I.e the kind of stuff everyone wants to do but can't justify flying so close to the sun on because they don't have a legal army say "we are in compliance and here's why" on their behalf when the municipal government comes looking for fine money or the slip and fall lawyer tries to make something their fault.
In "reasonable" (note for the bottom feeders, I did not say "free", I said "reasonable") markets the big guy has to do things to higher standards because his big pot of money will attract vultures looking for a quick buck if he does even slightly wrong.
Starting from this:
> The United States is short 4 million housing units
It's a lie. The US has more than one housing unit (1.1) per family.
We don't have a housing problem. We really really don't.
We have an urbanism problem, that made the dense hellscapes the only viable housing location.
MFW I now live in capitalism and can't afford to own anything.
It does not refer to all ownership by individuals of real and personal property, restrictions on other personally-held property are separate concerns from the abolition of private property, and socialists regimes, including those in the Soviet bloc, frequently have retained private home ownership, which is not fundamentally inconsistent with socialist theory.
But it also means that the people who can’t compete in this type of Darwinism only survive because of the empathy of others who do (whether that be family/friends, politics, or charities).
I’m worried about the breadth of industries that PE has infected in the US.
Notwithstanding that, the populist fantasy is that developers won't build more "because they are greedy", as though that math works out. If developers don't leave money on the table, then they'd want to build where the demand exists and it does. They face a number of constraints and bottlenecks, not just for materials/labor, but managing risk. Risk makes loans expensive, everything is built on credit. Some of that risk is compounded by the threat of litigation by NIMBYs, or regulatory requirements, or environmental review, etc.
I think you're right. A lot of people confuse capitalism for working for a living - because that's what capitalists want the middle class to think it is. Capitalism is really about getting capital to work for you so you don't have to. Building and selling homes is a form of working. Holding homes for rent is capitalism.
nothing in the real world is in its pure form, and some business are able to provide value which they cannot charge for because they can rent-seek on other areas, so there is always nuance.
but an economy where rent-seeking is the main path to wealth is an economy in really poor shape.
I don't think this is contingent at all on the capacity to buy and hold, but on policies that limit building and financial instruments related to housing. The 30-year mortgage even. So now similar to the case with Social Security and public pensions abroad, politicians are playing a game of hot-potato not wanting to be the ones to have to make changes and upset the large aging voting bloc. Similar, too, because it's a generational wealth transfer.
Many items through market exchange have gone down in price over time owing to increases in efficiency (see: coffee makers). This can't be blamed on markets qua markets. It's adversarial policy that harms young workers.
If you ban private equity, it's going to be mom&pop redevelopment companies doing the same. I give you an example of Vancouver. It banned foreign purchases: https://www.kelownarealestate.com/blog-posts/canadas-ban-on-...
The impact was literally non-existing. The prices continued to grow as Vancouver 's housing density keeps increasing.
If you can afford to have one, or multiple, $2M+ condos that you just "park" your wealth in to leave them vacant, the presence of a $10K or $20K fee/tax a year is in the "chump change" category.
> The number of vacant homes in Vancouver has fallen below 1000 as of 2024. The latest Annual report shows low vacancy rate of 0.49%. [the average is 2.7%]
Guess what happened with the housing prices? Right. They kept increasing. The housing density went up, so the prices must also increase.
The government should also build massive amounts of housing. Everywhere of all types - apartments, townhouses, single family. After built transferred to the residents as coops.
I think that's why they're buying residential - there aren't any other traditional investments that aren't in a bubble or just have low returns. If you anticipate economic collapse or hyper inflation or whatever, physical assets make sense - when you measure wealth in houses you don't care what the dollar does. Gold people can do without, housing not so much. Whatever happens next, people will need a place to live. OTOH the population collapse is also coming so housing doesn't make much sense beyond 2030 or so.
What is this? Would this just be "putting a little to the side each month" to cover your 12 million dollar loss to Hurricane Micheala ?
Of course it wouldn't happen in isolation, so there are other massive forces to consider.
Maybe wide swathes of formerly-occupied (but now uninsurable) land would sell cheaply enough that middle-income people could build inexpensive semi-disposable vacation cottages, like the old days.
GP's assertion of population collapse in five years is a bit extreme for me!
Check the population pyramid for the US. the baby boomers are moving into the top part (I call the grinder) where they will die out over the next 20 years. At the bottom, we have 20 years of slowly decreasing births, so the bottom AND top are shrinking. Combine that with current policies stopping immigration and I don't know how the US population can be doing anything but decreasing. College admissions people are talking about the cliff (an exaggeration for sure) in enrolment this year and for years to come. People are also getting married closer to 30, and having much less than 2 children per couple.
Many/most corporate owners are individuals (as per the linked report). See my comment here:
https://news.ycombinator.com/item?id=46208561
> Cap how many rentals an individual can own.
Yes. Cap to 0. Until we get data on the breakdown (what percentage of rental homes are by owners who own 1, 2, 3, etc), we don't really know. It won't be easy to determine because a lot of RE investors create a new LLC for each property they own.
> Yes. Cap to 0.
That is saying let's eliminate rentals entirely. If nobody can own a rental, there can be no rentals.
Some people do prefer to rent. I wouldn't, but I know people who truly prefer that.
It is, of course, an extreme scenario. As I said, this is absent good data. If we get a sense of the impact one would have if we limit it to 1, supported by data, sure - cap it to 1.
Why would you get to decide that?
Some people like to rent single family homes. Some because they have a large family. Some because that's just what they want. It's not ok to tell them they can't do that and must be forced to live in an apartment.
A fun knock-on effect of this policy proposal: it would effectively halt all new development of dense multifamily.
Landlords provide no 'service'; they are merely an existence tax.
The market already does not build dense multifamily; what is there to halt?
What about the fact that most homeowners get the vast majority of the money for said purchase from a (presumably ruthless) corporation?
It's funny that people rarely seem to apply the same reasoning to their dwelling place.
And that's before you get to things like the furnace going, or the roof failing. Two kinds of people with this "landlords provide absolutely no services" perspective: people so comfortable financially that the y-o-y costs of maintaining a property don't even register, and renters who have never owned and been on the hook for an urgent big-ticket maintenance problem.
Landlords have existed since forever, and the market was until recently very happy to build enough supply.
That it's suddenly gone downhill implies a problem well beyond "landlords".
But if it was truly a free market and supply met demand owning housing would be a depreciating asset and renting would be cheaper.
Land ownership is a cultural construct. Their is no natural state.
Yes build more. Also regulate the oligarchs until they no longer exist.
These investments are a bet on continuing to under-build and under-densify.
Me: "should we stop allowing private equity to hold property?"
My Strawman: "nah let's build more houses to be snatched up by private equity, that way eventually maybe they'll be really nice and decide to lower prices for us someday due to the infallible balance of supply and demand that definitely hasn't been rigged to hell over the past half century. They certainly won't just continue to rig the system to benefit themselves"
How has "supply and demand" been "rigged"? A lack of supply isn't evidence of "supply and demand" being "rigged", it's it working exactly as predicted, not any different than oil prices going up when there's some geopolitical event threatening supply.
Housing demand will always be > 0 as long as population is growing and hence there can never be a oversupply.
"As of December 2022, the five largest investors owned about 300,000 homes — just under 2% of single-family rental homes nationally."
Where institutions dominate is in rentals: "institutional investors own roughly 2% to 25% of single-family rentals in major markets" [1];.
[1] https://www.npr.org/sections/planet-money/2025/09/09/g-s1-87...
Honestly, this plus things like PermitFlow make me feel like we will be able to build enough. The issue will be making sure the housing is affordable rather than expensive and empty.
That's a red herring because most of the price increase comes from increase in land prices.
nonetheless, materials and the cost of labor are the most significant costs for new buildings. not land, taxes, or zoning regulations. here is one example where this is a fact: www.vermontpublic.org/local-news/2024-05-23/uvm-halts-student-housing-project-construction-costs-workforce-shortage
You can compare this to overall housing prices in the LA area[1], prices in 2024 is 262.7% of 2012 prices. Suppose you have a $100k house in 2012, that will worth $262k in 2024, an appreciation of $162k. Using the land value percentages above, the land value of the houses are $51k and $188k respectively, an appreciation of $137k. That means 85% of the appreciation was in land, not because building materials got more expensive or whatever.
You either go the liberal+regulated free market way, which will get lobbied, then overregulated, or you go the socialized way, where you allow local government and associations/unions to compete in the market... with the exact same rights as the companies, and no weird rules that prevent them to truly compete.
And if you have a natural monopoly (energy distribution is the worst offender), you have to go the central planning way I guess, until we find something better.
There is some tax tricks you can play, but in general homes for primary residence is lower then secondary/rent, which is a big proportion of cost.
I wonder: if you added it all up, would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have?
That's an easy one to fix regardless. Use a flat tax with a large fixed refundable credit. Now everyone pays e.g. 30% but gets a $12,000 credit, so someone who makes $40,000 is effectively paying zero, someone who makes $80,000 is effectively paying 15% and the effective rate approaches 30% as the number goes up. But the marginal rate is the same for everyone so there aren't all these complexities and arbitrage games, and at lower incomes the credit stands in for a lot of assistance programs so you don't get all the marginal rate cliffs from overlapping phase outs.
This only maybe works if you count capital gains as regular income. Otherwise they do the Steve Jobs $1 salary thing.
Even the capital gains can be largely evaded. https://www.propublica.org/article/billionaires-tax-avoidanc... https://www.propublica.org/article/lord-of-the-roths-how-tec... etc.
Yes, that's how a flat tax works. It's flat, for everything.
The nominal reason capital gains has a lower rate is that the amount of the gain is calculated without respect to inflation. But that's dumb; just use the normal rate and actually do the inflation adjustment from the time of purchase instead.
Absolutely not. The US has the most progressive federal tax code in the OECD, mainly because we don't have a VAT like most other countries.
Nearly all of the loopholes you mention are at the federal level, where half of the households in the nation pay <= $0 in income tax.
> but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant.
If you're referring to cost segregation, this is probably less true now than in the past. It used to cost a lot of money to do a cost segregation analysis, and made sense only for apartment complexes (i.e. the cost to do the analysis vastly exceeded whatever savings you'd get on a single house). So only rich investors who owned 20+ unit complexes would do it.
I've heard that in the last few years, many accounting firms are providing it for relatively cheap, so ordinary investors can do it now.
RE people make a big deal about depreciation as a tax benefit, but it's minor in my experience. You're effectively reducing the cost basis, so when you ultimately sell, you have to pay a larger tax on the capital gains. Overall you gain, but not by a lot.
Perhaps if you combine with a 1031 exchange, you may get a greater benefit.
If I am blackrock? If I am smaller PE deploying 10 million a year?
Not sure what you're asking.
As the report points out, institutional investors purchase only 3% of homes nationwide (but much higher in some cities). Regular smaller investors likely buy more homes than the institutional ones.
This is crucial. People are in cities - in the day and age of corporate consolidation, less and less jobs are available, and they are increasingly in-office, and increasingly in only a select few metro areas.
Nobody would give a damn if a glut of housing was built in the middle of South Dakota or Maine or Wyoming. That's because there's very little to no jobs growth in those regions.
If you're having trouble buying a house in Atlanta, yes - they are a big factor.
In Austin? No - not a big factor.
Are these companies going to banks and applying for a loan? I'd think they are privately backed and invested in.
The final phase is to exit via UPREIT for OP units rather than cash, with the REIT getting a step up in basis that can be depreciated again, while still not triggering any capital gains for you until you convert
Source? That looks like a juicy target for state taxation…
https://tax.thomsonreuters.com/en/glossary/bonus-depreciatio...
Cost Segregation:
https://warrenaverett.com/insights/what-is-cost-segregation/
I believe bonus depreciation is time limited (unless Congress renews it).
They're only deferring the tax on $70-80K, correct?
Yes, if they sell normally. But usually capital gains tax is lower than that on the income so overall they're saving.
To be explicit: They use the $70-80K depreciation to offset their rental income (which often means they pay no tax on the income for that year and several years after). They'll pay it eventually when they sell, but at a (usually) lower tax rate.
There are tricks like 1031 exchange to avoid paying taxes when they sell, but I don't know how depreciation benefits factor in to those.
First, depreciation on real property is about 27 years. 80k annual depreciation indicates a 2.2m purchase price.
Corporate capital gains don't get a special rate. They're taxed the same as regular corporate income. The 1031 like kind exchange is also very difficult to achieve as the bar is very high even under the Trump admin.
That's straight line depreciation. Look elsewhere in the thread and you'll see cost segregation and bonus depreciation. To give you an idea, I once invested $50K in a multifamily property and my depreciation for the first year was $18K. I never paid taxes on any of my income (but did pay more taxes when it was sold due to the lowered cost basis).
Also, I don't know what you mean about rolling paper losses into the next deal, but I suspect it's not accurate either.
There's a reason this non-existent loophole wasn't mentioned in the article that was looking for reasons to hate on corporate landlords.
Unrelated note but the Homestead exemption in Santa Clara County, average sale price $2,300,000, is $7,000. To be explicit, the home’s value is reduced by $7,000 for valuation purposes.
Edit: the tax deferred part sounds like a 1031 exchange
The homestead exemptions are very small or non-existent in some states, but I believe they are fairly substantial in the south. Ultimately, my point was that they are completely wrong in that I don't know of a single locality where landlords are given discounts on property taxes but owner occupied homes have to pay full freight, but the opposite is true in at least some cases. They could be talking about developer incentives for new construction, but that's not the same thing IMO and it's difficult to understand what they meant.
It's very, very hard to talk to people who have such strong, completely uninformed opinions and seem to be completely unwilling to even attempt to educate themselves on the topic. To be clear, this is not pointed at you, I'm just not willing to invest the time you did to seriously guess at what the parent poster was going on about.
Somewhat more outrageous is the 1031 exchange. Sell VTI at a profit to buy VOO and the government hits you with a capital gains tax. Sell your primary residence for $250k more than you bought it - same thing. But landlords are a special, privileged investor class to whom these rules don't apply. They can sell a house and pay no taxes on gains as long as they buy another property.
And the scale applies at every single step of the process. A citizen homebuyer is playing a oneshot game. There are few discounts to be had and every single fee is its own battle.
A corporation/PE is playing a multi-shot game. There are bulk discounts, relationships, and scale that is applied to everything from title insurance and inspections to cost segregations to filing all of the paperwork.
Also if you take a 10% gamble on a strategy to save 50k and it backfires and lands you with a 500k legal bill, that's just the cost of business to a big (or even not that big) company, but it'd be absolutely ruinous to private individuals.
This is also not really how depreciation works for assets that retain their value. If you buy a building to rent it out, the cost of the building essentially a cost of doing business, i.e. a tax deduction. You pay tax on the profit which is revenue (rents) minus costs (building, interest, maintenance, advertising, etc.) Depreciation is the building, they make you take it over time instead of all at once when you buy it.
But the depreciation lowers the book value of the building, which is your tax basis when you sell it. If you buy a building for a million dollars, depreciate it down to $500,000 and then sell it for $2M, you have a $1.5M capital gain from the sale. You basically have to give back all the depreciation unless the building actually lost that much value by the time you sold it, and in practice it usually goes up instead of down.
It's really the homeowners who have the advantage here because there is a large capital gains tax exemption from the sale of your primary residence, and that's actually a reduction in taxes instead of just a deferral.
Homeowners get a tax exemption but only up to a certain amount in gains.
They can also keep the property forever and continue renting it out, and then never realize the gain. But in both cases that means they don't get to realize the gain -- or even recover their original principal -- except insofar as they're renting it out, and the rent is taxable income.
As long as they buy another property at least as expensive or more, within a certain time period.
And it's not that they don't pay taxes, it's that the cost basis gets reset. That is the benefit.
a lot of temporarily embarrassed millionaires, some of whom may actually cross that threshold.
Not easy to do of course, but the problems that come with building more housing are better then the problems we have now.
> Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties.
They're invoking a false dichotomy. Small scale landlords (i.e. the guy who owns a second home and rents it out) are part of the corporations. From the linked report:
> A corporate investor, also referred to as a nonindividual investor, is a business entity that owns residential property, usually for the purpose of generating income. This broad category ranges from small entities such as family trusts and limited liability corporations (LLCs) to larger outfits like real estate investment trusts (REITs), endowments, and pension funds.
Many/most "ordinary" folks who buy a house to rent fall in this category - they form an LLC or something similar. Many reasons for this. Percentage-wise, my guess is that institutional investors (not just individuals who formed an LLC) are still a relatively small minority, but I don't have the data.
There is a common misconception on HN that it's rich people who mostly buy houses/units to rent out. In my experience, that's just not the case. Everyone is doing it across the board, and just by virtue of there being more non-rich people, they are likely the majority.
Also, higher income folks don't feel a great need to make more money. Median or lower income want to make a lot more, and real estate is actually one of the fewest options available to them (and also really easy to learn/understand). A lot less work than a second job (although some get a second job just to bootstrap the RE purchase process).
Just 3 days ago I spoke to a friend. Engineer (not software). Decent income, but not FAANG level. Non-working spouse and multiple kids. Rents out two houses, and is buying 2 more.
I took an AirBnB course from a guy who has lots of listings on AirBnB. He got there with almost no money down (most of his money was spent on furnishing the place). He was educated, but fairly low income ($50-60K in California). When I took the course he was making over $300K/year net from his AirBnBs.
When I used to listen to the Bigger Pockets podcast, the majority of people who owned 10+ homes to rent had very average incomes (less than a typical non-FAANG engineer).
I've been in the real estate space for a few years now. I don't own other units, but I do invest in them, and am moderately active in a local real estate club. I know how these things work.
If you want to solve this problem, stop pointing fingers at "rich people", and stop allowing multiple ownership for a decade or two.
Tax break on single home ownership, but significantly increased tax on multi-home-ownership?
It would be interesting to see comparisons between PE ownership in markets with property tax vs markets without.
For example, unsold stock that I bought 15 years ago; and then got a loan against. I'm wealthy... kinda? But I didn't sell the stock; I have unrealized gains, and you shouldn't tax me beyond income tax on borrowed money? Okay, tax me on my unrealized gains then - but then 2008 repeats itself, stock goes down 40%, do I get a refund? Of course not, I only pay when stock goes up and never down, which is not exactly a fair incentive.
Now imagine artwork I bought 15 years ago from Banksy. Or imagine my video game collection I bought on eBay that contains some rare titles. Or what about my wine collection? Now imagine I'm Elon Musk, on paper worth $400B, but if I sold even 20% of my stock, that paper valuation would be shredded from an excess of liquidity driving the share price down, so you can't tax me on what is physically impossible to realize.
This has the finance equivalent of feeling like cookie banners will actually do anything.
Political power will advocate for it's power, you have to go one level higher and interact at that level, not on tax law tweaks.
To give an example of where this has gone wrong already, look at the entire interaction between startup stock, ISOs and AMT and how it creates a horrible trap for startup employees, but not for founders and investors who get a lot of very nice tax benefits like QSBS, no AMT, so on. Because startup employees are diffuse, usually have unstable employment and are usually younger, this hasn't been fixed to this day.
While other countries like Israel have this fixed in a very elegant way, where you can exercise without tax bombs and only actually have tax liability when you actually can and do practically realize or liquidate the stock gains.
I don't have a good solution for private investment, but for offshore public investment, you can have the same principle.
> Sell stock that previously wasn't on the market, you exhibit permanent downward pressure.
Which is a very, very good thing, to be clear. Because it lowers expectations of future returns, and make stock valuations not based on "i predict pension funds will automatically put their contributor money into those stocks", but on actual business information.
At scale the government's holdings will be very diversified and relatively low risk. Almost like an index fund, but for the entire economy. They can use the dividend payments from these holdings to reduce income tax.
We already do this for property taxes.
A municipality is charging residents for services. Obligations are progressive (by necessity), and indexed to assessed property value (as a practicality), rather than equity or income.
Municipal operations get more expensive with inflation, and with resident demands (ballot initiatives, etc). They are never zero, and must be tied to something in the real world.
These payments are collected as a tax, because that is the only lever available to municipalities.
I see your point, but I think it's a category error.
You are taxed on realized property capital gains, beyond a certain amount ($500K?) for principal residence (anywhere you've lived two of more of the last five years). And for a non-principal residence there is no threshold.
The payment obligations are progressive by necessity, and indexed to assessed property value as a practicality.
The municipality does not care how much equity you have in your house, or how much wealth you have in other assets, or how much income you have.
Your property tax obligation is the same, whether you have unrealized gains or not. It is therefore obviously not a tax on unrealized gains.
Whether I have 0% equity or 100% equity in my home I still own it. The only question is how much I owe to the bank. "Oh I bought that with leverage" shouldn't change things for home ownership and it should change things for a wealth tax on stock ownership.
Don't allow loans against equity ownership. If you can take a loan against it, you should be taxed on it.
> artwork, rare collection
Tax the insured value. If it can be insured for 100 bucks, it should be taxed on 100 bucks.
So let me propose: a wealth tax on land! ("Georgism"). But not a tax on the "value of improvements," i.e, buildings. This disincentivizes single-family homes near train stations (widespread in the town I grew up in) and is very low-cost to collect.
I don't know where you're writing from. But here in California, the source of all evil (Prop 13) originated with single-family homeowners trying to *escape the property taxes that result from their opposing new development.
Given how spectacularly CA housing policy has failed, perhaps it's time to try the opposite: Let's abolish all income taxes and exclusively tax land instead! (Land taxes have the property of being extremely progressive wealth taxes that are dead simple to administer.)
Not that the system would not be abused, but the obvious exploit is not going to work.
If the burden is lessened to have your own place, hopefully we could see less homeless on the street or living in cars when times are tough.
However if you have more than one, then you pay significant property tax on all of them. I would hope that could free up more places for more people getting a home.
But of course if you earn more than $180k a year, I guess you could afford some property tax.
I am also thinking foreign ownership of property should be taxed heavily. I know that is not popular, but honestly if you not living full time in the country then you are effectively taking up a spot for someone who needs a place to live.
Or - what if I own a 5-bedroom house, and rent the other 4 bedrooms to roommates?
There you go, you've sidestepped this inane policy.
The number cited links to here:
https://upforgrowth.org/apply-the-vision/2023-housing-underp...
Which has this as the report:
https://upforgrowth.org/wp-content/uploads/2023/10/2023_Hous...
The number is driven by this definition:
> Missing Households. Households that may not have formed due to lack of availability and affordability, e.g. households with children over 18 years of age still living with their parents or individuals or couples living together as roommates at levels exceeding historical norms.
From an economics standpoint, "shortage" isn't a useful word, unless it's applied in the extremely unlikely scenario where there nothing is available at any price. Generally, this is because price dictates supply.
"Shortage" for the current housing market is generally used to mean, "relative to historic trends, many people want houses who can't afford the current prices."
Sometimes this is expected or unavoidable, e.g. if you have a sudden increase in the demand for electricity then the price will increase temporarily until new power generation or transmission capacity can be brought online, and in the meantime you have a shortage.
The problem comes when the shortage is a result of artificial scarcity as it is with housing/zoning, because then it's not temporary, it persists until the cause of the artificial scarcity is defeated.
Truckers are currently retiring faster than they're being replaced. So some folks are saying there's going to be a "trucker shortage." In reality, there are plenty of people out there who could get a CDL license and drive a truck, but don't. Why? Because the compensation for being a trucker isn't high enough because the demand isn't high enough.
For housing, from the house seller's point of view, they could have the viewpoint that there are far too many houses for sale, the supply is too high, they want a higher price for their house. And from the buyer's point of view, there aren't enough houses because they want to pay a lower price.
I'm not saying either side is right/wrong or good/bad. It's just that "shortage" isn't a very useful word.
And who is right is then determined by the market, because "not enough" means "the price is higher than the cost of creating more" at which point the market creates more. Unless the government is suppressing the ordinary market through rules imposing artificial scarcity, which is the evil to be prevented.
It's more like "relative to historic trends, many people want houses [in desirable areas] who can't afford the current prices."
Building tons of new houses outside of the hot areas that all these people want to live would still elicit cries of a shortage and an affordability crisis. Because there are currently affordable places outside of hot areas, but not very many takers.
It's a really tough nut to crack. Because how do you reorient the demand to those areas that have the supply? It's not easy. We can't seem to do it currently, and there's no real plan to do it if even if we could somehow build even more housing. We'd have to build lots of housing only in hot areas. Which sounds easy enough until you realize the economics don't make sense and even on the off chance that you could, it would only generate more demand.
First order of business however should be to find a clever way to stop abuses like the ones outlined in the article. The housing that would free up in the hot areas would not be near enough to meet the demand, but if we stop that nonsense at least we're not "digging the hole deeper" so to speak.
Building houses in places 3 hours away from closest job wont.
Uh have you heard of telework? I am sure that both federal and state governments could incentivize companies to offer telework instead of some forced RTO situation.
They aren't saying landlords are the problem, they are saying Institutional Investors and Foreign Corporations being landlords are the problem.
Doubly so when they themselves lobby for policies that keep housing prices high, which is the primary thing preventing more people from owning rather than renting.
The problem with institutional investors is that in making it big business you drive up home prices which in turn drives up the rental prices. Since they can have a wide portfolio of homes, they are less likely to lower rent prices when demand drops, because they can afford to take the short term hit if it they think the market is going to pick back up again. AND they can play games like grabbing all available homes in an area in order to artificially inflate prices.
Is there a good example of this?
Every corporation I've rented from have all fought me tooth and nail when I needed maintenance and did basically everything possible to ignore any and all complaints (because it costs them money, obviously). I have had to have a lawyer send a letter on my behalf more than once.
But that's just my experience, which has jaded me. Perhaps you can show me a non-hypothetical example of the other side and open my eyes up a bit? Any countries, laws, specific corporations which demonstrate a carefully-regulated market of institutional single-family-home lenders I should look at?
Anyways, I was just calling out that your logic didn't appear to hold. The right response to the comment that roots this subthread is "institutional landlords are not generally a thing". Again: the median number of properties a California corporate landlord lets out is 1.
I didn't write any other comment here :)
But, anyways:
>It has not been my experience that individual owner landlords have been better than institutional owners!
My experience has been different than yours, in that case!
More broadly: if your concern is that the landlord isn't going to fix the furnace or whatever, you can address that without distorting the market just by creating causes of action, penalties, and fix-and-deduct ordinances to shift incentives.
Banning corporate landlords reduces the supply of housing (larger institutional investors are the primary builders of dense multifamily), and privileges individual owner/landlords who do not have a better track record or better incentives or better resources.
His shtick is real estate investment, of course he wants to see Joe Public buy a starter home. The trouble is: real estate as a government-guaranteed investment vehicle is what brought us the housing affordability crisis.
... what bearing does that have on anything?
>"If you're 25 or 26 years old right now YOU ARE GETTING SCREWED RIGHT NOW (by large banks) like has never happened ever before... record debt debt debt" —Dave Ramsey [0]
I am definitely doing "better than I deserve."
[0] He actually says this at 6m in above-comment's link
It would be nice to see that again, the new housing market is ridiculous now.
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
I would bet most, if not almost all homes, are sold to buyers who will occupy them.
This graph goes further back:
https://fred.stlouisfed.org/series/RHORUSQ156N
More info:
https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
I was talking about the younger crowd trying to get a start.
First-time homebuyer (FTB) "average and median age stood at 36.3 and 33 years for the period Q3:24-Q2:25, and there has been minimal FTB average age change since either 2001 or 2021" [1].
[1] https://www.aei.org/articles/nar-says-the-typical-first-time...
Now there are certainly high income buyers who can afford these 1-2-3-5 and up million dollar homes. But the very nature of who is a homebuyer is changing before our eyes in these places. The white collar office worker in 1990 who was buying in west la then is saddled with being a renter, because they only make $70k in west la. Their income hasn't 4x since 2000, not even close.
How does this change the makeup of who lives in the homes? Maybe that $70k worker would have shacked up with the home purchase, and had two kids to fill those spare two bedrooms, who go on to be enrolled in the school district, maybe work part time jobs, and hopefully stick around after and contribute to the regional economy. Instead, maybe that 3br home goes to a content creator, who uses one spare bedroom as a guest bedroom and the other spare for creating content. The school ends up short two potential pupils. The local economy loses two potential contributors, shops don't have anyone to hire and cut shifts and start a downward cycle of declining service and profit against rent increases until closure.
I don't see why the seller would care. They're getting a check at closing, that's all they care about.
I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But most buyers are pre-qualified (at least if they're working with an agent). The main reason they would not get financing is if the appraisal came in lower than the sale price.
Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property.
Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing.
Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems.
EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of.
Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.
Like, don't arrest people for sleeping under bridges unless they are sleeping in the middle of a footpath under a bridge. And don't go building footpaths under all the bridges to prevent them, either. Also tear down all the hostile architecture or at least don't arrest people for taking to it with angle grinders.
The free market is supposed to work by everyone solving all their own problems and then exchanging solutions with each other. If you claim to have a market but then arrest people for solving problems, no wonder you get a dysfunctional society.
Not saying that people living in tents on public land is a good long-term solution, but it's a step up from being completely shelterless, and since price changes happen at the margins, if it's even remotely viable, it may cause a market crash.
I'm not convinced that commercial ownership is the problem. Or if it is, it's not a new problem. Slumlords have been around forever.
The main problem is we just don't have enough housing supply. Investor-owners can only hold units vacant to support higher rents up to a point. If there are enough vacant units available and enough supply that property values are not appreciating like crazy, someone will crack and cut the rent or sell out so they can get a better return on their money.
I am unbelievably sick of seeing the symptoms go unaddressed while commenters and armchair economists bicker and debate who is the sole source of blame that must foot the bill. We need action, and we need to be brave enough to be willing to admit this isn’t working for the masses anymore.
I’m unbelievably tired of this cowardly pussy-footing by people who can’t or won’t envision a better future that also doesn’t involve number go up on property forever without further investment.
Your proposed "action" is comically obtuse and will be ineffective at best. So no one can renovate a home for more than 30 days?
Number go up on property forever is what the masses want and what works for them, because the majority of people live in a home owned by that household. So you're misinformed about that as well.
Your thesis here is disproven in large cities like the one I live in, Miami. Many investors / property owners here don't give a damn on getting a return on their investment so long as it doesn't go to $0 - they buy real estate sight unseen because it's a good way for the well-to-do in LatAm and Russia to get their money out of developing/regressing economies and into the USA. Half the units in the building I live in are vacant - they are owned by Brazilians, Argentines, Venezuelans, etc who want a safe haven for their money (and for Brazilians, as a base to buy loads of Apple products that they can turn around and sell back in Brazil for a 2-3x markup).
That said, I would probably not be opposed to restricting foreign ownership of residential real estate, if indeed it is that big an issue.
Plus, to buy stocks or ETFs or bonds or whatever, you have to register with a broker, who has to legally report each sale and transaction to the government. The point isn't the liquidity. The point is that a family can drop 200k-500k in a pretty stable asset in an incredibly less volatile environment and effectively not report it. That is worth it in the age of hyperinflation in LatAm economies. Plus, if the unit in question is in a decent location, they can escape at the first sign of trouble.
They can offset this and maybe even get some cash flow by hiring a management company to rent it out, but then it's not sitting vacant, which was the original complaint.
They can offset this, as did my previous landlord who was based in China and had 5 units in the building. However, a small 10k to a family worth millions is nothing especially if it means they can escape a despotic regime at any point, and have somewhere to go, and if they need money, they can liquidate a condo VERY quickly.
"corn/egg/beef is more than a market - it's what people eat"
"cars/gas is more than a market - it's how people get around"
"natural gas is more than a market - it's how people stay warm"
Is there a point to this line of questioning?
That "housing is more than a market - it's where people live" is a platitude. It sounds nice. But it doesn't tell us anything meaningful nor solve any problems.
Trace the problem back. Where does it start?
Why is PE investing in homes? Because they can make money. Why does buying a home make money? Because the value appreciates. Why does the value appreciate on an asset that literally deteriorates over time? Because of restricted supply. Why is there a supply shortage?
The root cause of this issue is supply. Zoning, mostly, is to blame. There are down stream issues, like the capacity of the construction industry, but that is an effect of the current environment not a root cause in and of itself — if there is money to be made, construction will grow as fast as it can.
Fix supply, and you fix the issue. This is a uniquely (English) western world problem. Go look at western countries that speak English vs. non-English housing starts. It’s just a cultural failure. You can blame corporations all you want but at the end of the day most people in the anglosphere expect a return on the largest purchase of their lives, even if it comes at the cost of materially worsening the lives of those around them.
One should ask why it is that housing / land is more profitable than those investments in which banks and private equity previously invested. And then when you follow that line of reasoning (too much capital and credit -- thanks quantitative easing! -- poor performance on bonds due to low interest rates and restrictions on the quality of investment vehicles) and you'll see that the root cause is probably more financial rather than _just_ too little housing.
Debts need to be cleared, losses need to be accepted, and leverage unwound. Building more housing just gives banks and private equity more stuff to buy.
If corporations can't own residential properties, how would anyone rent a house? How would home builders build model homes? How would Trusts manage real estate?
This is a complex and nuanced problem.
Anecdotally: I've rented 5 different single-family houses in my life. All of them were rented from individuals.
Only 1 out of the 5 had a landlord that owned some other stuff that they also rented out.
For the remaining 4 out of 5, the landlord only had that singular property to rent: They lived wherever they lived, and they also had an extra house for whatever reason that they rented to me.
But sure: If you want to bet that you're right about a very specific situation that you have no specific knowledge of, then don't let me stand in your way. A fool and his money are soon to part.
In most cities, when you rent a detached house from a corporation, it's really one individual behind it.
These people are likely not the minority.
The context is my anecdotal experience.
Within that context, their intent was spelled very precisely.
The corpo ones were the worst.
They invented illegal terms ("Sorry, sir. You may have signed your 1-year lease agreement on the fifth day of the month, but our policy is to close leases only on the last day of the month. You still owe us for the rest of this [13th!] month whether you've moved out or not"), were wildly successful at making all of the security deposit disappear, and were miserable at keeping their word on necessary repairs. They were shit.
The ones that were run by some dude who owned some apartments were very different. I paid my rent on time. If I had a problem, I called the singular responsible person directly and he (being the kind of person who likes to have timely payments in their bank account) would answer the phone himself. There were never any surprises relating to money, and I never had an issue that lasted for more than 24 hours.
These were both in the north suburbs of Atlanta - one was mid upper end at the time and the other was in one of the more affluent neighborhoods
I have no reason to care about staffing or capitalization. Those aren't my concerns. Those concepts are beyond my purvey as a tenant.
I care only about timeliness. My entire relationship any landlord is that of paying money, and receiving housing and services relating to that housing.
When the aircon dies and it takes weeks of pestering for the corpo entity to address it, that's a problem for me that changes the way I view the world in a negative way.
When the aircon dies and it's fixed the next afternoon by the action of some dude who owns some apartments, then I don't really have anything to complain about at all. There was a problem and it was in the past almost as soon as it was discovered.
Which possibility might your exquisitely-refined sensitivities detect to be the most likely?
I'm an outlier; I understand that most rentals in the US are not owned by individuals, but instead by [large-ish] corporations. I understand that it is impossible for my experience to be broadly shared.
And the reason I ended up back in an apartment for four years from 2012-2016.
And during those years I was fortunately in my mid to late 30s and could afford to stay in nice apartments in an upper income suburb of metro Atlanta.
It's not very common that local merchants give a damn about the people in their community.
Let me tell you about the bodega man.
I'd walk over there to his shop if I wanted to buy something -- a soda, some beer, a loaf of bread or a gallon of milk or some pasta sauce or whatever. It was a good bit of healthy exercise, and it was as local as it could get.
He didn't keep a ton of inventory (it was not a big shop), but he'd stock whatever his customers wanted to buy.
I used to smoke cigarettes. One day when I stopped into the bodega, the bodega man asked me why he kept seeing me walk past his place to the big corpo gas station next door.
"They carry my brand of smokes, and you don't," I said.
He asked me what I smoked. I produced a pack from my pocket and showed it to him. He said he wasn't sure if he could get them from his distributor but that he would try. He then asked me what I paid for them next door, and I didn't really remember so I guessed -- and I guessed low.
"I think they're about six bucks."
A few days later, I was back at the bodega to buy whatever it was and he was proud to show me that he'd made a spot for my cigarettes and got some in stock. They were marked at $7.42 (I remember that part very precisely).
He asked if I wanted some, and I'm thinking to myself "Sure, dude. Fine. I'll buy your expensive cigarettes that you got in for me."
The bodega man rang them up at $6.00. I paid the man, and said "Thank you!"
They were $6.00 for me from then on, which made it the cheapest place in town (remember, I guessed low). His employees charged me $6.00 without any prompting on my part, too. They were only stocked because I wanted them, and they were sold to me at a price that I was very happy to pay. If anyone random wanted them, I'm sure that the price was $7.42.
Or at least, this all lasted until one day, when the bodega man suddenly fell over dead while coaching his team at a kids' softball game. IIRC, it was a brain aneurysm. The bodega didn't open back up the next day or ever again. The last time I went by there -- years ago, now -- the windows that I could see past the plywood had been shattered.
Sometimes I wonder about the Bud Light-emblazoned Weber charcoal grill that his beer distributor placed there as a part of a promo display. It was still in there when he died.
I had asked him about that one day, just because I was curious: "Hey, so: What happens to stuff like that when the promotion is over and the next display shows up?"
And he thought for a moment, and said "I'll tell you what: When the promotion is over, you can have it. It's your grill."
I wish I could have made any parts of these stories up, but it's instead just kind of sad to recall.
---
Anyway, enough stories of the bodega man.
I now have questions for you.
How many specialty items has Amazon kept in stock just because you, individually, wanted to buy them?
How many items have you successfully (even if accidentally) negotiated an ongoing price with Amazon on?
How many softball teams has your Amazon guy coached in your town?
How many minty new Weber grills has Amazon offered to give you before they fell over dead?
If your Amazon guy fell over dead tomorrow, would you even notice?
(I only lived near that bodega for a few months. Want me to tell you some stories about the next bodega man?)
I don't buy groceries online, have never liked the idea. But for other goods, Amazon or other corporate giants are normally the best choice. And you probably know it too.
> How many specialty items has Amazon kept in stock just because you, individually, wanted to buy them?
Places like Amazon are usually the only place to get specialty items. Go to a local merchant and their answer is always "We don't have them in stock, but we can order them for you". Even specialty stores never have specialty items which they know customers need. After having spent the day going to 5 different specialty stores and none of them having the item, you'll wonder why you didn't buy it on Amazon in the first place.
> How many items have you successfully (even if accidentally) negotiated an ongoing price with Amazon on?
Never, of course. Their prices are already cheaper than what you can get after successfully negotiating with a local merchant. And I don't enjoy negotiating. I have nothing against local stores being more expensive for the convenience.
> How many minty new Weber grills has Amazon offered to give you before they fell over dead?
About fourteen.
For most sectors, local merchants simply offer no convenience, no knowledge, no stock, annoying sales tactics, lying salesmen, predatory terms, no product guarantees, a hateful attitude, and jacked up prices. The local merchant is usually a multi-millionaire who gives as little a damn about you and the community he operates in as Amazon does.
With Amazon I can return a product if I need to and get my money back. I can purchase it in peace with all relevant information about the product presented clearly.
I have much better results with nearby merchants than that.
Like: A couple of weeks ago my furnace died. On a Sunday, at the end of a 4-day weekend. It was cold outside, and getting colder inside.
I could have called someone and they could have come by to fix it, but I would have paid dearly for that and that's never been my style anyway.
So I troubleshot it myself and worked down the flowchart of what a furnace needs to do, and what this one was not doing. I deduced that the ignitor was both not working, and that it was open-circuit, and that it had 120v available to use at times when it should have been doing its thing.
Thus, it was proven that the ignitor should have been working but was instead NFG.
I looked at Amazon (easy enough, right?) and found plenty of ignitors that could be made to work, or that were dead-ringers for the one I had in my hand. They were all cheap-enough (excluding some were that definitely too cheap), and they promised delivery in 4 or 5 days.
Now, I can sort out some temporary heat for a night or two (I even have a plan in-place just for that situation), but I don't want to deal with that for an entire work-week. Besides being inconvenient, that's also a money-losing proposition.
I looked harder. I found one in a store that was open, about 30 minutes away. I set forth immediately to go get it.
And then I installed it. It worked perfectly.
It did cost about twice what Amazon wanted for a seemingly-appropriate ignitor, but meh: I found a place that had the product I needed in (close-enough to) the right place, at the right time.
I was very happy to pay them.
---
Right now, I'm about to go outside to put new spool valve gaskets on my Honda. They're leaky; it's a known issue with this version of the J35 engine. And when they leak, they drip oil on the alternator. These alternators are known to die from being bathed in oil.
Amazon would have cheerfully sold me very inexpensive gaskets from any number of alphabet-soup vendors, but those are all known to leak again sooner instead of later and this isn't a thing I want to repeat soon. Besides, a new Denso alternator is expensive (and the other aftermarket offerings are known to be failure-prone in this application).
I found gasket part numbers from Mahle -- a German company with a very long history of making engine oiling system parts, and of not selling junk -- instead.
I ordered them online at O'Reilly Auto's website late last night as soon as I noticed the issue. They had them at their store two blocks from my house this morning before noon.
This was not inexpensive. I paid a -lot- for these two very specific little rubber gaskets.
But Amazon (with their selection of bad parts, and also fake parts) was a non-starter -- and their delivery times are still bogged down in the holiday business anyway. It was also both cheaper and faster to get them from down the road than it was to have them overnighted from Rock Auto.
---
And, you know, that works great for me. Right now when I need a thing ASAP, I can get it done with local(ish) shops that have local people working there. I can get it done faster than Fedex Overnight can.
Or at least: I can do this for as long as the local shops manage to stay alive.
After they're gone, I'll be left with extra-long delays every December (that's only 1 month out of every year, for the rest of my life) or spending even more money to keep my own personal inventory of spare parts for the important machines in my life.
I don't like that version of the future.
"How would home builders build model homes?" - This is a great point. I should have said "after the home is built"
"How would Trusts manage real estate" - for residential real-estate, they wouldn't. An individual would. But I just want to point out that I never said that corporations shouldn't own real estate. I said they shouldn't own residential real estate.
It's only as complex an nuanced as we make it. For most of history, individual people owned real estate. Only recently did we manage to screw that up. We can unscrew it.
Corporate ownership of real estate is ancient - read about the land rents (and in-kind labor rents) that early Christian monasteries were entitled to in late Roman/early-middle-ages Europe, or how Buddhist monasteries have been funded from local levees for thousands of years. Or how the British crown as a corporate entity currently vested in Charles III still owns substantial chunks of British real estate. History is long and for most of it it was not the case that ordinary middle class people even existed, let alone owned houses.
Sure, but realize that also applies to the current status quo.
Also, you cannot create the 'right' solution to a complex, nuanced social problem. You can only slowly shift the problem over time, one 'wrong' solution at a time.
Justice is not blind. Both sides make this so difficult. And expen$ive!
Congratulations, you just ensured zero new housing creation in our cities. (Co-ops are corporations.)
The biggest driver in housing prices is under supply. The main source of under supply is individual home owners who consistently vote against good zoning to protect their economic interests.
Corporations do not have the votes to strangle supply like individuals do.
There's no other expense where we talk about it as a market, at least in general layman focused new and discussions. People aren't concerned about the fuel market or the grocery market. They're concerned about fuel prices. Grocery prices.
Housing is an exception due to catastrophic historical policy choices to encourage it as an investment. Government restrictions on housing supply will exist for as long as a significant number of people not only have their net worth wrapped up in housing, but who actually leverage themselves and go in to extreme debt to achieve it. Not to mention the attached cultural issues of then wanting "buying a house" to mean "buying an area staying the same".
Concentration of residential real estate among fewer owners is the only path that doesn't lead to the future being housing based feudalism where your station in life is determined by if you inherited somewhere to live, and how desirable it is.
The problem is that we as a society tolerate people turning off their brains and becoming useful idiots if you frame things in certain ways. And so what to the scheming weasels with special interests to serve do? They frame things that way.
You see it all the time on HN, say nothing of "other" platforms. People who have no real pressing need to care about some specific thing will go to bat for something just because it's peddlers say it's good for the environment or public health or god or whatever. Anything can be framed in such a way they're happy to advocate for. It's like an open mail relay or DDOS reflection. This exploit in our society gets leverages left and right by special interests to get all sorts of things that make them money written into the rules and laws at every turn.
These people ought to feel bad for just taking a one sided story at face value and broader society ought to ostracize them for it same as we'd ostracize anyone stupid enough to go to bat for bigotry in drag.
The problem is in the mirror. This is a social norms issue.
A fundamental issue no one is truly engaging with his the concentration of where people want to live which has been a combination of where jobs are and the development consumer activities in those locations have fostered to keep them attractive places to live. They're too many people trying to live in too few places and thats subtly due to necessity related to where employment is.
Remote working should have eased that more sustainably over the medium term but society decided it was better to throw the baby out with the bathwater when it came to that & productivity issues etc.
Therefore the lender will not be made whole when their debt serf dies. That seems to place an upper ceiling on the (inflation adjusted) growth of the investment side.
Assets often function as stores of value, and housing is unique in that it performs an essential function, is comprised of material that generally rises in cost, has sentimental value, and is fixed to a specific location that may or may not rise in value but does in general (you see very little written about the non-housing shortage in Baltimore or many rust belt cities where land is very close to free, or even less than that in some cases).
Residential real estate is one of the most fragmented investment classes in existence. We're so far from feudalism that it's not even worth talking about. If you want housing to be less expensive in your area, you need to be like Baltimore and reduce demand or remove the disincentives from building and allow an increase in supply. Most people prefer the latter.
You have to run on agressive redistribution and get your political mandate from those that are kept out of this frankly insane system, else you're doomed to fail and join the other democrats who promised social justice but ended up delivering a boring half-competent technocratic stewardship of the economy instead, and disillusioned yet more people from the "left".
A housing can either be an investment or be affordable. It cannot be both. Those two things are completely at odds.
When something is an investment, it must become unaffordable over time. There is no way to square that circle! Unfortunately, housing-as-investment is more or less baked into our cultural DNA. We do not need to unwind the supply problem; or the government regulation problem; or the corporate problem. We need to unwind the idea that a house is an investment.
Good luck with that. It's the air we breathe here. There's nowhere to go but up.
Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes. Corporations shouldn't be able to own single family homes...
The entire arrangement is such a tax and loan leveraged scam. It's time investment groups and corporations are no longer allowed to use tax advantages that were intended to help build families/middle-class build wealth. Too bad PE essentially runs the US now. I would not be surprised that in ten years PE/REITs own 50% of the housing stock in every city that has a functioning job market.
toomuchtodo•1mo ago