[cglan]

Feels like non news. Or at least, a continuation of existing trends.

We don't build enough housing, so housing becomes a good investment, eventually pricing out everyone except existing investors or people with large assets. We' structured the system so that once you're in you're IN. Leverage, 30yr mortgages, tax deductions all continue to subsidize existing homeowners at the expense of everyone else (who are technically a minority).

If this continues, expect to see more and more radical policy proposals by young people.

[hristov]

The fact that it is a continuation of existing trends does not mean we should treat it as a non story and not take note of it.

[scoofy]

If you understand the underlying reasons for why an investor would buy an actively depreciating asset, then you understand why OP suggests--correctly in my opinion--that this is a non-story.

We have a housing shortage. As long as it looks like the shortage will continue, investors--people--will buy depreciating assets in the hopes that population growth will cause them to be worth more tomorrow than they are today. If it's not Private Equity, it'll be rental companies. If it's not rental companies, it'll be mom & pop landlords. If it's not mom & pop landlords, it'll be people looking for a second home or pied-a-terre with upside potential. The problem is the perpetual shortage clearly indicating increasing economic rents, instead of a trend toward the cost of production.

This is a housing crisis but most Americans are treating it like a housing whoopsie. We treat it with kid gloves, where we fight about the "correct" way to build just enough housing, in just the right places, instead of pointing a firehouse of development incentives, to the point of literally subsidizing private development and public development.

It's basic economics, but our electorate will tie itself in knots to make the housing crisis fit their niche political narrative.

[burnt-resistor]

Besides not enough new inventory in some areas, one major problem is allowing excessive housing hoarding and not taxing it enough to reduce gamification conditions leading to absurd exploitation. It needs much more regulation and increased progressive taxation for people/orgs who monopolize empty houses simply as speculative "investment" financial chicanery.

[spwa4]

I agree but there's only a single factor that matters: special treatment of mortgage loans. In tax. Government guarantees, both for owners and for banks. Special interest rates. Repo with government support. The list goes on.

And now you can say "yes, but ending those will cause a crash in house prices, which will hurt a lot of people, a lot of owners", which is true, but anything you do to change house prices will cause that hurt.

In a way you can look at it as the usual problem: governments effectively sold houses, handing out cash to constituents for votes and power, and now they want, maybe even need, them back. They can't pay to get them back. That's what the argument is about. If the government wanted to buy back houses the way everyone else has to play, by paying market price, nobody would be arguing much. Because of how property taxes work, even if governments crash the housing market, say by ending mortgage guarantees, governments will lose a lot of money they have already spent.

And the fundamental problem is not the division of houses, but how many there are. Crashing house prices is only part of the problem. They need to be torn down and rebuilt denser if you want to make any difference. That also needs to be paid for.

[lanfeust6]

You have to be careful with this because multiple properties are also rented out. Restrictions can lead to low vacancy and higher rent prices

[amy214]

>We have a housing shortage. As long as it looks like the shortage will continue, investors--people--will buy depreciating assets in the hopes that population growth will cause them to be worth more tomorrow than they are today

This is the most interesting point. With the current birthrate, what will these homes be worth in 30, 40 years, when depopulation is ongoing? Prices will drop, and so will supply. Look to Japan, deaths of all towns that are not major cities, I expect that to occur in the US

[scoofy]

Yes, in 50 years, I hope we as a society respond to the struggles of people then too, instead of nit picking our way to destroying an entire two generations ability to build wealth like we have done here.

[cumbotron]

This is a very important thing to point out. So often, issues that affect normal people negatively are only afforded a little bit of coverage once in a while. If the trend persists and it is still negatively affecting the citizenship, it deserves to be in the news.

[dymk]

“Private equity firms should not be allowed to own all the land” isn’t a particularly radical policy proposal

[alright2565]

> Of those, mom-and-pop investors, or those who own between 1 and 5 homes, account for 85% of all investor-owned residential properties, while those with between 6 and 10 properties account for another 5%.

[throwup238]

They don’t provide any concrete evidence for how they classify “mom and pop” (to be fair i haven't had the time to read the original paper). It’s standard operating procedure to split investment properties between many subsidiaries to limit the financial splash damage. It’s mostly a legal fiction because the property managers are directors of multiple corporations managing dozens of properties, but the courts haven't cracked down on it yet. I’m suspicious of whatever statistics they use to classify investors.

(I’m speaking only of the investors that buy to rent extract, I have no insight into the flippers)

[tcbawo]

LLCs need to declare the beneficial owner(s), which is supposed to give transparency and KYC to corporate structures like that.

[rubyn00bie]

Not when they’re funneled through states like Wyoming and Nevada which an enormous amount of them are… both have very good privacy laws protecting the owners identity. Often times there will be a local LLC which is owned by (at least one) separate out of state LLC in Nevada or Wyoming obfuscating who the true owners are. There’s a whole industry behind this.

[paulryanrogers]

Sounds like a federal law is needed to pierce these exploitive veils.

[dboreham]

Not since the regime change in January.

[giraffe_lady]

Shit even if not something like that, 5 homes in the middle quintile in my city would be around 2.4 million dollars. That's the entire net worth of a middle class family at the end of their earning years, including their house. The only people whose mom and pop have that kind of money to invest are rich folks. It's just as much a problem as the other thing in practical terms.

[blindriver]

1 home qualifies you as an invrestor? So I’m an investor? That definition is whacked it should be at least 2 homes.

[sorcerer-mar]

1 and 5 non-primary residence.

[jodrellblank]

“I own no homes, and am buying a home”

“I own one home, and am buying a house”

“That makes you an investor”

“No that’s whack. When I buy a third - buying while owning two - then I will be an investor”

You have an off-by-one error.

[selimthegrim]

I own no homes, and must scream.

[intrasight]

That was my mom and pop in the 80s they bought about one house a year. Empty derelict houses purchased from the city for between $1000 and $15,000. The city provided matching grants to fix them up. Also the city paid the rent for the Cambodian and Vietnamese migrants that came here to live. My parents invested the organization and literal sweat equity to fix up these homes.

[lanfeust6]

Yes and we are ignoring the rental component. Discouraging ownership > low vacancy > skyrocketing rent prices.

[minraws]

Why is the cut off at five more than 2 homes per person shouldn't be allowed. And 1 or 2 extra farm lands...

Like what are you going to do with your 5th home???

[MangoToupe]

I'm sorry I have zero sympathy for anyone who owns three homes. Fuck em

[axus]

Divorced people with 2 homes each that remarried and ended up with 4 homes? I've seen it happen. Finally they sold 2 of those homes..

[xarope]

I feel there's a major distinct difference between;

- a well off family who buys a 2nd home to make sure their kids are set

- a group of well off investors who pool funds, buys a 2nd home, with intention to "flip" it in the next 1-2 years and make 10%

Both are "investors", but I'd like to think the 1st are trying to build a better future, whereas the 2nd are just arbitraging.

[MangoToupe]

Intent doesn't matter; you can justify about any horrible behavior imaginable by saying you're looking after your family. I resent the commodification of housing and the destabilizing effects it has across society. Where's the upside?

[morngn]

In my area owning a trailer park home requires being in like the top 1% internationally. Owning 1 home in Oakland may be worse than owning 4 in Detroit, in terms of being an under-hated under-taxed elite.

[paulryanrogers]

Who needs more than two? You can only live in one at a time.

Why let the rentier class grow any larger than they already are?

It's not like there is an oversupply of desirable housing. And even if there were an oversupply, the answer isn't to incentivize the rich to get richer.

[solace_silence]

Won't someone please think of the Capital!?!

[MBCook]

There’s nothing wrong with investing by buying homes.

Just pay a 75% tax when you do.

If you can find places to make money with those taxes, have at it.

But you’ll stop messing with normal people’s attempts to buy a house for the most part.

[peab]

Yeah, we definitely still need homes to be available for rent.

If you move a lot, or want to be able to move easily and explore different cities or even neighborhoods within a city, renting is way easier than if you'd have to go through the hassle of buying.

What sucks is when private companies start owning too many houses and they have unfair advantages over regular folks. For example, they have teams of lawyers.

[MBCook]

I was suggesting that as a way to prevent purchasing homes to resell for more money. I actually meant it as a tax on the profits from a sale of a house.

I completely agree, we need homes for rent at reasonable rates.

But I forgot that a lot of the homes that were purchased for investing were purchased to rent out. A 75% tax on the profits from sale wouldn’t help. If it’s 75% on all profits, including rental income, it’ll destroy the rental market.

I can’t think of a decent answer off the top of my head. My suggestion was glib, but it was meant for the pretty easy case of just flipping.

Trying to control how many houses are purchased versus rented, and how you determine a reasonable rent or prevent that from being abused, is a lot harder.

[peab]

I think there are a few solutions. Having a property tax that goes higher the more properties you have would be a good one (it could be exempt for bigger apartment blocs if that was an issue)

[burnt-resistor]

A few or dozens, but not a large fraction of a city by one entity. The tax should be progressive and aggregate with ultimate holding companies/investors so they can't just gamify limits by creating a bunch of shell and holding companies.

[kelipso]

There’s lots wrong with buying up homes for investing so that prices of homes go up and people can’t afford homes. It’s some kind of flawed myopic morality that says there’s nothing wrong with it.

[lanfeust6]

They buy homes for investing with the expectation that prices soon rise, owing to demand and low interest rates, and inelastic supply. If you fix the supply issue then it would be moot.

30% of homes are not sitting empty, cities have a low vacancy rate. Often they rent out and we want low rents too.

He solution is building more or having fewer people on the market for a home through low immigration, and only the former seems politically viable.

[appreciatorBus]

A lot of people over the last few decades have invested in electronics and computer manufacturing, and today electronics and computers are cheaper than they have ever been. If we’re going to have a theory about why housing is expensive it’s going to have to be deeper than just the idea that investing in something makes the price go up.

[kingstnap]

What a ridiculous comparison.

Electronics are made in a factory. Houses are expensive because land near cities and work is scarce.

[potato3732842]

Housing is expensive in large part because of how illiquid supply is. This is in large part because the fixed compliance costs of doing work upon "land near cities" is high. I'm not talking the $50 permit. I'm talking the $50-500k worth of engineering and lawyers and whatnot you need to bulldoze a 1-family and put in an N-family even in a place zoned for it. You typically wind up going rounds with the city at every step just because while you're nominally allowed to do whatever it is you have to bicker over everything like parking and setbacks and whatnot that are nebulously defined for the purpose of allowing the .gov to extract concessions. This is why only big money 5-over N apartments get built. When you have a ton of fixed costs nothing less makes sense.

[appreciatorBus]

People don’t live in land, they live in floorspace.

We can manufacture as much floorspace as we need. We can even manufacture floorspace in factory!

[mr_toad]

The rapidly expanding supply of electronics and computing equipment drove prices down. Housing supply has not kept up with demand. It’s Econ 101.

[MBCook]

Furthermore usable land, let alone desirable, is a far more limited resource than silicon chips.

[em-bee]

the key word is manufacturing. the article is talking about buying homes, not building them. if all those people would invest into building new homes as opposed to buying existing ones then the comparison would make sense and maybe the price of homes would indeed go down.

[appreciatorBus]

Absolutely. I think one of the biggest problems in discourse around housing is this idea that housing “investment” can only ever about buying existing assets.

[lazide]

People aren’t “buying up homes for investing so that prices of homes go up and people can’t afford homes.”

That may be an aggregate and long term effect, but i’ve never seen anyone actually motivated by something like that.

At least not statistically.

People with excess money (often dentists, doctors, middle managers, small business owners, etc), who don’t trust stocks or the banks, are buying houses because they think they can rent them to people for cashflow in the future (aka not have to eat dogfood!), or rent them out now to other people for money. People that otherwise couldn’t be in these houses, or those people would be buying them instead.

Aka put their money to work.

IMO, people doing that right now are going to lose their shirts, but that is risk/reward. I could be wildly wrong.

[kelipso]

I am not saying it’s their motivation, but it is the end result. And since that is the end result, it is immoral.

I’m sure every person and corporation has some reason for buying homes in excess, but it’s still wrong because homes and land are limited resources that people need to live.

[lazide]

Are you vegan?

[blindriver]

Why do you think they will lose their shirts

[potato3732842]

When everyone gets sick of it and votes for punitive taxes on residential property that is not owner occupied.

I would prefer they deregulate the living shit out of constructing additional housing so all the small money can get into that (i.e. something productive instead of literal rent seeking) instead but I am not hopeful.

[lazide]

At some point the number of vacancies (for renting) causes enough cash flow issues people go bankrupt, or the number of non-investor buyers drops enough that it’s clear it’s just an investor bubble and investment value tanks.

Real estate always goes through these cycles.

[epgui]

You're completely missing the point of the comment you're replying to, though.

The parent comment suggests that the cost of investing is not high enough. Moreover, they suggest that it should not only be a higher cost, but that this cost should be redistributive.

[zdragnar]

The proposed cost isn't redistributive, though. The investors aren't running a charity, and there's an inelastic supply, so they'll be passing the cost of all of those taxes on to the renters until they have a comfortable margin again.

[epgui]

You could argue that (I would disagree to some degree), but the comment I replied to didn't argue that.

[kelipso]

You are completely missing the point of my comment though. I am saying it’s immoral to buy property in excess in the first place. So it should be discouraged, disincentivized, or made illegal, yes, and there are plenty of ways to do it, and sure, that is one of them.

[MBCook]

As I said in another comment, there may be situations I’m not thinking of where this would be beneficial. For example buying up extremely dilapidated properties and flipping them for much more money after fixing them up.

So I guess I’m a little cautious about just making it flat out illegal. I don’t know enough about the market to know if that would really be a problem.

So I suggested a tax high enough to make it extremely undesirable to do. I figure the net effect will be to stop it.

[9cb14c1ec0]

Or maybe have such a large housing supply that supply drives down profits to where large investors look elsewhere.

[xphos]

I don't think you understand who the tax hurts in that case. If investors can pass that tax off to a renter, than this type of policy just hurts renters. It seems similar to rent to control its great if you own a house but you ultimually create a shortage that has a lot more slient unknown victims. The real solution is to just build more housing in places people want it so that renting it becomes insanely cheap because there is a glut of supply. It also drives the cost of houses down but I think that might be for the better despite hurting my bottom line as a single family house owner

[burnt-resistor]

The nuance needed is in taxing progressively in relation to how many other properties are owned in aggregate by ultimate shareholders/holding companies and forbidding gamification tricks like putting every house into its own trust.

[danaris]

This is a classic fallacy trotted out every time someone suggests taxing the rich/corporations/landlords more.

"Oh, you can't do that, they'll just pass on the costs to consumers and keep their margins the same! Really, when you raise taxes on the wealthy, the only people you're hurting are the little people!!"

But evidence doesn't bear that out. Real economics are more complex than that, and especially given how things are right now, people can't afford more expensive homes, so trying to pass on additional costs is going to sharply reduce your available market.

[xphos]

I disagree that consider the effects on supply and demand that taxes have is simplification or ignoring real economics is fallacy?

My only point was that its a supply issue not really a tax issue. Houses already have tax on them called property tax its small yes but the reason investors are buying houses is not because the tax is small but because the demand for them is extremely high and the supply is very low. Adding a tax does not in any way fix the demand imbalance. This is why things like price controls only create shortages the problem is that its impossible to build houses because of nimbism.

A Tax doesn't make more houses exist even without investors there isn't enough houses because of local zoning and protesting prevents cheap housing from entering the market. A Tax that does not solve this problem still means that there are to many people buying / renting chasing to few houses.

[MBCook]

I agree with you. But let’s just say the comment you’re replying to is correct. They’ll pass it on to their renters.

Ok. Good.

That’s why we have to make it high enough. If you put a 10% tax on them they’ll just raise rents 10% (or more). I agree.

If you put a 75% tax on them, they’ll have to charge so much money that they’ll have a very hard time getting renters at all. Pretty soon that property is useless to an investor, but can be sold to a normal person and work just fine.

—

My suggestion was actually designed for just buying houses in hopes of reselling them. Buying them for rentals had not occurred to me, but I do know that’s a very common thing. It should have.

If the tax is high enough that you can’t make the business case work out, they won’t do it. And since it doesn’t apply to home owners on a primary residence that house is still perfectly good for anyone who would like to live there.

[EvgeniyZh]

What happens in this scenario to all the people who currently rent and who can't afford to buy house even when it becomes cheaper?

[EvgeniyZh]

But that's the intended outcome, isn't it? The proposal is to increase supply of housing for sale by decreasing of supply of housing to rent.

The cost of investment increases, so to keep the profits investors increase the rent, less people can afford it so the demand for rent decreases and investors sell houses. The supply of housing increases (I agree this is quite convoluted way to increase housing supply) and prices drop. Top cohort of renters can now afford to buy a house, and the bottom cohort is... fucked?

[dennis_jeeves2]

>Just pay a 75% tax when you do.

Make it 100.

[MBCook]

I’m a bit concerned that not allowing this it all would have some sort of perverse effect that I’m not for seeing.

I’m not in the real estate industry so I’m sure there’s things I don’t know about.

So I picked a really big number to dissuade it, but left open the possibility.

[dennis_jeeves2]

I was being sarcastic. taxes are rarely a good solution to our ills, because you are enabling tyranny from the gvt. And yes there are places/situations where taxes have exceed 100%.

[BuyMyBitcoins]

I suggest that any tax on multiple home purchases should scale, and be different depending on whether or not an individual or a corporation is doing the buying.

[MBCook]

I wonder about that.

If someone’s a billionaire and wants to play around by buying houses? Is that any better than an investment company doing it for the market?

How do you tell the difference between a rich person buying their third vacation home and buying a house they intend to sell for profit in a year or two through speculation?

Of course, on the other side, I’m aware of companies that own some company housing to let their employees use. How do you tell that from investing?

Maybe since they weren’t really doing it to make money they wouldn’t really care that the tax would be high when they sold it if they made a big profit.

It all gets really sticky. No special taxes gains on your primary residence, may be a lower tax (that 75% of what’s er) on a secondary residence.

But pretty quickly if you have that many houses personally you can probably afford to pay a high tax on gains. You’re not really what we want to optimize the market for anyway.

I just guessed at a big number. Maybe it should be 50%. Maybe it should be 90%. I have no idea. It seems like it should be legal, there have got to be cases where it might be useful. Buying and flipping houses from dilapidated neighborhood by turning it into something better.

I’m at the age where I wouldn’t mind a house. But they’re all gigantic, expensive, or both in my area. I have no idea how a normal family is ever supposed to afford one.

[lazide]

As the boomers start dying off in larger waves, a lot of inventory will start getting onto the market.

[SoftTalker]

They’ll mostly be leaving the houses to their kids, I’d think. Unless they’ve already pulled all the equity out with HELOC spending.

[paulryanrogers]

Investor money may just soak it all up though, especially as certain policies make other avenues less stable.

And unlike Boomers, corporations can live forever. Permanently raising the ladder.

[WalterBright]

Distorting markets like that tend to have unforeseen deleterious side effects that just make things worse.

For example: rent control

[Avicebron]

"Markets" exist because they are a thing people find useful. If people can't afford shelter and participate in the "market" of leveraging property because they are being pushed out by a soulless outgrowth of "line go up" thinking, then the "market" has failed and needs to be fixed until it is useful for people again.

[Manuel_D]

Sure, but if the price of housing is too high then price controls won't fix it either. You'd end up with no availability, or a decades-long waitlist for rent-controlled apartments like Stockholm.

The issue with housing affordability is that the market is often prevented from responding to high demand and low supply by regulation. SF is very restrictive with permitting housing construction, despite the incredibly high rents. It's not that the market forces are failing to incentivize housing construction, it's that developers are prevented from responding to market demand.

[Qwertious]

>Sure, but if the price of housing is too high then price controls won't fix it either. You'd end up with no availability

You're assuming a baseline of a functional market system.

If you have widespread price-fixing between landlords (say, via everyone using the same algorithm service that gives everyone the same recommendation) then rent control isn't introducing a price fix, it's just changing the level of price fixing.

If you can only rent for $X000, but the rent price is fixed to at least $X500, then for you, there might as well be no availability - the landlord is leaving the place vacant due to the price-fixing.

[Manuel_D]

The allegations of rent fixing don't look very credible. RealPage had a single-digit market share in SF when that story was making the rounds, nowhere near enough to effectively fix rates. Furthermore, these cities don't have high vacancy rates. And lastly, cities that banned the use of the software and did not see a subsequent drop in rental prices.

[WalterBright]

> widespread price-fixing between landlords

This is called a cartel. The trouble with cartels is enforcing it. Cartel members cheat all the time by selling for less than the cartel price in order to get a larger share of the market. The setup is unstable as the incentives are much like the Prisoner's Dilemma.

[derektank]

It's not the fault of private capital firms that local governments have essentially outlawed building new homes in many areas. The solution should be focused on restricting the ability of localities to do this, not restricting the ability of companies to buy real estate.

[xphos]

Yeah I agree with this here. Its simply to hard to build housing and the number permits and zoning restrictions have lead to localized housing shortages where people want to live. Its simply a difficult poltical issue to solve because most of the time zoning is handled at the local level and old people who have houses attend town hall meetings where zoning is discussed (if seldomly ever). Homeowners who have treated housing as a speculative centeralized asset have little to gain in allowing the market fixing itself.

[Qwertious]

It kind of is, though. The political economy is a thing, lots of companies lobby for favourable legislation.

[Avicebron]

> It's not the fault of private capital firms

Which doesn't really matter because they don't need to be "protected" in any capacity. Removing their ability to purchase those homes, and letting it get sorted between the people who are "outlawing building homes" and those who want to move there makes more sense.

[WalterBright]

Deciding who gets to buy what is known as central economic planning. It doesn't have a good track record.

In this case, by restricting who can buy, you're reducing the demand for housing. Less demand means lower prices. Lower prices mean fewer homes will be built, meaning less supply.

A better scheme would be to lower the costs of home construction by reducing regulations and taxes on them.

[kyboren]

Hallelujah. Shout it from the rooftops!

Markets are powerful tools--perhaps the most powerful tool we have to shape human interactions. But too many people believe in a sort of market gospel ("Supply Side Jesus"); that market forces are as inevitable and inflexible as the force of gravity. In reality, policy choices shape markets and careful market design can deliver politically-favorable outcomes.

Markets work for us, not the other way around. "You shall not crucify mankind upon a cross of gold!"

[WalterBright]

The government constantly tries to repeal the Law of Supply & Demand. That never works.

[anigbrowl]

“Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which best bear to have a particular tax imposed upon them.”

“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.”

“A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground.”

“The sea in the neighbourhood of the islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of the inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the landlord is in proportion, not to what he can make by the land, but to what he can make both by the land and water. It is partly paid in sea-fish.”

Karl MArx? No, Adam Smith.

[zefhous]

How one defines “distorting markets” is an important question when it comes to defining policy, and not an un-contentious one.

[dymk]

Well, what we have right now obviously isn’t working. So what’s your proposal?

[WalterBright]

Return to free markets in housing.

[anigbrowl]

Got anything more specific than cliches? For example, do you have any examples of this demonstrably making housing more affordable (ie lowering housing costs as a percentage of income) at scale?

[WalterBright]

Rent control making creating more rental units unprofitable. Zoning laws that prevent housing density.

[hooverd]

rent control is good actually combined with robust building

[amanaplanacanal]

Rent control has a tendency to kill robust building.

[thrance]

So basically remove all regulations and everything will fix itself automatically? This kind of wishful thinking is ludicrous, and it's insane how common it is. Markets have issues that need to be addressed through regulations, unless we want a return to the Gilded Age.

[WalterBright]

> So basically remove all regulations and everything will fix itself automatically?

I didn't say that. I said "rent control". And yes, remove all regulations on rent.

> unless we want a return to the Gilded Age

The Gilded Age was a time of great prosperity in the US.

[dragonwriter]

> The Gilded Age was a time of great prosperity in the US.

In aggregate, sure. (At least compared to times prior.)

How the prosperity was distributed, OTOH...

[WalterBright]

Wealth isn't "distributed" in a free market. People work and invest to get money in exchange.

Consider Jeff Bezos. He was roundly criticized for the profligacy of spending $80 million for his wedding. But look at it another way. He spread the wealth around by paying artisans, workers, craftsmen, photographers, travel agents, hotels, restaurateurs, etc.

[burnt-resistor]

> The Gilded Age was a time of great prosperity in the US.

No, wrong. Totally wrong. It was a time of immense inequality.

Oddly enough, these days are even worse than then in terms of income and wealth ratios, but different in absolute effects of penury.

[thrance]

> The Gilded Age was a time of great prosperity in the US.

Oh ok, so you have a totally wrong understanding of history. Neoliberalism's strongest solider, I see.

You do realize that the average American back then was working insanely long hours -when there was work at all- for meager wages, in horrendous conditions? Perhaps that's what you want to do with your life? Not me.

> remove all regulations on rent.

How would removing all regulations on rent improve this situation? You'd just make landlords even more powerful than they already are. What would prevent them from charging as much as they can get away with, ensuring their tenants remain poor forever? They are knowns to collectively price gouge.

[anigbrowl]

Even Adam Smith fulminated against landlords, who he saw as parasitical free riders.

[darth_avocado]

If you want cash poor people to compete with cash rich private equity in the housing market without banning PE completely, you need to make it cheaper for cash poor people to borrow money. That too isn’t a particularly radical policy proposal. A lot of countries across the world do it with positive outcomes.

[physicles]

Didn’t we do that in the lead up to the 2008 financial crisis? Remember NINJA loans?

[3rdDeviation]

You could go the other direction -increasing the borrowing cost of purchasing a home for investment to ensure that borrowers with less capital can still afford homes in the same market.

As a hypothetical, you could tax their purchase at the same rate at which they're borrowing and use the funds to back loan guarantees for new/lower income purchasers.

The point is to impair the ROI for multi-home purchasers without limiting upside in the market.

[darth_avocado]

NINJA loans were loans for people with no income and no jobs. What I’m proposing is cheaper access to cash for first time homebuyers. You’d still have to be credit worthy.

[conradev]

Yep, pass that, free up a few percentage points of inventory, good wealth transfer to the rest of existing entrenched investor base. They might even come leased!

[CBLT]

That's the desired outcome. What's the policy proposal?

[dymk]

Disallowing companies from owning residential housing would be a start

[StanislavPetrov]

How about we start with no home-based deductions for corporations. The means depreciation, vacancy, any sort of loss is not tax deductible for a corporation. If a corporation owns 100 homes, it may cost them nothing (or close to nothing) to keep 10 (or more) of those homes vacant, because they can simply deduct the costs from those vacant homes from the massive profits they are reaping on the other 90 and lower their tax burden.

The average person who owns a second home for rental purposes is highly motivated to get that home rented out, even if it means lowering the rent to attract a renter, because it can be financially ruinous to pay for the taxes and an upkeep if it stays empty.

[freddie_mercury]

Why not?

Are PE firms worse landlords than mom-and-pop landlords?

[paulryanrogers]

Moderned, industrialized PE? Absolutely worse, yes.

[GuinansEyebrows]

i wish we could think bigger than the lesser of two evils.

[burnt-resistor]

Americans hear any limitations on greed or anything that would benefit society as "communism".

[dietr1ch]

Private equity shouldn't be able to own housing. It should be like new highways and tolls, you get to charge until you make up for your investment, but then people who live there or the government should own it.

Want to keep your toll business? Build more housing.

[hollerith]

I have a different take. I feel housing is important enough that the government (i.e., the voters) shouldn't be able to interfere in the market for it, e.g., shouldn't be able to restrict who can buy and who can sell a house or apartment building.

[dietr1ch]

If it's so important, then my take is that the government should step in and make sure it happens and in some orderly way.

Cost cutting in my town for profits that go away just drains the local's pockets. If you want free market rules to apply, then profits going out of the town/city should be taxed harder to promote local businesses and community.

[hollerith]

If there are people that cannot afford housing, I would prefer for the government to give those people money rather than interfering with the resource-allocation system on which everyone relies. Prohibiting certain kinds of investors from investing in housing would be an example of interfering.

[dietr1ch]

> Prohibiting certain kinds of investors from investing in housing would be an example of interfering.

Note that I did not propose forbidding investment, just having rules to help make sure final ownership ends in people (who ideally live there and don't own other 10+ homes).

I'm just making sure that investments don't fuel a system where regular people can't own, but only rent forever, paying past the investment and a healthy interest for their lending, planning and doing service.

Why do road and other infrastructure investments can get these limited profit kind of terms for governments, but housing can't get similar ones for the people?

[PaulHoule]

I do a lot of "focus group" style conversations and one theme is "why do people think the economy is so bad for them right now?" A perception that the housing market is unfair comes up a lot, particularly complaints that investors are buying up all the houses.

Ithaca recently got an ordinance to encourage alternative dwelling units (ADU, aka "granny flats") but boy was it a knock-down drag-out because so many people were up in arms about AirBNB conversions and Private Equity getting involved in buying and building properties. As I'm seeing it Ezra Klein's "Abundance" theme is closely linked to Matt Stoller's "antitrust" theme both in the sense that monopolies are one reason "why nothing works" and that anger at them is dominating the public imagination.

[gsf_emergency_2]

the govs of the left shifting countries in EU (Norway, Denmark, Iceland) played an active role in nipping private energy monopolies in the bud. (Where did Spain err in comparison?) Their policies probably would be regarded as communist in the US though. I tend to call it "communitarian" rather than "communist", but I might be too lazy to argue that distinction :(

https://www.taylorfrancis.com/chapters/oa-edit/10.4324/97813...

https://www.norden.org/en/publication/power-communication-an...

Abstract >Traditional corporatist mechanisms in the Nordic countries are increasingly challenged by professionals such as lobbyists, a development that has consequences for the processes and forms of political communication. Populist polit­ical parties have increased their media presence and political influence, whereas the news media have lost readers, viewers, listeners, and advertisers.

YC used to be about investing in potential millennialist monopolies like AirBnB/Stripe/Coinbase/sama, though these days they lobby for the small businesses & the small cities (SF) :)

[jiggawatts]

The economist Alan Kohler on Australia's ABC News has a great quote: "For housing to no longer outstrip incomes, it has to become a bad investment."

The "how" of it doesn't matter. Could be changes to taxation, investment rules, foreign buyers, whatever. The point is that no matter what, for housing to stop getting more expensive faster than people's incomes, it has to be a bad investment.

Right now, in Australia, housing is a fantastically good investment, earning ludicrous incomes for people basically doing nothing but sitting on some property. It has created a new social class of the "landed gentry" that can earn income without usefully contributing to the economy.

The new nobility will not give this up willingly.

[xphos]

I really enjoyed this quote but you know the old nobility didn't give it up easier so you probably could drop the "new".

I need to look up Alan Kohler

[a_bonobo]

>The new nobility will not give this up willingly.

It's not just the nobility, it's also the Australian economic system itself. Australia's GDP is built on asset inflation and the housing market - I find numbers between 10% to 25% of Australia's GDP being based on housing.

If the Australian government stops the boomer money train they might crash the GDP, which in turn will negatively affect Australia's borrowing capacity, which will negatively impact (crash?) the economy.

Edit: the obvious solution is to diversify Australia's economy, away from digging holes and building houses. Economists have been shouting this from the roof-tops for years now and I have seen little political will to actually make this happen, the easy-money-train is just too good.

[jongjong]

In Australia, I'm a software engineer and don't own property so I'm a peasant but my parents are in the noble class. I'm finding it increasingly difficult to find things to talk about with them because almost everything that happens to me is bad and they can't relate.

So every topic we talk about seems to dissolve into some detailed complaint about how the system is screwing over people and it makes my parents uncomfortable. But then I can't talk about my work since it's too technical (and mind-numbing) for them so I literally have nothing else to talk about since I work all the time. I can't discuss politics because they think everything is fine politically. I picked up some outdoor hobbies so thankfully I have that to talk about; at least until my workload increases and salary drops to the point that I don't have time for hobbies anymore and can't afford to go on holidays.

The class divide is so strong, my life's goal shifted from "become a tech millionaire" to "try to save a deposit for an apartment" to now "just survive 30 years". If I can survive 30 years, I will become noble and I will finally understand what it feels like to be happy.

But because I'm a peasant and constantly stressed with a horrible workaholic lifestyle doing unfulfilling work, I think there's a possibility I'll die before my parents. I try to teach my toddler son about the importance of money. I had my son quite late because I couldn't afford to have a child sooner. Also, because I'm poor, my wife is quite a bit older than me (only noble men can afford younger wife these days). I worry my son won't understand the importance of money so I wrote letters for him in case he ends up inheriting at a young age to explain how money works and how horrible my life has been without money and how corrupt the system is and that real friends cannot exist in this system because people are always trying to get your money or securing their own money and that money is the most important thing. I explain to everyone around me how the government has made it illegal to be homeless and to exist without money, even if you perfect your wilderness survival skills, rangers will literally find you in the forest and arrest you if you refuse to vacate. I already started planning with my wife how we're going to get him married into money when he is older.

My parents always said that it's bad to spoil a child; that you have to be firm with a child; "when you say no, it means no" kind of thing. I couldn't disagree more nowadays. I started teaching my son that if he throws a tantrum bad enough, for long enough, I will give him what he wanted. Because he needs to know what being a jerk pays off and he needs to demand what he wants. Also, I prioritize his confidence above everything else.

[lunar-whitey]

You need people who care about you even more than money. I wish I had understood this when I was still young enough to seriously entertain having children.

[jongjong]

I think money is very important.

My experience is; if you get lucky, you might meet someone who will stay with you even without money, but you basically have to live through trauma together, to create that kind of bond. I feel like only extreme traumatic hardship can keep people together when they don't have money.

Some rich people feel jealous of poor people "This guy is dirt poor and yet his wife stayed with him." but they're missing the fact that these two people probably share so much trauma that it's very difficult to relate to anyone else after that. They stay together because they literally lack alternatives; nobody else can possibly understand their pain. Which is the core of their identity. It's not pleasant at all. Also, it's almost impossible to make new friends when you're poor for the same reason. You can't relate to anyone. People get rich for a small number of reasons (it's a unifying experience) but people get poor for a million different reasons which feels like falling through hundreds of different invisible cracks (it's a divisive experience).

Being poor, every time I do something unnecessary like small talk or making a joke, I feel unnatural and fake. At a profound level, I don't understand how it's possible to have friends 'just for fun'. Everything I do must have a path towards money. I feel guilty otherwise. I could have spent this time practicing my coding or writing skills or earning money.

[lunar-whitey]

I also believed I needed money and status to make friends. I hated myself, and behaved in ways others found difficult to appreciate or understand. As a result, I often failed and now have far less of these things than people who seem to believe in their own intrinsic value.

It has taken me nearly 20 years to understand why I feel this way. It is painful and unnecessary.

[strongpigeon]

It’s an almost YoY doubling of the Q1 2024 rate (14.8%, 13.1% and 13.8% for 2024, 2023 and 2022) [0], which seems pretty significant. Though, what’s interesting is that the share bought by institutional investor is shrinking per the article.

[0] https://www.realtor.com/news/trends/real-estate-investors-re...

[ahdanggit]

I wonder if the increase has anything to do with the post-COVID lack of interest in commercial property?

[mr_toad]

> If this continues, expect to see more and more radical policy proposals by young people.

The inability of people (specifically ex-soldiers) to acquire land and make a living provided a platform for Julius Caesar to take control of Rome and effectively end the Republic.

[dboreham]

Hence Romania.

[patcon]

Yes, more radical policy proposals are my expectation too.

When the status quo is already extreme (re: property ownership), the appropriate response will seem even MORE extreme because we've gotten used to that opposite one.

[some_random]

Non news to you maybe, but I would have predicted an order of magnitude below and I suspect most of the public shares my less-informed view.

[rayiner]

Journalists are, on average, shockingly innumerate. Here is Brian Williams (famous anchor) and Mara Gay (NYT Editorial Board member) thinking that $500 million is enough to give all 327 million people in America $1 million: https://www.independent.co.uk/news/world/americas/msnbc-bloo....

Note that this was pre-planned. They had a little graphic overlay prepared for this and everything. Probably a dozen people laid eyes on this and they didn't catch it. If you're a functioning human, your gut-level understanding of the world should have caught this. It would be like reporting that the weather in phoenix this weekend will be 327 degrees F.

It reminds me of my dad's story of watching about the moon landing on TV from Bangladesh. The guy next to him said he didn't believe it, because "how did they break through the dome of the sky?" That's what American reporters are like with statistics and economics.

[SoftTalker]

How did they break through the dome in the sky?

The rocket had a sharp point on the top.

[anigbrowl]

So what? You're just deflecting attention from this story to a poorly researched one written by someone else. That's like me saying people should ignore anything you say because some other lawyer used ChatGPT in court. Do better.

[rayiner]

OP explained why this article displayed a bit of economic ignorance, insofar as the framing is confused about what’s the real story. I’m simply providing broader context.

That is, if I start hallucinating citations it’s fair to compare me to AI!

[anigbrowl]

Well that's some bullshit, from beginning to end.

[bix6]

And no replacement births.

[bee_rider]

On the bright side, the folks who bought houses as investments might see that investment collapse along with the population.

[potato3732842]

I think it's as much a social problem as a numbers one. The greatest generation and the silent generation were rich enough to buy up tons of property but mostly didn't. In contrast every thousandaire boomer and gen X is trying to get into the rental game.

So it's possible we get to a point where a minority of the people own enough housing that the rest just vote to say fuck 'em.

[paulryanrogers]

> the rest just vote to say fuck 'em.

The rentier class has tools to prevent such coordinated voting. They divide us with scare tactics on fringe issues, religion, encourage over identifying with things/movements/celebrities, etc.

I'm afraid things would have to fundamentally and undeniably bad to rally enough people to change things. It's amazing how much folks with overlook or rationalize if given an effective distraction, like fear or hate.

[potato3732842]

>The rentier class has tools to prevent such coordinated voting. They divide us with scare tactics on fringe issues, religion, encourage over identifying with things/movements/celebrities, etc.

The "rentier class" in question here is a bunch of slumlords who own a few apartments as part of an LLC they have with their buddies and boomers who have retired to their vacation home and are AirBnBing their former primary residence, not Blackrock and friends, big money only owns a small fraction of property. The average landlord is some other middle or upper middle class schmuck.

[aaomidi]

And now there’s money in preventing building more housing.

It’s a bad cycle as lobbying spending will convince harder than people not being able to afford homes.

[davidw]

There was already money in preventing it. In a link I posted elsewhere about a hearing, the same people raised nearly $8,000 to try and stop one apartment building from going up in their neighborhood.

Not private equity, not 'tHe ChINesE' (or whichever 'bad' foreigners are currently in vogue), but wealthy local NIMBYs.

[dylan604]

And yet just a couple of days ago, HN threads were saying the opposite that stories about non-private ownership was essentially FUD.

[ch4s3]

Almost none of the purchases are PE firms, the vast majority are small investors who own 1-5 properties.

From the article:

> Of those, mom-and-pop investors, or those who own between 1 and 5 homes, account for 85%

Mid sized and large real estate investors make of most of the rest. PE firms account for 0.5-2% of the market.

*edit anyone downvoting this should make an effort to refute what I’m saying with some facts.

[7e]

The problem isn’t a lack of housing, it’s a lot of breeding. US population has doubled since 1950. It quadrupled since 1900.

As long as people keep having babies in excess of the replacement rate, housing will always be good investment. They don’t make any more land, and the earth is, frankly, full.

[darth_avocado]

Problem is absolutely lack of housing and population growth has nothing to do with it.

Average house size was about 1000 sqft in the 1900 and average household size was 5. This remained relatively the same in 1950 where the average household size was 4. These days, the average size of a house is 2600sqft and household size is 3. We have created a system where we build fewer larger houses. This is because policy (often dictated by people who already own houses) makes it impossible to build small high density housing or even if it is possible to build it, it’s not profitable.

[derektank]

The US birth rate hasn't exceeded the replacement rate since the 1970s

[lazide]

With immigration though, it definitely has.

[Supermancho]

> The problem isn’t a lack of housing, it’s a lot of breeding.

> As long as people keep having babies in excess of the replacement rate

To reiterate, the thread was about "breeding". The birth rate has fallen behind.

You are referring to the overall population growth being due to immigration. This may be true, but is unrelated. Respond to the post about why overpop is driving the housing pricing, not to the factual corrections.

[lazide]

So immigrants don’t count as people, or have babies?

The birth rate for immigrants in america is still quite positive, and has more than offset the low birth rate from ‘non-immigrants’.

[Supermancho]

> So immigrants don’t count as people, or have babies?

Births for immigrants are not counted separately. Again, the birth rate is the topic (which includes immigrant births). Granted, all kinds of residents have births outside of hospitals, but that's a tiny minority that is not counted.

This focus on immigrant vs non-immigrant is more noise in the wrong thread.

[derektank]

No it hasn't. Even among immigrants the birth rate reached replacement in the late 00's and has since fallen below 1.8 births per woman.

[sorcerer-mar]

You should consider getting in an airplane and meandering around and reporting back on how full the earth is.

[appreciatorBus]

People don’t live in land, they live in floorspace, and we can make plenty of that if we choose.

[jfengel]

Much of the news lately has been about how we're going below the replacement rate, and somehow that's also a crisis.

[AnimalMuppet]

The US is nowhere near full.

[msgodel]

If that were the case housing would be cheap.

It may very well also be that the way we're organizing people means they can't live densely and that's why it's full. Regardless it's full enough that there's almost no place for young people in the US economy.

[AnimalMuppet]

7e specifically said "land". He (?) said that "the earth is full", even though the issue was the US housing supply. Well, the US has plenty of land for houses - even if people can't or won't live densely.

And whether there's a place for young people in the economy is not what's under discussion here.