Comment by sharpy 2 days ago
Probably a lot of private equity buying up homes to generate rental income? Usually, I am more pro market, but I think there needs to be some regulations on this. Although if you are an existing homeowner with low interest rate locked in, you probably want more private equity investments to drive up your property value...
No, it isn't.
1/3 of the houses bought in the US are bought by these kinds of organizations. Zoning might matter, but large capital owners are buying up a large fraction of the houses that are for sale and this is obviously driving up prices.
That's not true: https://www.cnbc.com/2025/10/07/home-sales-investors-make-up...
Excerpts:
Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
Institutional investors are selling more homes than they buy and have been for six consecutive quarters.
While large institutional investors continue to get most of the headlines in the single-family rental space, small investors account for more than 90% of the market. These are individuals owning 10 properties or less. The largest investors, those with 1,000 or more properties, make up just 2% of all investor-owned homes.
That is the same source as I read, but
>Real estate investors, both individual and institutional, bought one-third of all single-family residential properties sold in the second quarter of 2025.
is, as I view things, what I said. You may say that individual real estate investors are not typically large capital owners, but that's a definitional thing, or a matter of assessment that isn't interesting to debate.
No matter how you choose to define it, investors buying homes are buying a substantial fraction of the homes on the market (1/3) and presumably have a substantial effect on prices.
Calling it a "subsidy for existing owners" is a slighty of hand that avoids blaming the literal hordes of useful idiots who are happy to see all manner of asinine provisions written into the zoning code to cater to their interest, whatever that may be. If it were just property owners it wouldn't have gotten done. It's busybodies, environmentalists, moralizing jerks, etc, etc that provide the necessary political will.
> The real reason (everywhere in US and Europe) is zoning
This is a lie fed to you by the rich lobby. Destroying zoning would launch the value of the land current owners have into the stratosphere.
This myth needs to die. PE does not own that many homes. There was a small period in early COVID where interest rates were lower than cap rates. During this time PE, along with the investment market in general, invested in real estate including SFRs. That is no longer the case. It's a great boogeyman but trust me, having worked in the industry, institutional investors own less than 5% of SFRs.
Real estate investing in general went bananas during COVID (plenty of non-PE buyers as well) because it's one of the only ways the average citizen can access that amount of leverage.
They might not own that many, but in 2025 it was 1/3 of the sold residencies.
You only need a little bit of extra demand to have an enormous effect on prices.
There's something fundamentally strange about how prices have spiked and inventory has tightened since Covid. Where I live in rural New England, prices are up 50–100% in five years. And this is on pretty poor quality homes. Yes, low interest rates led to a surge in buying and bidding wars that spiked the baseline, but when people say "the real problem is there isn't enough housing" that feels incomplete to me. Of course supply has been an issue for a while, but home prices nearly doubling in five years doesn't look like a normal supply story -- it's not as if we suddenly created 20-50% more qualified buyers in that time. I guess the lack of churn, with people hanging onto those sweet 3% mortgages much longer than usual, is probably part of it. But I really don't have an answer for the current state of home buying. I make great money but if I was to buy a house the quality of the house I got in 2018 with the same % down payment I would be looking at over 40% of my take home going to a mortgage, PMI and taxes.
> it's not as if we suddenly created 20-50% more qualified buyers in that time.
We don't create buyers quickly, but mobility means that a large number of buyers can show up in one concentrated area much more quickly than housing can adapt.
One piece of the US real estate puzzle is that automation and outsourced killed agriculture and manufacturing jobs. Those are the kinds of jobs that have some natural incentive to be spread across the US. Ag, because farms literally take up a lot of space and are spread out, and manufacturing because factories tend to be close to raw materials, ports, or other local resources.
When you get rid of those jobs and replace them with information work, you create a feedback loop with no dampening in it. People want to go where the most jobs are, so they move to the cities. Businesses want to open where the most workers are, so they start companies in cities.
The next thing you know, all the small towns are filled with dirt cheap empty houses because there are no jobs. Meanwhile, every metro area is bursting at the seams.
This makes some sense to me. The solution to housing often put forth is to build more affordable housing. In the context of people wanting to move toward cities where jobs are this makes sense.
But it seems like there is a larger problem of just having tons of housing inventory that is out of reach or untenable to most people. What are the more basic numbers of how many units exist in the country vs. how many people there are? How many second, third, investment, vacation units are there, how many sit empty most of the time? (I'm mostly not talking about true "country"/vanity houses far away from economic centers that will always only be accessible to the rich)
It seems to me that rather than just "build build build" we could do a lot to reconfigure the existing supply to make it fit the people better? Why is there so much "unaffordable" stock out there and continuing to be built? It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
> we could do a lot to reconfigure the existing supply to make it fit the people better?
The problem is that housing and infrastructure is, you know, actual giant physical objects. It takes a year of planning and millions of dollars to move a road. You can't tear down a block of single family homes and put a denser apartment building in there until everyone living in them sells. You need to run sewer, power, and roads to make a new neighborhood, and even then you will still have to deal with the impact to nearby schools, traffic, hospitals, etc.
Making places for people to live is, like, many orders of magnitude more effortful than anything we do in the software world.
> It kinda feels like the affordable housing issue is just a red herring for the larger wealth inequality issue.
Yes, this is certainly another piece of the puzzle. For every 100 people who can't afford a thing, there's still 1 rich person who can, and increasingly, rich people are the primary source of profit for businesses. So businesses target them more and more and we end up in today's world where it seems like "no one can afford what's being sold".
It's because unless you're one of the wealthy minority, you're simply not a market participant at all.
Related: https://www.nytimes.com/2025/08/28/opinion/disney-world-econ...
Sorry, by reconfigure I meant something akin to artificially lowering prices, legislation to push more homes to be filled by people that need them, allowing remote work, anything leveraging existing infra as much as possible.
My point is that we have the physical problem of housing units per capita beyond solved already, it's just socially/economically out of whack.
Unless there is not something I am seeing, people aren't racing to move to rural New England. Maybe it's retirees, red to blue state migrations, or remote workers. But I haven't seen a ton of evidence of that. People didn't really migrate out here before covid and I don't think enough people have to justify the rise in prices.
Personally I think people that otherwise would be selling are sitting on their homes because of the interest rates and this is causing a strange feedback loop of low turnover causing low supply which in turn causes new buyers to accept the prices (probably with a hope that interest rates will come down and they can re-fi in the years to come). I also think a non-trivial number of houses that on the market due to the owners passing or going into retirement homes are sitting there on the market because prices are so high but the only money the family is out is taxes. Or they are being turned into rental units, since rental prices are out of whack in these areas too.
My point I guess is where I live we haven't seen a big influx of population (probably the opposite) or significant job or wage growth to make sense of the increase in housing prices. I guess at the end of the day people are just stretching themselves further and sending more money to the banks in the form of interest to get into homes that were literally half the price in 2019. Strange times.
I agree that people sitting on their mortgages is part of the story.
I do also think there's a thing where home prices have risen so steeply in metro areas that even rural areas with fewer jobs are seeing prices go up because the market will allow it. Because the cities are so expensive, a house in a rural area can still be a relative good deal even if it's more expensive than it used to be.
City planning certainly isn't my area of expertise. I think it's a fiendishly hard problem. For a small town to draw people in and thrive, it needs:
1. Jobs.
2. Good K-12 schools.
3. Some amount of things to do and cultural amenities.
Remote work can help a lot with #1. I think people are fairly tolerant of a lack of #3 and it's a thing that can grow organically over time. People will also accept fewer things to do if the area is quieter, they can afford bigger homes, and there's more outdoorsy stuff nearby.
But #2 is really hard. You need a strong tax base to fund it, which small towns don't have. They are sort of trapped in a death spiral where if they had more people coming in, they could have better schools with the increased tax base, but they don't, so they can't, so no one moves there.
Prices spiked in large part because the government printed an enormous number of dollars since 2020, thus triggering asset price inflation.
I'm sure you read the footnote that goes along with the spike in 2020 where the definition changed.
and looking at the numbers, I see declining increaes over previous 5 year periods
39.1% increase from 2010-06 (8628.1) to 2015-06 (12004.6)
30.8% increase from 2015-01 (11787.8) to 2020-01 (15416.3)
21.0% increase from 2020-06 (18140.6) to 2025-06 (21942.4).
"Private equity generating rental income" is a lie fed you by the rich lobby. The real reason (everywhere in US and Europe) is zoning, which is a subsidy to the owners of existing buildings at the cost of everyone else.