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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

#581

Post by klipklop »

gbear605 wrote: post #545
klipklop wrote: post #409

Earlier quoted context omitted.

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?

This is pure whataboutism and made in bad faith. I feel for your friend (if they exist beyond you trying to make an argument), but there are various physical and legal ways to protect yourself from this situation in the US. This edge case is not a good enough reason help shield foreign oligarchs and large corps holding real estate in secret. There is probably a compromise somewhere between both extremes.

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

#582

Post by drBonkers »

m463 wrote: post #568
rgmerk wrote: post #165

It will make very little difference in the end. Australia's land tax system makes it effectively impossible for large corporations to own large chunks of residential property, but our real estate is amongst the world's most expensive and landlords are still awful - it's just that the landlords are hundreds of thousands of dentists and, yes, software engineers rather than corporate entities. If you want housing to be…

I've heard that japan has a system that keeps real estate dynamic with lower prices.

Have you read anything on this you could point me to?

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

#583

Post by bs7280 »

RegEx wrote: post #298
jspaetzel wrote: post #272

Earlier quoted context omitted.

Higher rent means more people will opt to buy. That's not necessarily a bad thing in perspective. Assuming the other side effect is a decrease in costs due to a lower profit margin.

I believe your comment is operating under the assumption that people are merely choosing to rent over buying because it's the more economically wise choice. That's not how things work in reality. Many people want to buy but cannot put up the initial costs.

I fit the description of someone who has the cash to make a down payment, but if I were to buy the property I currently rent, I would be paying $1000 more a month.

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

#584

Post by ctoth »

tptacek wrote: post #478
observationist wrote: post #357

Earlier quoted context omitted.

It's not just raising prices - it's holding prices steady at some point without the concurrent pressure to sell, for example, or manipulating other markets in order to raise or lower prices in an area, or using other mechanics to manipulate pricing, across the entire market, depending on the intended actions. If they intend to purchase properties, it benefits them to depress pricing in the area, if they intend to ren…

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…

Ownership share is a stock. Prices get set by flow - transactions. Housing is a thin market; maybe 5-6% of homes change hands in a given year. Price discovery happens at that transaction layer.

Institutional investors own ~3% of single-family rentals nationally. But per CoreLogic they're 29% of purchases in the starter home tier. That's the market where we first-time buyers actually compete.

In some metros it's more concentrated.

Atlanta: ~30% of single-family rentals corporate-owned.

Charlotte neighborhoods in 2022: 50%!!! of sales to institutional buyers.

So for your 1-2-3... maybe something like?

1. Institutional buyers concentrate in starter homes where they're 29% of transactions, not 3% of stock

2. Target metros/neighborhoods go higher still

3. Real estate uses comps-based pricing - their winning bids propagate to surrounding valuations

The mechanism isn't inventory control, it's just a buyer with a different utility function (rental yield vs owner-occupancy) systematically outbidding price-sensitive first-time buyers. In a thick market that gets arbitraged away. In a thin market with sparse comps, each transaction is a price-setting event.

The St. Louis Fed found institutional presence specifically increases price-to-income ratios in the bottom tier.

If you're evil corporate Landlordman You don't need to affect the whole market. You just need to cut off the bottom rung of the ladder.

Is this Trump move the right one? No frickin idea! But I do think we need to reckon with what's actually happening to first-time homebuyers. I bought a place in Englewood Co last year and ... it was pretty rough.

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

#585

Post by gfaster »

alextingle wrote: post #563
jazzyjackson wrote: post #324

Earlier quoted context omitted.

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…

"Rent seeking" has nothing to do with landlords and tenants. It's about buying legislation that forces people to give you money for nothing. https://en.wikipedia.org/wiki/Rent-seeking Tenants who rent property get something tangible in exchange for their cash - exclusive use of the property. Just because the word "rent" is common to both, doesn't mean they are connected in any way.

gp used "rent seeking" correctly.

The concept of "landlords do nothing while collecting passive income, therefore not creating any value but instead are just exploiting that they own the land" would be correctly described as "rent-seeking behavior".

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

#586

Post by mattmaroon »

presentation wrote: post #527
mattmaroon wrote: post #446

Earlier quoted context omitted.

They do it by citizenship, and you might be surprised how many investment properties are vacant homes, but I’m not necessarily advocating for this in any case. The real cure would just be right to build laws. The problem is, you can’t do that at the federal level, and the people who vote at the local level are the homeowners who benefit from housing restrictions. The federal government has a very difficult task. They…

Could homeowners be convinced with truckloads of money? As in, yes if you increase density beyond demand the value of each individual home decreases, but the value of the land dramatically increases if suddenly your single family home with a lawn could be converted to a 9 story tower renting out units to 20+ households with infrastructure spending diverted to your area to improve it. Are landowners unaware or just do…

I just don’t think it works that way. The developers don’t buy existing homes, they buy farms and golf courses and large vacant tracts. They don’t frequently just like buy 4 homes and put 20 where they had been.

Most people have most of their money tied up in their home equity and would lose an amount that hurts

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

#587

Post by seanmcdirmid »

ghaff wrote: post #333
seanmcdirmid wrote: post #253

Earlier quoted context omitted.

> I feel like there will be a difference between a handful of large corporations owning a majority of properties vs thousands of dentists and software engineers. Are you saying that all of these property owners are also soulless profit-optimizers? Do we want to trade crazy high prices in the American real estate market for absolutely crazier high prices in the Australian real estate market? That is a bit simplistic t…

And, everywhere, it's about people wanting to live in some specific cities. Even a bit outside of those specific locations isn't necessarily particularly expensive. (Leaving aside ski resorts, especially nice college towns, and the like).

I don't know...some countries are just expensive full stop. Lausanne for example, and since public transportation is good enough, you can live outside of the city and still get to work...so those places just get expensive also.

Australia I assume you mean the few places where people actually live in the country vs. the undeveloped outback?

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

#588

Post by [deleted] »

antonymoose wrote: post #161
kleton wrote: post #63

They will continue trading the ones they have as LLC holding companies.

This guy wholesales ;) I recently worked on an MVP for a Zillow-for-wholesale startup. As a curveball, our state passed a law restricting where and how these contract-to-buy sellers operate. So their workaround, after consulting lots of lawyers, was to provide a standardized LLC / Contract flow such that you’re no longer marketing a house for sale. You’re marketing a stake in an LLC, only that LLC has a sole purpose…

[deleted]

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

#589

Post by pixelatedindex »

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…

> IMO it's a crooked notion that landlords are rent seeking and nothing else - they do create supply and maintain housing.

They don’t create supply in any way, the only ones who do that are builders. But sure they maintain houses. Although just the bare minimum, they will never fix it nicely - just enough to rent it out.

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

#590

Post by abustamam »

There's a service called Arrived (I believe Jeff Bezos invested) that lets people buy fractional shares of single-family homes and earn a proportional share of the rent. If you sell, you're effectively selling your percentage of the property.

As a renter, I was drawn to this as a way to get some exposure to real estate, and I ended up investing in a vacation rental. At the same time, I'm pretty conflicted about it. Profiting from vacation housing feels different to me than profiting from people’s primary shelter, which is a basic necessity.

More broadly, I think as long as the incentives of property owners and renters are fundamentally misaligned, it will remain extremely difficult for middle-class folks who don't already own property to break into the market. The system optimizes for extracting rent, not for creating new owners.

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