We need to build more homes. When we do that, buying and holding homes ceases to become an interesting investment, and private equity gets out of it, just like private equity does not buy and hold used Toyota Corollas.
Zoning should be used to keep factories out of neighborhoods, nothing more. Also, building code is making houses boring. Should be a third-party standard, like UL.
The limits are: Getting people willing to work in the industry (a lot of it is hard labor for okay but not great pay). Zoning which doesn't allow you to build at all in high demand places. Building codes that sometimes require things that don't make sense. Places where builders can get permits "by right" tend to have a lot more building and thus much lower housing prices.
If that created a construction boom, then it would be a boom of constructing very expensive housing, not affordable housing. At least, that's what would happen if recent history is anything to go by.
Except that houses last much longer and there won‘t be an newer more attractive version 5 years later. And in many places the value is the land not the house.
> Newer housing is quite often much nicer than older housing
I would disagree very strongly. Stronger building codes and rising material costs have made everything look very samey. I really wish people would/could build more houses that were interesting.
> Newer housing is quite often much nicer than older housing, truth be told.
I haven't seen this in the real world. Newer housing tends to be of much lower quality than older housing, even when we're talking about high-end housing.
Perhaps we agree in terms of aesthetics, but that's in the eye of the beholder. In terms of the quality of the actual build, see the article below. Newer is generally much better in terms of energy efficiency and other metrics.
Newer housing is indeed better in certain ways, but is worse in others. I suppose whether or not it's better overall depends on how much you value those different things.
I've owned two houses now that were older than 100 years, and both of them were the best houses I've had. No money pits that were any worse than the money pits new houses are.
The idea that Blackrock brought all the homes has reached the level of what I'd call "TikTok truth", ie. an idea that feels so true that reality can't compete. Can I ask you why you find it convincing?
I found this Derek Thompson article informed my thinking on the subject:
> ban private equity firms owning residential properties
What happens to apartments? What is a "PE" fund defined as? REITs own a number of properties but are not PE. Are small landlords banned from renting? What is the delineation of a Family Office/Small Landlord and a PE fund?
You've basically done the policy equivalent of asking you to build me a website that can host FB level load with no other criteria except Facebook did it.
I came up with a rough idea for a policy. I'd say it's more like I'm describing Facebook as a timeline-based social media website where you can connect with your friends.
Not OP, but I did work real estate for 8 years. While Blackrock themselves aren't buying all the homes, private companies such as them buying homes for investment portfolios is a major issue.
In the area I worked in, 30% of all home sales were bought with cash with no inspections to investment companies like Blackrock and then listed for rent. In the 3 cities around me, 2 new communities that were supposed to be starter homes starting at $300k, were all bought up by those investment companies and are now rental-only communities.
The average American can't compete with that no matter how much we delude ourselves into thinking we can.
Is there any evidence that private equity owns a significant percentage of homes? Absent any strong data, I am skeptical that PE would purchase (and hold) large swaths of residential real estate. Unlike, commercial real estate, the operations component of maintaining the buildings (outside of apartment complexes) would be complex and hard to scale. I am open to be disproven but it just seems like a much more unwieldy asset class than PE normally deals with.
The real question is what is a significant percentage? My understanding was that the housing stock has always been so tight that residential vacancies (rental/sales) have always been in the single digit percentages. So if a private equity starts buying just a few percent they put an outsized pressure on a tight market.
Add in things like airbnb, foreign sales and the limited capacity in time and labour for construction you have a recipe for exhausting the already extremely limited suppy
That is why I used the qualifier "significant" as in enough to influence prices. What percentage of SFH sold are bought by PE each year? What percent of homes are held by PE? I would be surprised if either one is even in the high single digits.
I can definitely see Airbnb or foreign buyers being a factor in some local markets. In both these cases, the operational aspect of home ownership is less of an issue since the ownership is diffuse.
This is irrelevant. Homes are depreciating assets. The only reason that finance got involved is that we are building way to few relative to demand. Remove the extreme market distortion and finance has nothing to push against.
I think you're right, and I think I'm right. The correct approach would be to punish rampant speculation backed by my 401k, and reward building and private ownership.
They also play games where they refuse to lower rents even when they're going empty because it will lower the resale value of the property. There's lots of economic games you can play when you own a large percentage of the rental property in an area. The logic of "landlords provide housing" is a myth, but it's especially true here when the primary purpose of owning the property for these firms is speculation and collecting market rate rents is secondary to that.
Landlords generally own a couple properties, and have competition. If you control a significant percentage of the market, you can really really abuse that.
Is increasing the rental housing stock an intrinsically good thing if every unit of housing available for rent means one less unit of housing available for sale?
Here on HN we're all quick to lament the end of real ownership in the sense of media like books and music, at the mercy of an exploitative corporate practice that is not coincidentally called rent-seeking. So why should we all be happy to be literal rentiers to the landed gentry?
There's no intrinsic reason people should own as opposed to rent. Some people want to own, some to rent. When it comes to single-family lots, the stock is profoundly tilted towards ownership, so the more extraordinary claim would be that shifting those lots slightly towards rentals is somehow bad.
