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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

#941

Post by pianopatrick »

bombcar wrote: post #925
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.

Simply greatly reducing loans available to small investors for non-built rental properties would do that. The key is increasing supply, and we should directly target that issue (or decrease demand, but people don't like that side).

"The key is increasing supply" assumes the goal of new housing laws should be to increase supply and bring house prices down. But a lot of people do not agree with that goal. Many people are homeowners who will get tens of thousands of dollars richer if there is less supply and prices rise. And in America at least, homeowners have more votes than renters or builders or landlords or the homeless or other groups. So new housing law tends to favor the goals of homeowners, not the goals of other groups who want more supply.

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

#942

Post by anon291 »

mycodebreaks wrote: post #261
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…

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.

The purpose of people putting money into stocks or real estate is to allow for a simple, fairly 'hands-off' way to make money (real estate is not totally hands off, but is pretty close to a set-it-and-forget-it business).

Real estate works for this because you can really put in as much as you want into it.

Other business activities do not work because the entrance cost for non-rent-seeking business is extremely high and the risk is way too high compared to real estate. This is due to American regulation and labor laws.

This is a 'first-world problem', but now that I have capital, the question is 'what to do with it'?. Yeah, you could throw it in the stock market, but that's also rent-seeking in a sense because you're not really able to invest in primary rounds (I mean you can, but it's hard to find deals), so basically you're just providing liquidity to people, which is rent-seeking of a different kind.

So then the question becomes what else to do with it? I've given a ton away, but that's useless for the most part since it barely creates any economic value.

In my ideal world, I'd start a factory and hire a manager, but the capital cost of that is high, not because of the material or the rental cost, but because of the labor cost. So then, what's the option? I could easily outsource it all to China or India, but that's completely useless for the United States.

Then the question becomes, why start your own, when you could invest in others. Great! I would love to do that. It would be even better if I could simply invest in a local enterprise... Except, that's not easy either. Regulation over investments means that even investing in this is fraught with difficulty unless you want to establish some sort of 'fund'.

So basically, there's nothing to do with the money, which is sad, since I end up giving most of the money I make away anyway, and would prefer to have more of it to give away.

Until America figures out what it wants to be, it's going to be real estate for me... consistent incomes, fairly uncorrelated with equities (which I have a lot of too), etc. There's really not many other options here. There's barely any 'productive' activities taking place in the United States.

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

#943

Post by JoeAltmaier »

pianopatrick wrote: post #941
bombcar wrote: post #925

Earlier quoted context omitted.

Simply greatly reducing loans available to small investors for non-built rental properties would do that. The key is increasing supply, and we should directly target that issue (or decrease demand, but people don't like that side).

"The key is increasing supply" assumes the goal of new housing laws should be to increase supply and bring house prices down. But a lot of people do not agree with that goal. Many people are homeowners who will get tens of thousands of dollars richer if there is less supply and prices rise. And in America at least, homeowners have more votes than renters or builders or landlords or the homeless or other groups. So ne…

It's more complex than that. When I'm not looking to sell, I certainly don't want the assessed value of my house to increase. That just means, higher property tax bill for me.

Also, houses get older every day. Tastes change - ranch, open-plan, multi-story, multi family get more or less valued as time goes on. Not just 'fewer houses means better resale value'. In fact, a shortage may not change housing prices at all - sometimes it just makes them sell faster.

It's easy to take a complex picture, connect a dot or two and draw a line from someplace to some conclusion. But it's always a trickier picture than that. You gotta consider more dots and connect them all.

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

#944

Post by anon291 »

estearum wrote: post #375
kiba wrote: post #334

Earlier quoted context omitted.

Landlord, or property management, is a job, same as any other job you might have. The problem is not owning multiple properties, but not paying enough taxes on land. Otherwise, landlords benefit from the free lunch that comes with economic growth and real estate price appreciation, which is true for every homeowners in this country. IF you want affordability? Tax land. Doesn't matter who owns them. Your grandma or wa…

> Landlord, or property management, This is literally not true. A landlord owns the property. Property managers operate the property. Sometimes these are the same people (in mom and pop scenarios), but typically and at scale they certainly are not. Property management is a job. Landlording is not. It is simply owning an asset. +1 on taxing land though.

The landlord of most of the United States is the American people since American public pension plans are some of the largest holders in these funds that purchase single family homes.

People act as if this is due to 'private greed'. It's not. American public pension plans are underfunded and need more returns. Thus they turn to the private markets, who offer them that which they are seeking to purchase. The market is heavily distorted by these public players whose policy and aims are not constrained by the market but by public policy.

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

#945

Post by 6510 »

BigTTYGothGF wrote: post #851
6510 wrote: post #490

I have this idea where we pick a desert road as long as possible (maybe road 50 Nevada) then build a 50 000 metric ton machine that makes large rammed earth houses. Perhaps make a mold the shape of a Ferris wheel. Have it stamp out 200 homes per week (2 miles) Road 50 is 400 miles so 200 weeks. Rammed earth is a very decent building material but if you make the walls thick and compress it hard enough (maybe add steam…

There's a reason people don't live in that part of the world and it's not because there aren't any houses.

The reasons people do chose to live some place are mostly man made. The reason to buy a property somewhat overlaps but not entirely. The giant machine alone delivers enough hype for some to just buy one. Take care of the boring things and lure them in with killer features. The line is/was planned to have way to many of them. In Japan real estate people already get excited if there is a subway station planned.

Houses are horrifically boring all over the world. There are so many data points that people building stuff are happy when all the boxes are checked. As you've pointed out they usually follow demand but it's not a rule, it doesn't have to be that way. We do living room, kitchen, dining, bathroom, bedroom but you could do many different rooms. Say a proper office with all the trimmings perhaps a network connecting coworkers. You could do a space for home manufacturing. If you could just dock a truck properly and roll pallets in and out it would go a long way. Could do a district cooling system and/or a centralized pool pumping station. Could have a fee to gradually green the desert behind the homes.

But the true killer feature is lack of red tape.

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

#946

Post by hwh03v3r »

mywittyname wrote: post #939

Housing prices are rising due to inflation, and specifically inflation on the raw input for houses - lumber, building materials, and labor. Granted, this is not the only reason in all regions, places like California have much more complex, systematic reasons for increased housing prices. But the bulk of the US has housing prices that are somewhat in line with the cost of building, since there's no limit on land to th…

Being in the lumber industry myself, I can tell you that lumber prices have not kept up with inflation. There was a major run up in price in 2021 and 2022, but prices have returned to pre-covid levels accounting for inflation. I have our own sales data, but this chart makes the case relatively well: https://tradingeconomics.com/commodity/lumber.

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

#947

Post by bombcar »

JoeAltmaier wrote: post #943
pianopatrick wrote: post #941

Earlier quoted context omitted.

"The key is increasing supply" assumes the goal of new housing laws should be to increase supply and bring house prices down. But a lot of people do not agree with that goal. Many people are homeowners who will get tens of thousands of dollars richer if there is less supply and prices rise. And in America at least, homeowners have more votes than renters or builders or landlords or the homeless or other groups. So ne…

It's more complex than that. When I'm not looking to sell, I certainly don't want the assessed value of my house to increase. That just means, higher property tax bill for me. Also, houses get older every day. Tastes change - ranch, open-plan, multi-story, multi family get more or less valued as time goes on. Not just 'fewer houses means better resale value'. In fact, a shortage may not change housing prices at all -…

I think too many people jump to the easy-to-understand "owners want to get richer" conclusion without actually engaging with what people are saying and voting for. Often the results of the voting may be related to property staying somewhat scarce, but (in my experience) the vast majority of people don't really care about the value of their house as long as it doesn't go substantially down.

Assessed value raises (and drops) shouldn't directly affect property tax assuming the whole area raises and falls (in most areas) because of how the tax is apportioned.

The reality that people don't want to deal with is that it's personal and it is slow - there is no SimCity-style bulldozing and redeveloping without pouring in tremendous amounts of money, because people like living where they do and it's hard to get them to move involuntarily.

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

#948

Post by bombcar »

john-h-k wrote: post #926
bombcar wrote: post #924

Earlier quoted context omitted.

It could be substantial just by increasing the number of occupied dwelling units - if institutional investors are willing to let housing sit empty for 6 months or a year (because it doesn't hit them where it hurts) and the average vacancy rate in a city is hovering around 10%, dropping that down to 5% will really shake up prices.

If mega institutions are financial extractors who will take all money available, and the units can be rented to make more money, why aren’t they doing it? Why would the institution turn away free money but individuals owning the houses wouldn’t?

Because commercial real estate works on weird counter-intuitive things, and dropping rental rates adversely affects their entire portfolio more than leaving a building vacant does.

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

#949

Post by munksbeer »

rayiner wrote: post #648
throwaway2037 wrote: post #641

Earlier quoted context omitted.

Another thing: Residential homes are never considered liquid assets. They don't need professional market makers.

Liquidity doesn’t make something more or less of an investment, it makes it easier to buy and sell. Liquidity in residential homes is a good thing. It means that it’s easier to sell your house and buy a new one if you need to move for whatever reason.

If we're still talking about big investors, they're buying, not selling. They're not "market makers" if they're one side only.

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

#950

Post by throwaway-11-1 »

psunavy03 wrote: post #470
Someone1234 wrote: post #421

Earlier quoted context omitted.

The problem with "increase supply" is that existing property owners rarely want that. In almost all cities land has run out, so the only way to actually increase supply is to increase density. That means fewer single-family-homes, and more townhomes, multi-family, condos, and apartments. The "American Dream" is a single-family-home, surrounded by other single-family homes, but even with urban sprawl we simply run int…

No, we threw it away because executives wanted their control fantasy of being able to push people around like little chess pieces, as opposed to setting a vision, hiring professionals, and then giving them the tools to achieve the vision and staying the hell out of their way.

can someone who downvoted this comment explain why? I'm guessing you're management and find it offensive? Feels pretty accurate in my experience
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