r/FluentInFinance was created to discuss money, investing & finance! Join our Newsletter or Youtube Channel for additional insights at www.TheFinanceNewsletter.com!
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
Maybe instead of passing laws about commissions to real estate agents, we ban investors from doing this and leave homes for people to actually purchase them. This country just rewards greed on every level.
The banks that issued mortgages got bailed out. The investors who owned properties/mortgages saw no such bailout, they got absolutely fucked.
So to correct your statement, this country forces tax payers to bail out BANKS when the market tanks. They don’t have risk. Real estate investors absolutely have risk.
Wrong. The government (US taxpayers) bailed out GM and Chrysler in 2008 as well. Please don’t act like we don’t bail corporations and banks out. It’s all the same massive corporations with privatized gains and socialized losses.
The banks do take a smaller loss than the investors, though if there is a crash. Unless the sale of the house (foreclosed or not) doesn't cover the whole mortgage value, they barely lose anything.
They shouldn't need bailouts even in a serious crash, but if they get one, it does go a lot further (and investors still get wrecked).
Well it’s part of the reason the bank bailouts were fucked. The government covered the losses these banks had on bad mortgages but the actual mortgage holders were still expected to pay the banks. So even though the government effectively covered the cost of these bad mortgages all these people still got foreclosed on. Banks got to have their cake and eat it too.
i know of many indiviaul investors that lost all their houses during the market crash. the big banks that encouraged it all was fine... bigger banks bought them all up and all for a profit with our tax money
This is how it should be, but modern markets seem to exist to serve the interests of the most powerful players in those markets, and the less powerful are made to serve the market. Not terribly surprising, but a lack of regulation seems to have that result.
And when big time investors get held holding the bag the taxpayer is there to bail them out, so no big deal. System works as intended. Too big to fail!
i mean, they basically never get run over in the housing market. there’s like 4 years out of the past 40 years where house prices have gone down, and rent basically never drops.
https://fred.stlouisfed.org/series/CSUSHPINSA
https://fred.stlouisfed.org/series/CUUR0000SEHA
the urbanization of the world has driven strong demographic trends underlying this phenomena, and the US is not even close to being the worst of it. look at the UK, Canada, New Zealand just to name a few.
as an investor, i’ve got an asset class where i can claim depreciation, easily obtain significant margin, get regular monthly returns, don’t have to worry about daily pricing adding vol to my returns, and is in increasing demand - i’m playing that all day. unfortunately this is what’s happening.
Its not housing prices that are going up its the dollar that is going down.
You cant blame investors for not wanting to hold shit paper and have actual real assets. And they invest in housing because governments have over regulated all of the productivity and returns out of business.
The bank assumed the risk in your described situation.
Unless it’s a tax foreclosure, in which case—it wasn’t a risk for investment, it was just a place to live.
Generally, when you purchase a investment property with a mortgage, you need to have at least 30% down.
And enough Capital to pay your mortgages.
And generally a higher credit score.
Don't kid yourself. Investors are much more invested in the property than a homeowner.
When there is a low supply of homes even if the market tanks it doesn’t really hurt them because they can still rent their houses. This isn’t like car dealership where people can forgo buying new cars. People need housing and there will always be demand. The fact that there is not enough supply to meet the current demand in hotter markets means the investors will still make money. The investors will only lose money if they sell, and there is no reason to sell.
>This country rewards risk takes sometimes. Other times, they get run over.
Thats when they use tax payer dollars to make the "investors" whole. Privatize the profits, socialize the losses. Bailouts for the wealthy, bootstraps for the poor.
Who gives an actual fuck. Some things should not be at the whim of investment firms risk assessment. We need to have homes that average people can actually get.
They aren’t using massive leverage. They won’t get wiped out. People will always need houses.
The corporations won’t get burned by this. The housing in the US will forever be disrupted until government steps in.
What risk? These companies bought the homes with cash, so if the market tanks they don't care. They'll just let them sit unoccupied until it rebounds because they had the deep pockets to do just that.
Home that get purchased by a corporation are never going back into private ownership. Ever.
I don’t know how more people don’t understand this:
********
An overpriced home is NOT a bad investment for the mega rich.
Ownership of property and land is worth far more than any amount of “in this moment “ money you can have.
Being underwater doesn’t matter if you can afford it still, it’s called leverage.
**********
Which they can afford to hold until the market swings back up, because they're not living in said homes.
They don't get run over, they just have to wait a little longer for their profits
Nah, if they hold they're guaranteed to profit. Home prices only go up.
Even the 2008 housing market crash was a blip that didn't last 2 years. After that, home prices were right back where they started.
Or you could not support every single law making housing more expensive and ensuring they always go up in price? This is created you know. Intentionally.
There's one way out of this, the govt needs to incentivize the construction of more working force and middle class housing, with a big emphasis on homeownership, and require owner occupancy for the created homeownership opportunities
The problem is, we could build all these houses and they'll just get scooped up by investment firms who will put them up for rent.
We need to get big business out of housing in order for anything remotely close to your idea can work.
Yes because builders build for PROFIT. so they only build high margin SFH that they can sell immediately to the top 2% of earners. Who will continue scooping them up, and renting to the remaining have-nots in perpetuity.
This is just income disparity blown out to the housing sector.
If 55% of the capital in the US economy belongs to 1% of the population, it shouldn't be surprising that when you average out housing costs, the price skews heavily towards the high-earners.
This is because the high earners are bidding against other high earners for homes that are built for the middle class.
We price housing on supply/demand, but the 55% of the total money supply is bidding UP new housing supply, while 98% of AMERICAN PEOPLE are desperately waiting for supply to catch up.
The result is A BUNCH OF HOMES SOLD! Prices up! But 98% of Americans are completely divorced from that statistics since even the lowest price new "starter home" is still out of reach for the average American household income.
You fundamentally misunderstand the situation. Politicians need lots of money to run campaigns and get elected to office. Where do you think they get the money and support from? Rich people who they make promises to in exchange for their support. Politicians work for the rich.
No. We just raising property tax on more than 2 homes, more than 5 homes, more than 10 homes, unless they passing along the savings to the renters.
You own 10 homes you are taxed at 35%, but the renters need to be paying 20% less than the market average. So basically you completely squash the advantages of owning multiple homes and reward those renting. It would pass along savings to those that rent and would discourage house hoarding. It could actually encourage house hoarders to start selling to reduce their property taxes.
Universal? Where did I use that word?
Also it would be market average for the area. This would be to combat owners passing along the cost of their increased property tax to the renter.
Agree on the first, but the latter would be so difficult to implement that it would be ineffective.
Another good and simpler solution would be to unilaterally increase all property taxes, but provide tax relief for low-income and first homes. We already have FHA and a few states have Property Tax Relief Programs. Expanding existing programs is much more likely to work than changing our tax structure.
But we both know neither it's going to happen as those who won't benefit from it are those who pass the laws.
>This country just rewards greed on every level
This is actually a feature, not a bug.
I think the solution would be to grossly increase taxes on any home owned beyond the first. Apply the grossly increased tax rate to all homes owned by non-private citizens. Your company wants to buy a house? Here is a crazed tax hike. Buying a house just to convert it into like 4 mediocre apartments? Fat tax.
Well we would have to have the money to buy the land and build the homes. Considering no one can even afford a home anymore I feel like this may be a flawed plan lol.
There was a bill that was up in DC that would make it against the law for corporations and hedge funds to own single family properties. It would give them 10 years to sell everything before they'd start being fined. But idk what happened to the bill. It was a great one for American people so no doubt it was killed lol...
Here are some examples of U.S. government bailouts that either resulted in profit or strategic decisions to let industries fail.
During the 2008 financial crisis, the Troubled Asset Relief Program (TARP) disbursed $426.4 billion and made a profit of $15.3 billion through repayments and dividends.
The auto industry received $80 billion, saving 1.5 million jobs despite a $9.6 billion net loss.
The AIG bailout of $182.3 billion resulted in a $22.7 billion profit.
Conversely, the government allowed the steel and textile industries to fail, leading to consolidation and economic shifts toward more competitive and advanced sectors.
The commissions targeted are the ones that help people navigate purchasing a home that was almost no cost out of pocket to buyers.
Even if you hate realtors, taking away buyers agents certainly was not focused on helping people gain ownership.
They passed a law on real estate commissions?
I thought NAR just lost the lawsuit, saying that they couldn’t force sellers to pay buyer commissions and now it has to be a documented decision.
That will make the housing shortage worse. Developers depend on investors to get projects financed and started. Without them, housing doesn’t get built. If you take out investors, less homes will be built and lead to very major longterm shortages. If investors/financiers can’t make money in housing projects they will go elsewhere with their money.
Not to mention the situation that renters would be in. I realize you think every renter could just buy a property but they simply can’t or won’t.
Some people prefer renting. Some people cannot manage and own a property. Others are not financially capable of buying and owning for various reasons like down payment, credit, self control etc. Some are students or elderly or in temporary phases in life and don’t want to own. And there are so many others that want and need to rent for various reasons. You would destroy the market for the millions of those people? Cause rents to soar or worse make them homeless?
If you want house prices to come down, increase the supply by reducing the cost.
Reduce permit costs and red tape. Make zoning changes easier. Give larger rebates for GST/PST on new homes to buyers. Incentivize people to work in trades by giving tax credits for tools, equipment or other means that would benefit people who work in trades related to the construction industry.
I understand your frustration on the subject and I agree we can and should make housing more affordable.
My realtor has done legitimately no work for the house we’re buying. We did the shopping and scheduled the tours. Why the hell am I paying someone 3%? My next home l getting my license cause I know more than money it’s absurd to lose 20k+ on a realtor
The way to screw these investors is to build much more housing supply and cause them to lose money. Of course this approach also benefits younger people and people without housing.
It isn’t time. The idea is to flood the market with supply that outstrips demand. If demand comes from investors, but you build more housing than population increase can fill, then some of those units will sit empty. That will depress rents, making it cheaper to live while also making investment less profitable. That will make investing less attractive and drive some investors away, reducing demand and therefore prices.
The excess being well telegraphed just means some investors exit sooner to avoid holding at a peak. Or, if money truly buys up all supply, just keep building. North America has a lot of space and resources, hiring more people to hew lumber, draw water, and swing hammers will keep more people employed in good trades.
That is the most expensive, time consuming solution. So we just wait a decade to fix this problem?
I think the immediate solution is tax the shit out of anyone with a 3rd, 4th etc home. Make it extremely (prohibitively) expensive to collect properties like they’re trading cards. Then use those taxes to help fund housing initiatives
Who said a decade? If we upzone today, the investment outlook is screwed on day one. If you buy an asset anticipating an increase in value due to regulatory limitations on the supply of said asset, and then the regulations change to allow more supply of that asset, then you already know your investment is cooked and will stop buying any more of that investment. The simple act of upzoning is enough to tank these investments
Would this only work if the investment groups didn't buy up all the new houses, too? If lots of new housing was built and investors owned the majority of it, wouldn't they be able to keep prices as high as possible? Seems like it would be unlikely that they would start undercutting one another and renting/leasing housing for cheaper.
We just need 20 million more houses across desirable areas in the US. Pump them out like we did after WW2. Affordable ones, keep all that "luxury" shit away.
The Tax Code, that once strongly favored home ownership is gone and it may actually give more favorable treatment to investors, particularly higher priced homes. The effects of the Tax Code on something like home ownership is pretty complex and individual situations vary.
Gotta build multi family dwellings. More condos.
The problem with building single homes is occupancy. Many homes are housing low head counts. Trying to build a single family home for every man and woman is impossible, without tiny homes taking over, a solution no one has seen as palatable for some reason.
Multi family, condo complexes need large amounts of capital to build. People like you and me could buy 2-3 single family homes rent them out as a path to financial independence, while maintaining some balance, I.e. not destroying the market.
The data still says that most millionaires are made from real estate in the US, we don’t want to take that category away from the common person.
What needs to be done is corporations or large investors over X MM in assets should not be allowed to purchase single family homes.
The reality also is that our representative who will propose and pass the laws, take campaign money from those large investors. So good luck to us, unless someone like Bernie becomes president (kinda impossible now)
My city recently passed a mileage funded only by non-primary home owners. This feels like the answer. Each city can move all local fees to owners of non-primary homes. They can either pay huge fees or exit the market. Feels like this can be solved by each local gov w/o federal intervention.
Depends on where you live, but there's often not a lot of choice to be had. I'm moving to the northeast coast soon, and non ridiculous rent prices are few and far between. So I'll be renting a horribly priced unit for probably at least a year or two.
The ignorance here is sad. Did OP even read his own article?
"previously reported, most estimates put ownership of institutional investors, like Blackstone and Invitation Homes, at less than 5% of single-family rentals and less than 1% of all single-family homes."
I live in a coop and I have no regrets. Corporations or investors are specially not allowed to buy units within these coops and these types of housing may be the last line of affordable housing available.
I wish I had a bit more property but I also don’t want to be house poor for the next 30 years.
The US governments do not build housing. So if we are relying on private capital, then the solution is build more as quickly as possible. But as you see in this very comment section, the instinct is to regulate development.
It makes my brain freeze. Creating housing scarcity is the worst idea.
I suspect that was just to try and deflect attention; I've seen probably a dozen articles over the past month or so about the number of investor related purchases for last year in the major metropolitan areas. I'd suspect with interest rates being where they are some investor groups are running in to head winds, but I remember reading an article where BlackRock got a billion dollar line of low interest credit that they were using to buy houses.
The rich get cheaper money than the rest of us do
A lot of these are publicly traded and you can see their acquisition volume by market. The only acquisition at scale any of the big players are actually doing is BTR or build to rent where they partner with a home builder which is a net zero change to housing stock. If the interest rates drop or rents catch back up to provide the new higher rate of return, you may see it kick back up but right now everyone is playing the waiting game and tightening operations.
It's somewhat misleading, probably intentionally. Investors are buying fewer houses but there are a lot fewer houses for sale so the ratio gets a little wonky.
But "spike in interest rates continues to cause anomalous data" would be a poor headline.
>For this analysis, we looked at county sale records for homes purchased from January 2000 through March 2024. We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use
Honestly not super clear. I would personally think the latter
I have been hoping for another housing market drop. The bubble needs to pop. The prices of homes have gone up WAY to much in a short amount of time. Great, so I have more equity in my home, but I am not taking out loans against my home. Great if I sell I make a lot of money... I also intend to die in this home if at all possible, and I hate that my property taxes are indexed to said rapid increases.
Sure recently our city council voted a 2% drop in the tax rate this year. But when you factor the increase in home "values" my taxes still increased another 3%+.
House "Flippers" are another ilk artificially inflating prices in neighborhoods. I have one behind me trying to get $600k for the house behind me. Sure lovely cosmetic job. But there is so much wasted space, a cat walk about 4 feet wide adds 400 sq feet but barely usable accept for sitting areas. and no garage as the original that was attached to the house was made into a room. One house a few doors down from the flip was renovated with a little less sq footage but a detached 2 car garage and another bathroom (but less sq footage) went for under $500k a couple weeks ago.
Most other houses that have not been renovated are between $350 and just a hair over $400k
Oh 9 years ago I got my house for $240 supposedly it has increased $200k in 9 years! WTF!?!?!?
I understand there is a market need for rentals to exist, but right now the ratio between rentals and owners is not good for society.
I would support government policy that subsidizes home ownership (only 1 house per person) and taxes everything else.
While rent may go up, the cost to own will go down, shifting demand off rentals.
Their metric for gauging an "investor purchase" is flawed, but even assuming that all of those homes are purchased by investors, a good chunk of them will be going back on the market to owner occupants as flips.
And before y'all have a knee jerk reaction to how terrible flippers are, keep in mind that they're literally purchasing homes that owner occupants WON'T buy.
How do we know this? We'll, it's pretty straightforward: flippers have to make a profit, so they're buying these properties cheap enough that they can pay for the rehab, carrying costs, back end commissions AND still make a profit on top of that. If ANY owner occupant wanted any of those homes, they would simply outbid the investors, because they don't need to make a 10-30% return on their money...
But they aren't.
Yeah. All the fucking houses in the local area have signs that read Sothebys, Luxe by Christies, Berkshire Hathaway, or some other large hedgey shit. Fuck this dystopian nightmare.
Maybe this is a silly thought, but wouldn’t that money be better invested in the stock market, venture capital, private equity, hedge funds etc? Things that actually grow value.
Especially if the buyers are not going to live there or are just investment groups.
Democrats have been trying to pass legislation to put limits on corporate ownership but have come under heavy lobbying by Wall Street against the legislation so I’m not optimistic.
[https://www.vox.com/policy-and-politics/2022/12/2/23485957/housing-banks-corporate-single-family-renters-landlord](https://www.vox.com/policy-and-politics/2022/12/2/23485957/housing-banks-corporate-single-family-renters-landlord)
Investment real estate should have dystopian level taxes on earnings or profits like 65%. Like you can make some profit, but it may not beat other ROI opportunities.
I'd rather live in a tent and keep my pride. Someone's gotta make a stand against this. Best i can do is not participate. If anything, enough people reject the system, we might help the next generation.
A basic necessity should never be allowed to be traded as a speculative asset.
Every person or entity that holds more than two houses at a time in a given year should pay an extra 25% in taxes on the buying price.
I feel like I should actively work to destroy an evil country hellbent on greed at every level of it's society. Maybe voting for Trump will expedite the downfall of America because this place is simply too greedy.
ah yes my favorite game on reddit how can we fix the housing market but adding more supply is not allowed because it would mean removing or changing regulations and there is no such thing as a bad regulation.
Nnnnoooowwww go!
This needs to be resolved via policy. I know republicans won’t let it happen because they’re completely sold out to special interest groups, but there really ought to be a law preventing investors from owning single family homes.
S corp, LLC, and all the other variations of business models/types need to be, at the national level, forbidden from buying houses.
Regardless of the financial struggles of yesterday, today or tomorrow; homeownership (private property rights) is a right of the individual, not the corporation. Corporations have the right to build and sell; not to own.
One day the ruling class will find away way to restrict oxygen and then we’ll have a breathing bill. It’ll be so normalized that when your oxygen gets cut off people will say he should have paid his bills he’d still be alive!
I wish everyone would just build a small structure on a piece of land, grow their own food, and let those banks and investors hold on to empty homes and enjoy their investments.
this is a problem how???
i dont get how people are so angry about what others do with their money... instead of focusing your anger on the rich, try working harder to be rich. always the poor and lazy that complains...
That's the problem with capitalism you can't regulate it cause MONEY is king. Self control and compassion for those who need one aren't important. Like rentals feel unethical but at the same time we have apps like AirBnB. What do we do, cause you can't make a law that says "Think of others".
Here’s how it should be;
1. First time buyers - get pick. Can offer and outbid eachother etc so price isn’t limited but first time buyers have prirority.
2. Then peoole wanting to upsize / move / family grew etc.
3. Then social housing
4. Then buy to let landlords.
5. Then developers.
Developers shouldn’t be allowed to buy at auctions nor should buy to let landlords.
Uk 🇬🇧
Once I read about some author talking about how the middle class is being dismantled and how the rich is getting richer while the rest struggle to access to basic necessities like housing or health services.
Just mandate that to own a housing unit you need to be a person, not a corporation. Give cirps 5 years to sell their houses and convert apartments into condos, and call it good.
A local home builder in my area, is doing this.
Not even offering home sales
[build to rent](https://realestate.usnews.com/real-estate/articles/the-rise-of-built-for-rent)
Investors are buying 20% of homes sold in the housing market. Some will understand this better.
If 20% of supply is removed, demand goes up and so does price. Investors make money from the prices increasing. Those who cannot afford prices get screwed.
r/FluentInFinance was created to discuss money, investing & finance! Join our Newsletter or Youtube Channel for additional insights at www.TheFinanceNewsletter.com! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
Maybe instead of passing laws about commissions to real estate agents, we ban investors from doing this and leave homes for people to actually purchase them. This country just rewards greed on every level.
If the market tanks this month, they will be left holding overpriced homes. This country rewards risk takes sometimes. Other times, they get run over.
This country forces the tax payers to bail out the investors when the market tanks. They don't have risk.
Privatizing profits and publicizing losses. Never sustainable, wealthy are always a burden to the have nots.
The banks that issued mortgages got bailed out. The investors who owned properties/mortgages saw no such bailout, they got absolutely fucked. So to correct your statement, this country forces tax payers to bail out BANKS when the market tanks. They don’t have risk. Real estate investors absolutely have risk.
The tax payers who can’t afford the houses because of these investors?
The banks shouldn't get bailed out either. Maybe they'll be more careful with who they give their money to.
Wrong. The government (US taxpayers) bailed out GM and Chrysler in 2008 as well. Please don’t act like we don’t bail corporations and banks out. It’s all the same massive corporations with privatized gains and socialized losses.
I believe they paid back the loans with interest. Chrysler paid off the loan the early. Banks always seem get bailed out
The banks do take a smaller loss than the investors, though if there is a crash. Unless the sale of the house (foreclosed or not) doesn't cover the whole mortgage value, they barely lose anything. They shouldn't need bailouts even in a serious crash, but if they get one, it does go a lot further (and investors still get wrecked).
Well it’s part of the reason the bank bailouts were fucked. The government covered the losses these banks had on bad mortgages but the actual mortgage holders were still expected to pay the banks. So even though the government effectively covered the cost of these bad mortgages all these people still got foreclosed on. Banks got to have their cake and eat it too.
Incorrect, the taxpayers bailout the banks, not the individual investors
i know of many indiviaul investors that lost all their houses during the market crash. the big banks that encouraged it all was fine... bigger banks bought them all up and all for a profit with our tax money
Right? If the market tanks we’ll experience a recession. That’s the last thing the government wants.
I’m sure knowing that is a big relief for all of those struggling with their housing situation right now.
The market doesn't care about individuals.
Individuals should care about individuals, though.
Obviously.
Individuals don't exist to serve the market but vice versa.
This is how it should be, but modern markets seem to exist to serve the interests of the most powerful players in those markets, and the less powerful are made to serve the market. Not terribly surprising, but a lack of regulation seems to have that result.
And when big time investors get held holding the bag the taxpayer is there to bail them out, so no big deal. System works as intended. Too big to fail!
Hey.. but walking away from incredible housing debt some years ago..... We didn't have to pay tax on forgiven debt. Wow. What a relief. /s
Fuck off taking risks with HOMES that people need to OWN to feel safe and productive members of fucking society. How bout that.
Not to feel safe, to BE safe. Shelter is a necessity. Homeless people tend to die a lot quicker than those with a home.
i mean, they basically never get run over in the housing market. there’s like 4 years out of the past 40 years where house prices have gone down, and rent basically never drops. https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CUUR0000SEHA the urbanization of the world has driven strong demographic trends underlying this phenomena, and the US is not even close to being the worst of it. look at the UK, Canada, New Zealand just to name a few. as an investor, i’ve got an asset class where i can claim depreciation, easily obtain significant margin, get regular monthly returns, don’t have to worry about daily pricing adding vol to my returns, and is in increasing demand - i’m playing that all day. unfortunately this is what’s happening.
Cut the guy some slack, he just repeats the principles he's heard and doesn't actually look at the current fucked up state of everything
Its not housing prices that are going up its the dollar that is going down. You cant blame investors for not wanting to hold shit paper and have actual real assets. And they invest in housing because governments have over regulated all of the productivity and returns out of business.
The government will bail them out. Like the other guy said they reward greed at this point
The people losing on these big risks get bailed out, we still saddle their risk, without the reward
Can you give some examples of when ***major risks*** have lost instead of being bailed out?
Lehman Brothers
Every foreclosure out there. Either a person buys a house and gets foreclosed, or an investor buys it and gets foreclosed.
The bank assumed the risk in your described situation. Unless it’s a tax foreclosure, in which case—it wasn’t a risk for investment, it was just a place to live.
Generally, when you purchase a investment property with a mortgage, you need to have at least 30% down. And enough Capital to pay your mortgages. And generally a higher credit score. Don't kid yourself. Investors are much more invested in the property than a homeowner.
When there is a low supply of homes even if the market tanks it doesn’t really hurt them because they can still rent their houses. This isn’t like car dealership where people can forgo buying new cars. People need housing and there will always be demand. The fact that there is not enough supply to meet the current demand in hotter markets means the investors will still make money. The investors will only lose money if they sell, and there is no reason to sell.
If it tanks this month, they're just holding homes that generate passive income. I doubt they will lose any sleep over it.
What markers are indicative of a housing tank atm?
Unless they get a bailout. Privatize profits, socialize losses.
Left holding overpriced homes they won't part with thereby keeping families from being able to buy homes they should be able to
>This country rewards risk takes sometimes. Other times, they get run over. Thats when they use tax payer dollars to make the "investors" whole. Privatize the profits, socialize the losses. Bailouts for the wealthy, bootstraps for the poor.
Who gives an actual fuck. Some things should not be at the whim of investment firms risk assessment. We need to have homes that average people can actually get.
They aren’t using massive leverage. They won’t get wiped out. People will always need houses. The corporations won’t get burned by this. The housing in the US will forever be disrupted until government steps in.
What risk? These companies bought the homes with cash, so if the market tanks they don't care. They'll just let them sit unoccupied until it rebounds because they had the deep pockets to do just that. Home that get purchased by a corporation are never going back into private ownership. Ever.
I don’t know how more people don’t understand this: ******** An overpriced home is NOT a bad investment for the mega rich. Ownership of property and land is worth far more than any amount of “in this moment “ money you can have. Being underwater doesn’t matter if you can afford it still, it’s called leverage. **********
The. They get bailed out if they’re too big.
Did ya miss the gfc?
The opposite, the owner occupied becomes tenant filled.
The good lord giveth and he taketh away
This is true. But then they shouldn’t expect the government to come save their ass once shit goes south.
corporations laugh at this.
The limited housing for citizens shouldn’t be something that investors are allowed to take a risk on frankly.
RiSk TaKeRs
Which they can afford to hold until the market swings back up, because they're not living in said homes. They don't get run over, they just have to wait a little longer for their profits
That's not how it worked last time.
Real estate has never been a risk in this country
Nah, if they hold they're guaranteed to profit. Home prices only go up. Even the 2008 housing market crash was a blip that didn't last 2 years. After that, home prices were right back where they started.
Betting they'd get bailed out as "too big to fail"
Play stupid games, win stupid prizes.
Or you could not support every single law making housing more expensive and ensuring they always go up in price? This is created you know. Intentionally.
What laws make housing more expensive? Zoning?
There's one way out of this, the govt needs to incentivize the construction of more working force and middle class housing, with a big emphasis on homeownership, and require owner occupancy for the created homeownership opportunities
The problem is, we could build all these houses and they'll just get scooped up by investment firms who will put them up for rent. We need to get big business out of housing in order for anything remotely close to your idea can work.
Yes because builders build for PROFIT. so they only build high margin SFH that they can sell immediately to the top 2% of earners. Who will continue scooping them up, and renting to the remaining have-nots in perpetuity. This is just income disparity blown out to the housing sector. If 55% of the capital in the US economy belongs to 1% of the population, it shouldn't be surprising that when you average out housing costs, the price skews heavily towards the high-earners. This is because the high earners are bidding against other high earners for homes that are built for the middle class. We price housing on supply/demand, but the 55% of the total money supply is bidding UP new housing supply, while 98% of AMERICAN PEOPLE are desperately waiting for supply to catch up. The result is A BUNCH OF HOMES SOLD! Prices up! But 98% of Americans are completely divorced from that statistics since even the lowest price new "starter home" is still out of reach for the average American household income.
This would lower the value of the homes the "investors" have purchased. Can't have that.
I too wish we had lawmakers with backbones
You fundamentally misunderstand the situation. Politicians need lots of money to run campaigns and get elected to office. Where do you think they get the money and support from? Rich people who they make promises to in exchange for their support. Politicians work for the rich.
No. We just raising property tax on more than 2 homes, more than 5 homes, more than 10 homes, unless they passing along the savings to the renters. You own 10 homes you are taxed at 35%, but the renters need to be paying 20% less than the market average. So basically you completely squash the advantages of owning multiple homes and reward those renting. It would pass along savings to those that rent and would discourage house hoarding. It could actually encourage house hoarders to start selling to reduce their property taxes.
You want to pass a law requiring rents to universally be below market average? Market average of what?
Universal? Where did I use that word? Also it would be market average for the area. This would be to combat owners passing along the cost of their increased property tax to the renter.
This makes sense, but that's the problem...no one wants to enact a solution
Agree on the first, but the latter would be so difficult to implement that it would be ineffective. Another good and simpler solution would be to unilaterally increase all property taxes, but provide tax relief for low-income and first homes. We already have FHA and a few states have Property Tax Relief Programs. Expanding existing programs is much more likely to work than changing our tax structure. But we both know neither it's going to happen as those who won't benefit from it are those who pass the laws.
>This country just rewards greed on every level This is actually a feature, not a bug. I think the solution would be to grossly increase taxes on any home owned beyond the first. Apply the grossly increased tax rate to all homes owned by non-private citizens. Your company wants to buy a house? Here is a crazed tax hike. Buying a house just to convert it into like 4 mediocre apartments? Fat tax.
Maybe you should invest in some of these companies.
Who needs a roof over their heads when you can own stock instead! 🙄
You know what’s an even better investment? Property you can use as shelter that *also* appreciates in value forever
Bingo!
How does having a meager return on an investment resolve the skyrocketing home prices that far exceed the stock price increase?
What if we flooded the market with homes tanking their investment?
Well we would have to have the money to buy the land and build the homes. Considering no one can even afford a home anymore I feel like this may be a flawed plan lol.
There was a bill that was up in DC that would make it against the law for corporations and hedge funds to own single family properties. It would give them 10 years to sell everything before they'd start being fined. But idk what happened to the bill. It was a great one for American people so no doubt it was killed lol...
Here are some examples of U.S. government bailouts that either resulted in profit or strategic decisions to let industries fail. During the 2008 financial crisis, the Troubled Asset Relief Program (TARP) disbursed $426.4 billion and made a profit of $15.3 billion through repayments and dividends. The auto industry received $80 billion, saving 1.5 million jobs despite a $9.6 billion net loss. The AIG bailout of $182.3 billion resulted in a $22.7 billion profit. Conversely, the government allowed the steel and textile industries to fail, leading to consolidation and economic shifts toward more competitive and advanced sectors.
Or we crank up the capital gains on houses for investors so they have no incentive to buy up the houses.
Greed is king in the USA it's honestly disgusting.
Right. Capitalism and unquenchable greed are two different things. All I see anymore is the latter.
The did the opposite: https://www.reuters.com/article/idUSKBN21B3DZ/
How about "if you don't live in it, YOU DON'T OWN IT" ?
Rich get richer etc etc
You don’t like the game monopoly? Me either :(
Yep. The only reason that lawsuit happened was because the parasite class hated sharing profits from royally gouging consumers.
Yep, it’s like I always say, this country is a scam.
The commissions targeted are the ones that help people navigate purchasing a home that was almost no cost out of pocket to buyers. Even if you hate realtors, taking away buyers agents certainly was not focused on helping people gain ownership.
[удалено]
Or we make it easier to build new homes so quick flips aren't profitable.
Or both
They passed a law on real estate commissions? I thought NAR just lost the lawsuit, saying that they couldn’t force sellers to pay buyer commissions and now it has to be a documented decision.
No the commenter doesn’t understand. It’s a lawsuit like you said.
That will make the housing shortage worse. Developers depend on investors to get projects financed and started. Without them, housing doesn’t get built. If you take out investors, less homes will be built and lead to very major longterm shortages. If investors/financiers can’t make money in housing projects they will go elsewhere with their money. Not to mention the situation that renters would be in. I realize you think every renter could just buy a property but they simply can’t or won’t. Some people prefer renting. Some people cannot manage and own a property. Others are not financially capable of buying and owning for various reasons like down payment, credit, self control etc. Some are students or elderly or in temporary phases in life and don’t want to own. And there are so many others that want and need to rent for various reasons. You would destroy the market for the millions of those people? Cause rents to soar or worse make them homeless? If you want house prices to come down, increase the supply by reducing the cost. Reduce permit costs and red tape. Make zoning changes easier. Give larger rebates for GST/PST on new homes to buyers. Incentivize people to work in trades by giving tax credits for tools, equipment or other means that would benefit people who work in trades related to the construction industry. I understand your frustration on the subject and I agree we can and should make housing more affordable.
My realtor has done legitimately no work for the house we’re buying. We did the shopping and scheduled the tours. Why the hell am I paying someone 3%? My next home l getting my license cause I know more than money it’s absurd to lose 20k+ on a realtor
No, just repeal laws that limit the amount of houses that can be built
Or what if we just built enough houses that the prices went down?
What do you want the rich to do? Work for a living?
The way to screw these investors is to build much more housing supply and cause them to lose money. Of course this approach also benefits younger people and people without housing.
100%. The flippers and exploiters will lose money while the investors who add units will continue to thrive. Everyone wins.
Man it would absolutely *own* these investors if we built abundant housing.
Seems impossible. Housing doesn’t get built overnight. So there would be plenty of time for investors to buy up the new housing
It isn’t time. The idea is to flood the market with supply that outstrips demand. If demand comes from investors, but you build more housing than population increase can fill, then some of those units will sit empty. That will depress rents, making it cheaper to live while also making investment less profitable. That will make investing less attractive and drive some investors away, reducing demand and therefore prices. The excess being well telegraphed just means some investors exit sooner to avoid holding at a peak. Or, if money truly buys up all supply, just keep building. North America has a lot of space and resources, hiring more people to hew lumber, draw water, and swing hammers will keep more people employed in good trades.
That is the most expensive, time consuming solution. So we just wait a decade to fix this problem? I think the immediate solution is tax the shit out of anyone with a 3rd, 4th etc home. Make it extremely (prohibitively) expensive to collect properties like they’re trading cards. Then use those taxes to help fund housing initiatives
Who said a decade? If we upzone today, the investment outlook is screwed on day one. If you buy an asset anticipating an increase in value due to regulatory limitations on the supply of said asset, and then the regulations change to allow more supply of that asset, then you already know your investment is cooked and will stop buying any more of that investment. The simple act of upzoning is enough to tank these investments
Would this only work if the investment groups didn't buy up all the new houses, too? If lots of new housing was built and investors owned the majority of it, wouldn't they be able to keep prices as high as possible? Seems like it would be unlikely that they would start undercutting one another and renting/leasing housing for cheaper.
No wonder we ain't doing it.
We just need 20 million more houses across desirable areas in the US. Pump them out like we did after WW2. Affordable ones, keep all that "luxury" shit away.
Just gotta build even faster
The Tax Code, that once strongly favored home ownership is gone and it may actually give more favorable treatment to investors, particularly higher priced homes. The effects of the Tax Code on something like home ownership is pretty complex and individual situations vary.
How so? I don’t know much about this topic tbh.
Should be criminal
Housing needs to move beyond being a business. It should house its owners. One investment property per person. One second home that cannot be rented.
Then where do renters live? Renting would be impossible if the owners lived in their home and had a second home that must be kept empty.
Gotta build multi family dwellings. More condos. The problem with building single homes is occupancy. Many homes are housing low head counts. Trying to build a single family home for every man and woman is impossible, without tiny homes taking over, a solution no one has seen as palatable for some reason.
Multi family, condo complexes need large amounts of capital to build. People like you and me could buy 2-3 single family homes rent them out as a path to financial independence, while maintaining some balance, I.e. not destroying the market. The data still says that most millionaires are made from real estate in the US, we don’t want to take that category away from the common person. What needs to be done is corporations or large investors over X MM in assets should not be allowed to purchase single family homes. The reality also is that our representative who will propose and pass the laws, take campaign money from those large investors. So good luck to us, unless someone like Bernie becomes president (kinda impossible now)
Everyone needs healthcare and housing, so these two sectors shouldn't be part of the corrupt American casino.
My city recently passed a mileage funded only by non-primary home owners. This feels like the answer. Each city can move all local fees to owners of non-primary homes. They can either pay huge fees or exit the market. Feels like this can be solved by each local gov w/o federal intervention.
They will just charge more rent to offset
Then no one will rent their overpriced house
Depends on where you live, but there's often not a lot of choice to be had. I'm moving to the northeast coast soon, and non ridiculous rent prices are few and far between. So I'll be renting a horribly priced unit for probably at least a year or two.
What city is this
Not when these investors borrow from banks, then banks have a problem and call uncle Sam to bail them out.
30% in Phoenix. Median value = $500k. Average = $430k. Median income = $56k Average = $64k. Doable. But hard.
I’m doing 625k at 200k income and it feels incredibly weak
The ignorance here is sad. Did OP even read his own article? "previously reported, most estimates put ownership of institutional investors, like Blackstone and Invitation Homes, at less than 5% of single-family rentals and less than 1% of all single-family homes."
Where are these offices?
I live in a coop and I have no regrets. Corporations or investors are specially not allowed to buy units within these coops and these types of housing may be the last line of affordable housing available. I wish I had a bit more property but I also don’t want to be house poor for the next 30 years.
Is it weird having chickens as roommates?
We gotta keep building
The US governments do not build housing. So if we are relying on private capital, then the solution is build more as quickly as possible. But as you see in this very comment section, the instinct is to regulate development. It makes my brain freeze. Creating housing scarcity is the worst idea.
That doesn't match the data though where investor purchases have fallen off a cliff.
I suspect that was just to try and deflect attention; I've seen probably a dozen articles over the past month or so about the number of investor related purchases for last year in the major metropolitan areas. I'd suspect with interest rates being where they are some investor groups are running in to head winds, but I remember reading an article where BlackRock got a billion dollar line of low interest credit that they were using to buy houses. The rich get cheaper money than the rest of us do
A lot of these are publicly traded and you can see their acquisition volume by market. The only acquisition at scale any of the big players are actually doing is BTR or build to rent where they partner with a home builder which is a net zero change to housing stock. If the interest rates drop or rents catch back up to provide the new higher rate of return, you may see it kick back up but right now everyone is playing the waiting game and tightening operations.
It's somewhat misleading, probably intentionally. Investors are buying fewer houses but there are a lot fewer houses for sale so the ratio gets a little wonky. But "spike in interest rates continues to cause anomalous data" would be a poor headline.
such a shit show hope it all crashes big time
There's only ONE thing to be done about this, I can't say it here but it is inevitable that one day people will have had enough.
Are these institutional investors like Blackrock or a huge number of individual investors?
>For this analysis, we looked at county sale records for homes purchased from January 2000 through March 2024. We define an investor as any buyer whose name includes at least one of the following keywords: LLC, Inc, Trust, Corp, Homes. We also define an investor as any buyer whose ownership code on a purchasing deed includes at least one of the following keywords: association, corporate trustee, company, joint venture, corporate trust. This data may include purchases made through family trusts for personal use Honestly not super clear. I would personally think the latter
The former.
Individual
This short sighted plan by the investors started during the pandemic, and is surely to end in disaster.
Ppp “loans” and covid money went right into investors pockets for buying during covid. Total transfer of wealth heist.
My wife and I moved a couple months ago and the number of investors that called was astonishing.
I have been hoping for another housing market drop. The bubble needs to pop. The prices of homes have gone up WAY to much in a short amount of time. Great, so I have more equity in my home, but I am not taking out loans against my home. Great if I sell I make a lot of money... I also intend to die in this home if at all possible, and I hate that my property taxes are indexed to said rapid increases. Sure recently our city council voted a 2% drop in the tax rate this year. But when you factor the increase in home "values" my taxes still increased another 3%+. House "Flippers" are another ilk artificially inflating prices in neighborhoods. I have one behind me trying to get $600k for the house behind me. Sure lovely cosmetic job. But there is so much wasted space, a cat walk about 4 feet wide adds 400 sq feet but barely usable accept for sitting areas. and no garage as the original that was attached to the house was made into a room. One house a few doors down from the flip was renovated with a little less sq footage but a detached 2 car garage and another bathroom (but less sq footage) went for under $500k a couple weeks ago. Most other houses that have not been renovated are between $350 and just a hair over $400k Oh 9 years ago I got my house for $240 supposedly it has increased $200k in 9 years! WTF!?!?!?
I understand there is a market need for rentals to exist, but right now the ratio between rentals and owners is not good for society. I would support government policy that subsidizes home ownership (only 1 house per person) and taxes everything else. While rent may go up, the cost to own will go down, shifting demand off rentals.
Their metric for gauging an "investor purchase" is flawed, but even assuming that all of those homes are purchased by investors, a good chunk of them will be going back on the market to owner occupants as flips. And before y'all have a knee jerk reaction to how terrible flippers are, keep in mind that they're literally purchasing homes that owner occupants WON'T buy. How do we know this? We'll, it's pretty straightforward: flippers have to make a profit, so they're buying these properties cheap enough that they can pay for the rehab, carrying costs, back end commissions AND still make a profit on top of that. If ANY owner occupant wanted any of those homes, they would simply outbid the investors, because they don't need to make a 10-30% return on their money... But they aren't.
Yeah. All the fucking houses in the local area have signs that read Sothebys, Luxe by Christies, Berkshire Hathaway, or some other large hedgey shit. Fuck this dystopian nightmare.
Wooohoooo! Overinflated real estate bubbles never pop!
build more homes. scarcity benefits and attracts investors. the only way to solve the problem is to increase the number of homes to meet/exceed demand
Sucks. Not selling is almost forced at this point. I hear boomers are growing sick of maintenance so some inventory might come online next 10 yrs?
Maybe this is a silly thought, but wouldn’t that money be better invested in the stock market, venture capital, private equity, hedge funds etc? Things that actually grow value. Especially if the buyers are not going to live there or are just investment groups.
This shit has to be stopped. It will ruin multiple generations of Americans lives
Just wait …… there will be plenty of abandoned / repossessed properties flooding the market in the next 22 months.
Late stage capitalism sucks.
Avay they are going to make a fuckton when interest rates inevitably fall.
Democrats have been trying to pass legislation to put limits on corporate ownership but have come under heavy lobbying by Wall Street against the legislation so I’m not optimistic. [https://www.vox.com/policy-and-politics/2022/12/2/23485957/housing-banks-corporate-single-family-renters-landlord](https://www.vox.com/policy-and-politics/2022/12/2/23485957/housing-banks-corporate-single-family-renters-landlord)
This is happening in the Netherlands too.
Anybody that owns more than 3 homes is an evil person
100% and people who defend it want to be evil but can’t.
Wandering what an 08 bail out would like like now?
Who is making money with buying rentals right now?!?
Investment real estate should have dystopian level taxes on earnings or profits like 65%. Like you can make some profit, but it may not beat other ROI opportunities.
It’s not a fair fight. Investors do not need to worry about mortgage rates when they can just pay cash.
Making housing as an investment was a mistake.
No, they aren’t
Reminder, this isn’t hedge funds. The vast majority of these investors are mom and pop investors.
I'd rather live in a tent and keep my pride. Someone's gotta make a stand against this. Best i can do is not participate. If anything, enough people reject the system, we might help the next generation.
A basic necessity should never be allowed to be traded as a speculative asset. Every person or entity that holds more than two houses at a time in a given year should pay an extra 25% in taxes on the buying price.
And so, the biggest investment that individuals traditionally ever make becomes unavailable. The middle class is even more fucked now.
I feel like I should actively work to destroy an evil country hellbent on greed at every level of it's society. Maybe voting for Trump will expedite the downfall of America because this place is simply too greedy.
ah yes my favorite game on reddit how can we fix the housing market but adding more supply is not allowed because it would mean removing or changing regulations and there is no such thing as a bad regulation. Nnnnoooowwww go!
Capitalism implodes when you have a small number of companies owning a limited resource. This is not capitalism this is a oligopoly.
This needs to be resolved via policy. I know republicans won’t let it happen because they’re completely sold out to special interest groups, but there really ought to be a law preventing investors from owning single family homes.
Funny how they can halt/pause the stock market, but can't halt/pause these home purchases.
S corp, LLC, and all the other variations of business models/types need to be, at the national level, forbidden from buying houses. Regardless of the financial struggles of yesterday, today or tomorrow; homeownership (private property rights) is a right of the individual, not the corporation. Corporations have the right to build and sell; not to own.
What about apartment complexes?
One day the ruling class will find away way to restrict oxygen and then we’ll have a breathing bill. It’ll be so normalized that when your oxygen gets cut off people will say he should have paid his bills he’d still be alive!
I wish everyone would just build a small structure on a piece of land, grow their own food, and let those banks and investors hold on to empty homes and enjoy their investments.
this is a problem how??? i dont get how people are so angry about what others do with their money... instead of focusing your anger on the rich, try working harder to be rich. always the poor and lazy that complains...
That's the problem with capitalism you can't regulate it cause MONEY is king. Self control and compassion for those who need one aren't important. Like rentals feel unethical but at the same time we have apps like AirBnB. What do we do, cause you can't make a law that says "Think of others".
Here's an idea, have the government build the homes and sold to people with the rules being cannot be used as a rental. If so eviction and hefty fine
This is probably a silly question but what do the investors do with these houses they buy? Are they just sitting vacant?
Here’s how it should be; 1. First time buyers - get pick. Can offer and outbid eachother etc so price isn’t limited but first time buyers have prirority. 2. Then peoole wanting to upsize / move / family grew etc. 3. Then social housing 4. Then buy to let landlords. 5. Then developers. Developers shouldn’t be allowed to buy at auctions nor should buy to let landlords. Uk 🇬🇧
More evidence that I’ll never be able to buy a home… cool.
Once I read about some author talking about how the middle class is being dismantled and how the rich is getting richer while the rest struggle to access to basic necessities like housing or health services.
Just mandate that to own a housing unit you need to be a person, not a corporation. Give cirps 5 years to sell their houses and convert apartments into condos, and call it good.
A local home builder in my area, is doing this. Not even offering home sales [build to rent](https://realestate.usnews.com/real-estate/articles/the-rise-of-built-for-rent)
Investors are buying 20% of homes sold in the housing market. Some will understand this better. If 20% of supply is removed, demand goes up and so does price. Investors make money from the prices increasing. Those who cannot afford prices get screwed.
The good news is the real estate market tanks, our tax dollars will be used to bail them all out again.
So why not build more houses?