Investors add to demand for housing. This will help drive up prices. And no, builders will not necessarily increase supply if they can realise increased margin of profit due to increased demand. We see that with RAM manufacturers. RAM suppliers constrain supply to boost margins. Same with house builders. The difference is people can go without RAM but everyone needs a place to live.
> And here I thought people who want to live in houses add to demand for housing.
Desire is a necessary component in demand, but it also requires willingness at a given price point. If houses are selling for $1,000,000 and you only have $500,000 to spend, then no matter how much you dream every night about having a home, you are not a contributor to demand.
Counterpoint: houses sell for $1,000,000 because there are more people with $500,000 (and every other number less than $1,000,000) who want those houses than there are houses.
1) morally. Alice deserves it because her intention is more pure.
2) financially. Bob gets it, because he can pay more for it than alice.
Which choice above you make as a policy direction is a reflection of your world view. I'm voting for 2), but i can understand the POV of 1), even tho i disagree with it.
You are entirely missing the point. The correct answer is to build 2 houses. The problem with these policies is that they artificially restrict demand. If they didn't do that, nobody would have a problem with them.
Sounds easier to just outlaw investor from owning houses they don't live in themselves. Seems we can't really stop collusion, only real way to win there is to not make that possible in the first place.
> Then everyone is forced to buy a house to live in, no matter what their situation or desires are.
Great! Now we're talking real solutions that can actually help people :)
> Of course we can stop collusion. What are you even talking about?
Besides laws and regulation (which already exists and clearly isn't enough), what is your suggested solution for stopping collusion?
Price fixing is/was already illegal in the US (if I understand the Sherman Act correctly), yet the largest landlords in the US was found to engage in price-fixing and artificially raising rents. https://www.propublica.org/article/justice-department-sues-l...
I currently don't own, and I can't either, because I don't want to be stuck in one place for too long. If the prices where lower, where I could reliably buy, live for some years then sell again, without a huge amount of hassle, and not costing at least one million to buy some shitty apartment, then that'd be preferably.
And besides just having "real estate investors" slurping up all housing, people could own one house then rent out parts of it, or a collection of people could own their apartment building together, there are many other ways to make housing work that doesn't involve huge companies owning large parts of the market. A little bit of nuance goes a long way.
35% of Americans rent their homes. And they almost invariably rent from investors. Therefore if more than 35% of homes are owned by investors this drives down rent. If less than 35% are owned by investors rent goes up.
This logic assumes that 35% of Americans WANT to rent their home. Which seems odd to me, if only for financial reasons - why would you pay 1400$ for a 1 bedroom apartment when you could pay 700$ in a mortgage for that same apartment if you could have bought it?
> why would you pay 1400$ for a 1 bedroom apartment when you could pay 700$ in a mortgage for that same apartment if you could have bought it
Because the down payment you put into your purchased home could've been put into the stock market and grown faster than property values (this is historically true).
Because you don't want the headache of home maintenance.
Because in the 21st century, job stability doesn't exist so it's a big risk to buy a home fifteen minutes from your current job that might be an hour from your new job after you get fired so a CEO can get more golden parachutes.
Because you might have to change cities a year from now.
My wife and I rented for a long time because it was better than owning for us.
Agreed. It’s a classic fallacy to compare rent vs mortgage on a numbers to numbers basis. It’s classic example of not accounting for the total cost of ownership.
Maybe not half, but it’s pretty common around here (generic midwestern city) for renting to be more expensive than a comparable mortgage.
Many landlords seem to expect to pay their mortgage and property taxes and maintenance with the rental income, and still net a profit, if r/landlord is to be believed.
The profit is compensation for the risk. The mortgage and property taxes and maintenance are due no matter what - can't find a tenant, tenant doesn't pay, tenant flushes paper towels down the toilets every day etc etc.
If there was no profit there would be no landlords. Some might say that's great. But it would be a world with less flexibility, with fewer choices. Don't like your job and want to move? Split up with your partner and need someplace to live? Moved to a new city and don't know where you want to put down roots yet? At college for 4 years? Don't want to deal with house maintenance? "F** you, buy a house anyway". That's what we'd have if there was no rental housing.
> renting to be more expensive than a comparable mortgage.
that doesn't sound plausible. May be for a select few properties that are in some unique circumstance (e.g., the seller of the property would sell underpriced because they needed quick sale).
And often, in arguments like these, the rent is the rent, but the mortgage is purely the interest on the loan, and doesn't count the maintenance cost, and doesn't count the deposit required (which has a cost, ala the cost of capital). If you added up all these costs, it exceeds rent.
I fundamentally agree on statement that rents are more expensive than mortgages. As capital is involved and landlords want premium on capital.
Still, things can go either way. And well renting is lot more flexible and less risky. So there is really nothing wrong with that option existing. And many times it is the better pick of the two.
You do know that the posters on r/landlord are often selling services to landlords and thus have a financial incentive to make being a landlord seem attractive. Its a pretty safe assumption that reality isn't that rosy.
> 35% of Americans rent their homes. And they almost invariably rent from investors. Therefore if more than 35% of homes are owned by investors this drives down rent. If less than 35% are owned by investors rent goes up.
This only holds until the percentage owned by the investors becomes a monopolistic chunk. At that point the investors would rather leave some apartments empty rather than see rents go down.