Comment by scoofy

Comment by scoofy 3 days ago

5 replies

If you understand the underlying reasons for why an investor would buy an actively depreciating asset, then you understand why OP suggests--correctly in my opinion--that this is a non-story.

We have a housing shortage. As long as it looks like the shortage will continue, investors--people--will buy depreciating assets in the hopes that population growth will cause them to be worth more tomorrow than they are today. If it's not Private Equity, it'll be rental companies. If it's not rental companies, it'll be mom & pop landlords. If it's not mom & pop landlords, it'll be people looking for a second home or pied-a-terre with upside potential. The problem is the perpetual shortage clearly indicating increasing economic rents, instead of a trend toward the cost of production.

This is a housing crisis but most Americans are treating it like a housing whoopsie. We treat it with kid gloves, where we fight about the "correct" way to build just enough housing, in just the right places, instead of pointing a firehouse of development incentives, to the point of literally subsidizing private development and public development.

It's basic economics, but our electorate will tie itself in knots to make the housing crisis fit their niche political narrative.

burnt-resistor 3 days ago

Besides not enough new inventory in some areas, one major problem is allowing excessive housing hoarding and not taxing it enough to reduce gamification conditions leading to absurd exploitation. It needs much more regulation and increased progressive taxation for people/orgs who monopolize empty houses simply as speculative "investment" financial chicanery.

  • spwa4 3 days ago

    I agree but there's only a single factor that matters: special treatment of mortgage loans. In tax. Government guarantees, both for owners and for banks. Special interest rates. Repo with government support. The list goes on.

    And now you can say "yes, but ending those will cause a crash in house prices, which will hurt a lot of people, a lot of owners", which is true, but anything you do to change house prices will cause that hurt.

    In a way you can look at it as the usual problem: governments effectively sold houses, handing out cash to constituents for votes and power, and now they want, maybe even need, them back. They can't pay to get them back. That's what the argument is about. If the government wanted to buy back houses the way everyone else has to play, by paying market price, nobody would be arguing much. Because of how property taxes work, even if governments crash the housing market, say by ending mortgage guarantees, governments will lose a lot of money they have already spent.

    And the fundamental problem is not the division of houses, but how many there are. Crashing house prices is only part of the problem. They need to be torn down and rebuilt denser if you want to make any difference. That also needs to be paid for.

  • lanfeust6 3 days ago

    You have to be careful with this because multiple properties are also rented out. Restrictions can lead to low vacancy and higher rent prices

amy214 2 days ago

>We have a housing shortage. As long as it looks like the shortage will continue, investors--people--will buy depreciating assets in the hopes that population growth will cause them to be worth more tomorrow than they are today

This is the most interesting point. With the current birthrate, what will these homes be worth in 30, 40 years, when depopulation is ongoing? Prices will drop, and so will supply. Look to Japan, deaths of all towns that are not major cities, I expect that to occur in the US

  • scoofy 2 days ago

    Yes, in 50 years, I hope we as a society respond to the struggles of people then too, instead of nit picking our way to destroying an entire two generations ability to build wealth like we have done here.