Comment by thrance
Comment by thrance 3 days ago
Why would a larger supply stop private equity from buying it all?
Comment by thrance 3 days ago
Why would a larger supply stop private equity from buying it all?
Same reason anything else keeps getting built when the price drops. Builders are not investors. As the price drops the cost of acquiring new land to build on also drops. As long as a builder has a margin between land + construction cost, they will build.
A huge part of the cost of building a house right now is the excessive regulation. By deregulating we will be able to build houses for less money and so builders will be able to sell them for less money. In addition apartments and especially larger apartment buildings are straight up illegal in many areas even though demand is high. Legalizing these units which are much cheaper than SFHs would allow all housing prices to decrease as some of the people competing for SFHs instead buy a condo.
Because if you get zoning out of the way, we can keep building, and keep building, and keep building.
Let them keep buying. But if we build enough, they won't be able to rent it all out. Are they going to keep buying to control the rent-able supply forever? No, they'll run out of money before we run out of buildable land. (Maybe not before we run out of wood, shingles, and labor though...)
And then you're left with huge ghost towns, like that one place in Seattle. This seems like a terrible solution, although it might work. And let's not even talk about the environmental impact, it seems to be a taboo nowadays.
Why not just prevent private companies from buying homes they don't use, and force them to sell the ones they are currently holding?
Right, ghost towns owned by private equity. So I'm not crying. I agree about the environmental impact, though.
"Prevent private companies from buying homes they don't use" is going to be a really hard sell legally. (Though, to be fair, changing zoning laws seems also to be a really hard sell...)
They already don't buy with cash, which is actually one of the only advantages of scale in real estate: big firms can borrow cash more cheaply.
If loads of housing is built and the price of housing starts dropping, firms won't want to invest in housing because they'll lose money. Unfortunately, a lot of politically active home owners also want to keep the price of housing from dropping so this is a harder thing for local governments to put into practice.