thread that make this argument explicitly in terms of “maximizing land use efficiency”.

This was the economic structure of feudalism. It … wasn’t great. Private ownership of land has its own tradeoffs but a few centuries of historical experimentation in both directions has been fairly decisive.

Re: US will ban Wall Street investors from buying single-family homes

#543

Post by mrktf »

bs7280 wrote: post #260
roadside_picnic wrote: post #48

The key word here is "Wall Street". And this statement is playing off a popular misconception around corporate investors buying up American houses. There has been a bit of a panic around "Investors buying up all the property!!!" With people often citing Black Rock and Blackstone as the main culprits. But most of the "investors" buying up property are individuals purchasing investment properties. Here's an article on…

I propose two changes to (try) and broadly solve this: - Additional property tax if you do not live in your home fulltime. This includes vacation homes. - First time, US Citizen, non-corporate homebuyers can get a loan at the federal interest rate. If I were to try and buy the condo I rent, due to interest rates, taxes, and HOA's I would be paying $1000 more per month. At the end of my mortgage I would given the enti…

With today requirements for accounting, somebody with economics background could tell what would be wrong with following solution?:

If you house owned by commercial entity - taxes are payed from full value, but the valuation to any collateral/derivative goes by something like (0.75x)^l, where l how many levels deep (counting ownership levels). For example it house is in some sort collateral/derivate/indirect ownership mix with 4 levels deep, it can only valuated as 0.31x value (you can only account as it is worth 1/3). In my mind it should reduce attractiveness for speculative buying.

Re: US will ban Wall Street investors from buying single-family homes

#544

Post by dweez »

riazrizvi wrote: post #338

This will absolutely help. It’s easy for these institutional players to downplay their involvement with select stats, to play PR defense, but platforms like Zillow work with institutional funds to sell them an information advantage that means they are at the end of the market that does the most upward impact on pricing. People don’t have a natural feel for how little you need to alter flow to cause liquidity in a sys…

There are a few markets like Jacksonville and Atlanta where there is a lot of institutional ownership, but outside of those few cases impact of Blackrock et al on housing markets is effectively nil.

Re: US will ban Wall Street investors from buying single-family homes

#545

Post by gbear605 »

klipklop wrote: post #409
JoshTriplett wrote: post #23

One additional important detail: if this gets implemented at all, hopefully it does not affect the common practice of having a self-owned LLC owning your home. This is common for the purposes of keeping your personal name out of public records; it is far too easy to link someone's name and address, and people at risk of doxing can do this to protect themselves.

Personally I feel people and especially corporations/REITs do not have the right to hide what real estate they own. Sure put it in a trust, but the public has the right to know who controls it.

I have a friend who has someone who has repeatedly threatened to assault her, and her primary protection is keeping her address hidden from him. Should she never be allowed to own a house at risk of being assaulted?

Re: US will ban Wall Street investors from buying single-family homes

#546

Post by deepsun »

jazzyjackson wrote: post #324
mycodebreaks wrote: post #261

Earlier quoted context omitted.

Controversial, but for affordability reasons, there even should be a cap on how many homes an individual can own for rentals. For the sanity in the housing market, members of society need to be driven to participate in other business activities for income/revenue, not rentals.

This is basically a maximum wage for landlords, bound to start a secret society. IMO it's a crooked notion that landlords are rent seeking and nothing else - they do create supply and maintain housing. Issue is when they want to politically and artificially raise the value of their property by preventing more housing from being built, so, if you're going to ban something, ban artificial regulations on construction! N…

> landlords are rent seeking and nothing else

Noone says it's nothing else. But rent seeking is a big component of it, you just focus on other minor parts.

In general, locking down some limited but critical commodity (e.g. land) is bad for any economic system. It doesn't really matter whether it's "Wall Street" or "your neighbor". A healthy economy is geared towards creating an added value.

Re: US will ban Wall Street investors from buying single-family homes

#547

Post by austhrow743 »

ZeWaka wrote: post #500
austhrow743 wrote: post #469

Earlier quoted context omitted.

>It will make very little difference in the end. It will make very little difference if Wall Street investors hold very little property. Putting a finger on the scale of how much real estate is individually owned definitely makes a difference though. It makes it worse. 100,000 individuals who own 100,000 properties have far more political power than 10 companies who own 100,000 properties. >If you want housing to be…

> 100,000 individuals who own 100,000 properties have far more political power than 10 companies who own 100,000 properties. Is that really true in the US?

Consider every other expense that people have that's supplied by companies (see: literally everything). Why have those companies not successfully lobbied to prevent competition? Industries where it happens are the exception, not the rule.

Re: US will ban Wall Street investors from buying single-family homes

#548

Post by tptacek »

observationist wrote: post #518
tptacek wrote: post #478

Earlier quoted context omitted.

You're telling a just-so story, and you can tell because there isn't a simple schematic 1-2-3 story you can make from this about how these people exert control over home prices. Words mean things; wielding scarcity requires you to control enough inventory to manipulate scarcity, and REITs and corporate buyers empirically don't. I get why people like telling stories like this: it suggests there's a single boogeyman th…

I don't mean to convey that it's intentional. There's no conspiracy of cigar smoking financiers in tuxedos smoking cigars in dark rooms. It's just like the Carlin observation - there doesn't have to be a big conspiracy. They just know what's good for them. They behave accordingly. The do things that they can, and because those things are relatively new, it's a type of information asymmetry and policy / good intention…

I'm not talking about whether it's intentional. I'm talking about whether it's possible. If corporate investors could control the price of housing, I believe they would.

I can buy a house tomorrow and hold it vacant off the market at a listing price 3x its value. I will have zero impact on the housing market. You may be conflating the listing price of an asset with the clearing price of that same asset. You can, obviously, build up inventory to manipulate prices. To do that, you have to be able to generate scarcity, which is exactly what corporate investors aren't doing.

You've just given me 6 more paragraphs about the control you think they have, and you still haven't told a simple 1-2-3 story about how they're using a microscopic footprint in the total housing market to distort prices.

You have to do better than "supply and demand normally influence pricing feedback at much more granular levels". In the context of your original claim, of them being "a huge driving force in setting and manipulating prices", you need to explain how that would actually work, and not rely on handwaving.

Re: US will ban Wall Street investors from buying single-family homes

#549

Post by kiba »

observationist wrote: post #518
tptacek wrote: post #478

Earlier quoted context omitted.

You're telling a just-so story, and you can tell because there isn't a simple schematic 1-2-3 story you can make from this about how these people exert control over home prices. Words mean things; wielding scarcity requires you to control enough inventory to manipulate scarcity, and REITs and corporate buyers empirically don't. I get why people like telling stories like this: it suggests there's a single boogeyman th…

I don't mean to convey that it's intentional. There's no conspiracy of cigar smoking financiers in tuxedos smoking cigars in dark rooms. It's just like the Carlin observation - there doesn't have to be a big conspiracy. They just know what's good for them. They behave accordingly. The do things that they can, and because those things are relatively new, it's a type of information asymmetry and policy / good intention…

You overly complicate the situation by targeting one type of actors. If you look at comment around this story, people propose complicated mechanism to hack at the problem instead of looking at the root causes.

It's just land ownership isn't being taxed properly, no matter who owns the land. We homeowners get a free lunch from economic growth and price appreciation of real estate while penalizing capital investment.

The solution is simple if not necessarily easy to implement. Tax land and at a high enough rate, and exclude building and improvements. We'll reap bigger benefits if we reduce taxes on income and capital and eventually phase it out.

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