[starbird3000]

Where I am there’s been a huge increase in houses being bought for cash by equity hedge funds, like 25% of houses going on the market. Nearby Kushner bought hundreds of houses in Baltimore. The impact of this is that house prices soared because no one can compete against a multi-billion-dollar company to buy a house, which artificially pushes up prices.

Secondly, I’ve done a lot of engagement with policy makers and builders and you are not going to get affordable housing being built if you relax zoning laws (which I’m in favor of across the whole city). Instead, what is supposed to happen is that the older properties become less attractive and hence their prices (or rent) are supposed to fall. That’s the theory anyhow. Anyway, the builders all say there is no financial incentive for them to build affordable housing, they make so much more on luxury buildings. You’ll only get it if the local government does it themselves and most in America are reluctant to get involved (it’s why they like saying 15% of a complex should be ‘affordable’ because they don’t have to do anything about it, the builders do, and it’s too small an impact to fix the issue).

[Marsymars]

> Anyway, the builders all say there is no financial incentive for them to build affordable housing, they make so much more on luxury buildings.

This is only really a problem insofar as building luxury homes reduces the throughput of new supply because they take longer to build than affordable housing. In terms of overall market effect, as long as you're not allowing places to sit empty, it doesn't particularly matter if you're adding new homes at the top or the bottom of the market.

[Detrytus]

> Where I am there’s been a huge increase in houses being bought for cash by equity hedge funds, like 25% of houses going on the market.

Is this increase in absolute number of sales, or increase in the percentage? Because, if the house affordability due to high interest rates goes down, one of the only buyers with money that remain are hedge funds. So, in the past you had 1000 homes selling per year, 100 of those going to hedge funds, now you have 400 total sales, with 100 going to hedge funds. The relative percentage of houses bought by hedge funds increases from 10% to 25%, even though the absolute number remains flat.

[WorldMaker]

It seems to be an increase in both absolute number of sales and increase in the percentage. Some signs indicate hedge funds purchasing consumer real estate (houses/apartments) is working towards an all time high thanks to the bottom falling out of the commercial real estate market in 2020 and it being far less reliable an investment post remote-work culture. A lot of commercial real estate investors have flipped to consumer real estate in a way they hadn't before. It may be a while before a new equilibrium happens.

(This is where investments in risky things like flipping various cities' "downtown' commercial real estate into additional consumer real estate are starting to look really interesting, especially in some of the cities that had massive corporate tower investments just pre-2020. It's also where you see some cities directly and indirectly pressuring major corporations into RTO policies in the hopes of it releasing some of the pressure on the consumer real estate market in those cities by encouraging hedge funds to reinvest in corporate real estate. It's hard not to feel those pressures are somewhat futile long term, but to feel sympathy for why they seem like necessary short term sandbagging projects.)

[B56c]

It's true that the current large developers will never meet the need for affordable housing, but that's where small local developers can fill in assuming zoning and regulation allows them to. All of the small projects that are profitable but too tiny to justify the time of large developers can be picked up by small, local developers who have a vested interest in incrementally improving a place.