Comment by kelipso
Comment by kelipso 3 days ago
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.
Comment by kelipso 3 days ago
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.
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.
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.
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!
In every North American city facing rising housing costs, there is a literal ocean of usable, desirable land for housing, already serviced by municipal infrastructure.
And every month, a percentage of that useable and desirable land comes up for sale, meaning it’s previous owner occupiers are voluntarily moving, and a new owner, if they chose, could redeploy the land in a way that provides homes to many more people, while not evicting anyone.
Unfortunately, each of these cities has also made it illegal for this transition to happen, mandating that the only way you’re allowed to build larger buildings, (if at all) is by demolishing another large (and occupied) building first.
We should change that!
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.