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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

#751

Post by defrost »

refurb wrote: post #747
pixelatedindex wrote: post #589

Earlier quoted context omitted.

> 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.

Of course landlords create supply. A renter is someone looking to rent. If someone buys a home then rents it out they just +1 the supply of rental units.

Only if that home wasn't already rented out by the previous owner.

A high proportion of real estate sales are owner churn, not the purchase of brand new never used before properties.

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

#752

Post by somenameforme »

WalterBright wrote: post #325
observationist wrote: post #283

Earlier quoted context omitted.

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…

> 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. Raising prices when you only have a tiny portion of the market does not work. People won't buy them when there's…

I generally agree with you on market discussions, but I don't think you're considering this one correctly. Imagine a country responsible for just 10% of global oil production decided to stop producing. What's going to happen oil prices assuming no other country starts producing more?

They're going to skyrocket in a seemingly irrational way. But it's completely rational. The reason is that they're a finite resource that is needed, and so there is very minimal price elasticity. People will pay as low as they can, but simultaneously must have oil and so have a practically uncapped price ceiling if that's all that's available. The same is true of housing.

You're right that people won't, generally speaking, buy a house for $100 when there's another one for sale for $80. But what you've done there is greatly increase the demand for that $80 house, which is now going to naturally send its price upwards.

---

Finally there's the issue that figures on the percent of homes that are owned by investment groups are misleading, because they aren't just buying homes randomly. They're going to pick up lots of houses in precise areas, and so the impact on prohibiting this behavior will be dramatic in these areas.

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

#753

Post by 8bitsrule »

Don't hold your breath.

It needs to be illegal for anyone to buy a single-family home that already owns one, and who won't agree to live in it, full-time and exclusively for at least one year. They must also agree to sell it ONLY to someone who also accepts the same terms. The penalty should be a criminal fraud charge with minimum jailtime -and- a hefty penalty.

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

#754

Post by mancerayder »

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…

Additional property tax? Do you have any idea what property taxes are like in places like NJ, NY? It's 2-3% of the value, sometimes assessed at sales value. People buy despite this because they like an area or a school system. If you raise it more, rest assured that only the rich will have the right to buy. It's as regressive as it gets, your proposal.

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

#755

Post by mmooss »

SecondHandTofu wrote: post #554
lewdev wrote: post #201

Earlier quoted context omitted.

> It will make very little difference in the end. 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? I remember watching some video of tenants being priced out of their rental apartments so when they tried to contact the prop…

It's the opposite in the UK. Most landlords are individuals, own one or maybe a couple of properties. It's awful, rogue landlords who do everything they can to not do repairs or improvements and when they do it often comes after a long time. Often as they have underestimated all the expenses they're liable for and find that the profit is not very much. Give me a company that owns a whole block every day, they've mode…

IME companies are worse: professional investors highly focused on maximizing profits - driving up rent and minimizing costs - rather than a long-term investment by someone with another job, a sidelight and retirement plan.

I don't see how you have more recourse against a company with lawyers that can ignore you, and mom-and-pop. The latter are much more likely to respond to reason.

Of course, any landlord can be bad.

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

#756

Post by tptacek »

tfehring wrote: post #744
kasey_junk wrote: post #270

Earlier quoted context omitted.

And home ownership rates are well within the normal range for the US post war regime! So this is a policy proposal that will likely decrease affordability to fix a problem that doesn’t exist.

Homeownership rates are only ~flat in aggregate because the population is aging and older people are more likely to own their homes. The homeownership rates of Americans aged https://www.census.gov/housing/hvs/data/charts/fig07.pdf

You just told a story about how we need to build more housing. Kasey and I agree with you about that.

The point is that there isn't a distortionary corporate investment force preventing young people from doing that; what there are is zoning and permitting rules locking every desirable location into stasis.

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

#757

Post by mmooss »

pianopatrick wrote: post #601

I'd be fine with a policy of "you can rent housing you build" for American corporations. If a corporation thinks there is demand in some city, goes and build housing for that demand and then rents that housing, that is good for the world. Would be a better policy than letting corporations use their access to capital markets to outcompete individuals trying to buy a house.

Maybe if it doesn't include property with existing homes that you tear down.

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

#758

Post by mmooss »

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.

> 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

I have a hard time believing lots of people care to do that - not many take steps for privacy - or have the resources or time to setup an LLC.

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

#759

Post by kart23 »

corpoposter wrote: post #619
kart23 wrote: post #432

Earlier quoted context omitted.

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…

LVT is a tax on the value of the land specifically, not a traditional property tax. This encourages development on valuable land that is currently being put to unproductive uses. For example, if you own a lot in a downtown metro which is a parking lot you pay low property taxes because parking lots have low property values. You are disincentivised to develop it because your property tax would go up. Opposite incentiv…

I understand that, but what should the actual rate of the LVT be? If the LVT rate is too high, nobody will want to develop that parking lot at all because the taxes outweigh the possible profit. And if they are lower than land appreciation, speculation is encouraged.

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

#760

Post by phreeza »

8bitsrule wrote: post #753

Don't hold your breath. It needs to be illegal for anyone to buy a single-family home that already owns one, and who won't agree to live in it, full-time and exclusively for at least one year. They must also agree to sell it ONLY to someone who also accepts the same terms. The penalty should be a criminal fraud charge with minimum jailtime -and- a hefty penalty.

Wouldn't that most likely lead to less rather than more construction of single family homes?
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