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Investors bought a quarter of US homes sold last year

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Re: Investors bought a quarter of US homes sold last year

#561

Post by bamboozled »

paxys wrote: post #293
VirusNewbie wrote: post #226

What's nuts is not just that investors get to buy homes, but that its tax advantaged to do so. Between prop 13 in California, to 1031 exchanges, there are plenty of reasons to invest in RE over even say the stock market. I don't get to do a 1031 exchange for my Meta stock into AAPL or something...

You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.

This is what I find concerning though, we're now seeing the damage of the endless money printing, through inflation.

Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown.

Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.

Re: Investors bought a quarter of US homes sold last year

#562

Post by mancerayder »

missedthecue wrote: post #331
slg wrote: post #131

Earlier quoted context omitted.

Yes, the investors are the symptom and not the cause. They are going where the money leads them. However a big problem with institutional investors is that they also institutionalize NIMBYism. They won't just block housing in a select neighborhood, they will block housing everywhere and they put more pressure on the federal government to ensure that housing is protected as an investment class. Both will contribute to…

"They are treating their home primarily as an investment because that is what they have been told to do their whole life." It's not some psyop that has duped an entire nation, it's people accurately recognizing that their home is the biggest purchase they will ever make in their life, it's almost completely done with debt, and most don't want to end up underwater.

Yeah, it's further not psyops because of the simple monetary incentives, namely mortgage tax deduction, and primary home owner capital tax excluding the first 250/500 of profit on a sale. Investment purchases have a few incentives as well.

There's an over reliance on 'ideas' in this message thread, and an under reliance on simply trusting people to reason their own self-interest.

Re: Investors bought a quarter of US homes sold last year

#563

Post by mancerayder »

standardUser wrote: post #210
mancerayder wrote: post #155

Earlier quoted context omitted.

Just to hammer home the point: NYC has rent stabilization, which applies to about 50 percent of the rental stock. The rent can't go up more than a certain amount, one must renew with the tenant with few exceptions, etc. Now, not surprisingly these units are offered by real estate brokers who demand steep fees, and guess who gets first dibs, but brokers and their friends/families.

Most rentals in NYC no longer work with brokers, especially in the low-to-middle range.

On what basis do you say that?

The Fee rentals have all returned when the laws banning them were re-interpreted.

When you say low to middle range, do you include rent-stabilized units in moderate to hot neighborhoods?

Re: Investors bought a quarter of US homes sold last year

#564

Post by jeffbee »

bamboozled wrote: post #554
jeffbee wrote: post #212

If this bothers you there is an extremely simple way to kick these guys in the teeth: approve new housing developments in your town! Housing investors fear nothing more greatly than they fear competition.

Why wouldn't they just buy the new houses as investments ?

In an environment where they have a depreciating asset on their books and their rental incomes are falling, these REITs will fold suddenly. They aren't able to just throw money into an incinerator.

Re: Investors bought a quarter of US homes sold last year

#565

Post by reverend_gonzo »

thehappypm wrote: post #314
paxys wrote: post #293

Earlier quoted context omitted.

You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.

Investors don’t get the same rates that homeowners do, but they are still quite low.

Of the two additional properties I own, marked as investment and vacation, they are 3.5% and 3%, refinanced, and bought during the pandemic. The former, five years prior, was marked as non warrantable, as in no bank would even give a loan for it.

So, while investors don’t get the same rates as homeowners, they still got very good rates. If I had had capital, I would have bought a dozen more units at that time.

<5% == Free money.

Re: Investors bought a quarter of US homes sold last year

#566

Post by giantg2 »

bobthepanda wrote: post #545
giantg2 wrote: post #518

Earlier quoted context omitted.

"And those are the relatively straightforward problems, to say nothing of places with high crime, bad schools or other complex societal issues." It seems every city has areas within it with these issues. So this shouldn't affect the possibility of moving to areas that have decent schools. And there are solutions to many, like private schools can be a good option especially if the yearly cost is less than the property…

> So this shouldn't affect the possibility of moving to areas that have decent schools. It doesn't, but how much cheap land in Goldilocks-type areas really exists? The housing price problem is already becoming national in scale. > It doesn't have to be a huge influx, nor all at once. That ship sailed a long time ago. It already is. It turns out 1% of Californians leaving annually is still half a million people swarmi…

"It doesn't, but how much cheap land in Goldilocks-type areas really exists?"

That's my point - it doesn't have to be perfect. Otherwise nothing will solve it.

"Encouraging more people to do this is going to exacerbate the problem."

They should be moving to places that are shrinking. That's what I'm suggesting.

That food desert thing is a joke. They're talking about supermarkets, yet there are other sources like farm stands. 10 rural miles is nothing. That might be a 10-15 minute trip if you've ever driven in WV and seen the speeds people drive.

Re: Investors bought a quarter of US homes sold last year

#567

Post by hahaxdxd123 »

anon291 wrote: post #539
wiradikusuma wrote: post #154

"but many Republican lawmakers oppose such controls." — I'm not American and not in in the US, so I'm wondering, why in many articles I read, "Doing Good Things For People™" tend to be opposed by Republicans? 1. Are there a scheme to vilify them? Bcoz it's not even mentioned why they oppose (maybe they see Bad Things™ far ahead). 2. Are they not elected by the people?

Because republican lawmakers come from states where this is not a problem. Perhaps many houses in red states are owned by corporate landlords but housing is way more affordable in those states. So this is a case of lawmakers simply not seeing the problem amongst the people they represent and thus being unwilling to pass what they view as unnecessary regulation. Ultimately housing affordability is a blue state problem…

Homeowners are >75% of the US voting populace. You will never pass a policy that decreases home values.

"88% of U.S. Republican voters own homes, 78% of U.S. Democratic voters own homes, and 73% of U.S. independent voters own homes"

https://centerforpolitics.org/downloads/pub_housing_2.pdf

Re: Investors bought a quarter of US homes sold last year

#568

Post by BeetleB »

brianwawok wrote: post #294
quantified wrote: post #95

Earlier quoted context omitted.

Renting is always worth 0 as equity, so it's a total loss regardless.

* It guarantees you do not lose money if the home values around you drop * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you. * If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying. Look, buying is mostly great. It's one of the biggest builders of wealth for most…

> No "10k new roof" or "1k new stove" suprises hit you.

New roof costs are pretty much never a surprise. You should know when you buy the house how much life is left in the roof and plan accordingly. If a natural disaster occurs that destroys your roof, insurance will cover it.

Appliance costs? Yeah, they are often surprises. Hard to find reliable appliances any more.

Oh, and it's hard to get a $10K roof these day :-)

> If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.

Yeah, I always wondered if I should do this analysis for my house, and I'd be curious on studies on how this would play out in most cases. For me, right from the get go the rent on a comparable house exceeded the monthly interest + tax + insurance (excluding principle). The tax benefits more than paid for all the maintenance costs. So the main questions would be:

1. How much would the down payment be worth in an index fund?

2. How much would the principle payments monthly in an index fund be worth?

I suspect that I'm ahead of the market significantly, what with all the crazy house appreciation (that alone is about 8x my down payment), and rents are quite high - easily increased by over 70% since I bought the house.

Re: Investors bought a quarter of US homes sold last year

#569

Post by hahaxdxd123 »

desperadovisa wrote: post #533
Bukhmanizer wrote: post #340

Earlier quoted context omitted.

This is a pretty silly response. Are people entitled to live wherever they want? No. But the situation is very obviously not that black and white. We allow many things in society that people aren't entitled to, largely because we believe it will build a better society. Am I entitled to own my investment properties? No. Am I entitled to block neighbouring housing from being built? No. But society allows both of these…

> But should a middle-class person be able to build a life in places where there are opportunities for job growth (and like it or not, right now, that's the big cities)? No. You are not entitled to access to specific jobs or a specific area.

What kind of worldview is this? We should sacrifice social and economic mobility for people's Zucchini gardens?

Re: Investors bought a quarter of US homes sold last year

#570

Post by slg »

candiodari wrote: post #522
slg wrote: post #440

Earlier quoted context omitted.

Exactly. True stability is likely unattainable, but I would love if it was a governmental goal like a steady small positive rate of inflation is a goal. There will be temporary changes like the last year with inflation. But for the prior 30 years there has been a very steady roughly 2-4% rate of inflation. Could you imagine if the federal, state, and local government fully committed to steadying housing costs? It wou…

The government goal already is 2% inflation per year. That’s why this is happening ...

I'm not sure exactly what the "this" is in your comment. The government has largely accomplished their inflation goal as that has been roughly what inflation was for 30+ years, but they aren't all powerful and can fail that goal like they have in the past year.

The government could put the same energy to keeping housing costs in pace with inflation. They don't. Instead, the government tries to keep housing costs rising faster than inflation because housing is viewed as an investment. They have been successful in that goal as housing is greatly outpacing inflation.

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