[xoqem]

For anyone who didn't click into the article, the headline may be misleading without the sub headline, which currently is "Relatively speaking, California is not a hot spot for housing investors". The map graphic shows that 19% is lower than other large states (e.g. 22% in Texas, 21% in Florida, 20% in New York). And lower than other west coast states generally (22% in Washington and Oregon, 25% in Nevada, and 23% in Arizona).

[hn_throwaway_99]

I think another metric that's probably just as important is what percentage of those investors are large institutional investors vs. "Mom and Pop" landlords with one house for rent.

I mention that because I remember reading during the pandemic that institutional investors generally make shittier landlords: they're quicker to evict, quicker to raise rents, less likely to work with a tenant on a payment plan, and they have fewer ties to the community. There was a concern that with all the eviction moratoriums during the pandemic that large landlords could wait it out, while smaller landlords got screwed and got out altogether in some cases, leaving their housing stock to be gobbled up by the shittier institutional landlords.

[Gibbon1]

George Orwell made a comment that the landlord in the impoverished coal mining town he visited was usually an old widow.

Always gets me is the ideological contortions people will get up to in order to not face that California is short a couple million units of housing. Really the US has been investing in looting schemes and not in build out for the last 40 years.

[taeric]

It would probably be easier to understand if worded the other way? 81% of California houses are owner occupied.

[brentm]

But how is that going to trigger someone?

[dgrcode]

I think the 81% group would also include unocuppied houses, right?

[taeric]

I have to confess I'm not sure. :( Searching for vacancy rate shows that is around 9%. I would expect these are owned by someone, though, such that I don't know why they would not be counted as investments?

Doing the same search for "owner occupied" shows only around 50%, though. I don't know where to get the data that teases apart housing units and standalone houses.

[tptacek]

Where are you seeing 9% vacancy rate in California? According to FRED, the current rental vacancy rate in CA is below 5, and the current home vacancy rate is below 1.

[taeric]

Hmm... I thought I just took the basic google, but that seems to give a different result now. Maybe I just fat fingered copying into here, not sure.

I know that my main assertion there was it was a relatively lower number. Adding it to the 19 of this story would still leave owner occupied higher than 50ish. Such that I clearly need help to put a lot of this together.

[comfysocks]

California houses are not popular with professional “landlord” investors because the cap rates (net operating income / house value) are poor. Rents are limited to what potential renters are actually able to pay, while the prices are very high.

On the other hand, during the upswing in prices, house flipping in California was really popular with investors because the (then) low interest and likely capital gain made things easy.

[joe_the_user]

The headline isn't misleading unless your only concern is placing California in relative position.

The headline is true and relevant if you are wondering how investors influence housing prices - with a 20% share, clearly investors influence prices a lot. Moreover, California is where the housing bubble began but it's quite logical it's no longer where the bubble is concentrated so again 20% doesn't imply investor ownership is unimportant.

[tims33]

But it is also the largest state with the most expensive home so on a $ weighted basis it is a big chunk of the national total.

[bigbadfeline]

Good point. Similar to how the share price of a company is meaningless, total capitalization is the only useful metric. Similarly, investors have gone to great expenses to commit their money into 19% of California's housing, greater expenses than any other state, even when considered on per-capita basis.

To understand the meaning of this, consider that supply/demand curves are naturally non-linear and even 5% increase in demand can double the prices.

[jondwillis]

Yeah but that nuance doesn’t fit into the current “California bad” memetic onslaught being peddled by my owners.

[grafmax]

And yet 20% of the market being captured by those who already have a home, while so many go without one, indicates a shortcoming in our society’s ability to distribute resources from those who don’t need them to those who do.

[tptacek]

Renting a home out isn't "capturing" the house. Rental housing is a desirable product. Lots of people don't want to own, be locked into a particular house for years to offset transaction costs, and to own all the downside and maintenance risk of the property.

[cloverich]

Consider soliciting the opinion of more renters. Plenty of us would happily purchase if prices were more reasonable. Renting out sfh should be rare, imho. The current situation needs many remedies and kicking out sfh as investment vehicles is a very low hanging fruit.

[kasey_junk]

Kicking out sfh as investment vehicles makes it harder to sell homes. This a) increases the risk to home buyers and b) makes owning inventory more expensive. Thats likely to make increasing supply untenable.

This low hanging “remedy” is likely to exacerbate the supply issue, not help it.

[cloverich]

Demand would still outstrip supply, so by what mechanism would selling be difficult or risky? It would modestly reduce prices, making it less expensive for all regular home owners. That's a win for everyone but (sfh) investors.

[kasey_junk]

Home builders are “investors” in sfh. So out of the gate you’ve got a problem with making the regulations more complicated to navigate. For the people creating supply.

Some of those homebuilders build because they can rent homes if they can’t be sold. Others build because they have large investors to sell to if necessary. All of them build with their financial models account for carry time, as carry costs are extremely important to their bottom line.

If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable.

[tptacek]

Spoken like someone who never lost their shirt on a house after discovering they had to move a couple years after buying. No, I'm pretty confident: lots of renters are renters on purpose. Ownership is not categorically better than renting.

[bpt3]

20% of CA residents are homeless? Citation please!

[esseph]

That's not at all what they said.

[bpt3]

To spell it out, they seem to be completely ignoring that those rental properties are not vacant. Instead, they house people, just like they would if they were owner occupied.

[esseph]

20% of market capture does not cause homelessness, but there are many very valid arguments that treating housing as an investment isn't a stairway to ending homelessness.

[bpt3]

> 20% of market capture does not cause homelessness

Right, which is why trying to link the two is misleading at best.

> there are many valid arguments that treating housing as an investment isn't a stairway to ending homelessness

Such as? We seem to agree that the existence of rental units isn't a cause of homelessness.