[cglan]

Feels like non news. Or at least, a continuation of existing trends.

We don't build enough housing, so housing becomes a good investment, eventually pricing out everyone except existing investors or people with large assets. We' structured the system so that once you're in you're IN. Leverage, 30yr mortgages, tax deductions all continue to subsidize existing homeowners at the expense of everyone else (who are technically a minority).

If this continues, expect to see more and more radical policy proposals by young people.

[hristov]

The fact that it is a continuation of existing trends does not mean we should treat it as a non story and not take note of it.

[scoofy]

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.

[cumbotron]

This is a very important thing to point out. So often, issues that affect normal people negatively are only afforded a little bit of coverage once in a while. If the trend persists and it is still negatively affecting the citizenship, it deserves to be in the news.

[dymk]

“Private equity firms should not be allowed to own all the land” isn’t a particularly radical policy proposal

[alright2565]

> Of those, mom-and-pop investors, or those who own between 1 and 5 homes, account for 85% of all investor-owned residential properties, while those with between 6 and 10 properties account for another 5%.

[MBCook]

There’s nothing wrong with investing by buying homes.

Just pay a 75% tax when you do.

If you can find places to make money with those taxes, have at it.

But you’ll stop messing with normal people’s attempts to buy a house for the most part.

[WalterBright]

Distorting markets like that tend to have unforeseen deleterious side effects that just make things worse.

For example: rent control

[anigbrowl]

Even Adam Smith fulminated against landlords, who he saw as parasitical free riders.

[darth_avocado]

If you want cash poor people to compete with cash rich private equity in the housing market without banning PE completely, you need to make it cheaper for cash poor people to borrow money. That too isn’t a particularly radical policy proposal. A lot of countries across the world do it with positive outcomes.

[conradev]

Yep, pass that, free up a few percentage points of inventory, good wealth transfer to the rest of existing entrenched investor base. They might even come leased!

[CBLT]

That's the desired outcome. What's the policy proposal?

[freddie_mercury]

Why not?

Are PE firms worse landlords than mom-and-pop landlords?

[burnt-resistor]

Americans hear any limitations on greed or anything that would benefit society as "communism".

[dietr1ch]

Private equity shouldn't be able to own housing. It should be like new highways and tolls, you get to charge until you make up for your investment, but then people who live there or the government should own it.

Want to keep your toll business? Build more housing.

[PaulHoule]

I do a lot of "focus group" style conversations and one theme is "why do people think the economy is so bad for them right now?" A perception that the housing market is unfair comes up a lot, particularly complaints that investors are buying up all the houses.

Ithaca recently got an ordinance to encourage alternative dwelling units (ADU, aka "granny flats") but boy was it a knock-down drag-out because so many people were up in arms about AirBNB conversions and Private Equity getting involved in buying and building properties. As I'm seeing it Ezra Klein's "Abundance" theme is closely linked to Matt Stoller's "antitrust" theme both in the sense that monopolies are one reason "why nothing works" and that anger at them is dominating the public imagination.

[gsf_emergency_2]

the govs of the left shifting countries in EU (Norway, Denmark, Iceland) played an active role in nipping private energy monopolies in the bud. (Where did Spain err in comparison?) Their policies probably would be regarded as communist in the US though. I tend to call it "communitarian" rather than "communist", but I might be too lazy to argue that distinction :(

https://www.taylorfrancis.com/chapters/oa-edit/10.4324/97813...

https://www.norden.org/en/publication/power-communication-an...

Abstract >Traditional corporatist mechanisms in the Nordic countries are increasingly challenged by professionals such as lobbyists, a development that has consequences for the processes and forms of political communication. Populist polit­ical parties have increased their media presence and political influence, whereas the news media have lost readers, viewers, listeners, and advertisers.

YC used to be about investing in potential millennialist monopolies like AirBnB/Stripe/Coinbase/sama, though these days they lobby for the small businesses & the small cities (SF) :)

[jiggawatts]

The economist Alan Kohler on Australia's ABC News has a great quote: "For housing to no longer outstrip incomes, it has to become a bad investment."

The "how" of it doesn't matter. Could be changes to taxation, investment rules, foreign buyers, whatever. The point is that no matter what, for housing to stop getting more expensive faster than people's incomes, it has to be a bad investment.

Right now, in Australia, housing is a fantastically good investment, earning ludicrous incomes for people basically doing nothing but sitting on some property. It has created a new social class of the "landed gentry" that can earn income without usefully contributing to the economy.

The new nobility will not give this up willingly.

[xphos]

I really enjoyed this quote but you know the old nobility didn't give it up easier so you probably could drop the "new".

I need to look up Alan Kohler

[a_bonobo]

>The new nobility will not give this up willingly.

It's not just the nobility, it's also the Australian economic system itself. Australia's GDP is built on asset inflation and the housing market - I find numbers between 10% to 25% of Australia's GDP being based on housing.

If the Australian government stops the boomer money train they might crash the GDP, which in turn will negatively affect Australia's borrowing capacity, which will negatively impact (crash?) the economy.

Edit: the obvious solution is to diversify Australia's economy, away from digging holes and building houses. Economists have been shouting this from the roof-tops for years now and I have seen little political will to actually make this happen, the easy-money-train is just too good.

[jongjong]

In Australia, I'm a software engineer and don't own property so I'm a peasant but my parents are in the noble class. I'm finding it increasingly difficult to find things to talk about with them because almost everything that happens to me is bad and they can't relate.

So every topic we talk about seems to dissolve into some detailed complaint about how the system is screwing over people and it makes my parents uncomfortable. But then I can't talk about my work since it's too technical (and mind-numbing) for them so I literally have nothing else to talk about since I work all the time. I can't discuss politics because they think everything is fine politically. I picked up some outdoor hobbies so thankfully I have that to talk about; at least until my workload increases and salary drops to the point that I don't have time for hobbies anymore and can't afford to go on holidays.

The class divide is so strong, my life's goal shifted from "become a tech millionaire" to "try to save a deposit for an apartment" to now "just survive 30 years". If I can survive 30 years, I will become noble and I will finally understand what it feels like to be happy.

But because I'm a peasant and constantly stressed with a horrible workaholic lifestyle doing unfulfilling work, I think there's a possibility I'll die before my parents. I try to teach my toddler son about the importance of money. I had my son quite late because I couldn't afford to have a child sooner. Also, because I'm poor, my wife is quite a bit older than me (only noble men can afford younger wife these days). I worry my son won't understand the importance of money so I wrote letters for him in case he ends up inheriting at a young age to explain how money works and how horrible my life has been without money and how corrupt the system is and that real friends cannot exist in this system because people are always trying to get your money or securing their own money and that money is the most important thing. I explain to everyone around me how the government has made it illegal to be homeless and to exist without money, even if you perfect your wilderness survival skills, rangers will literally find you in the forest and arrest you if you refuse to vacate. I already started planning with my wife how we're going to get him married into money when he is older.

My parents always said that it's bad to spoil a child; that you have to be firm with a child; "when you say no, it means no" kind of thing. I couldn't disagree more nowadays. I started teaching my son that if he throws a tantrum bad enough, for long enough, I will give him what he wanted. Because he needs to know what being a jerk pays off and he needs to demand what he wants. Also, I prioritize his confidence above everything else.

[strongpigeon]

It’s an almost YoY doubling of the Q1 2024 rate (14.8%, 13.1% and 13.8% for 2024, 2023 and 2022) [0], which seems pretty significant. Though, what’s interesting is that the share bought by institutional investor is shrinking per the article.

[0] https://www.realtor.com/news/trends/real-estate-investors-re...

[ahdanggit]

I wonder if the increase has anything to do with the post-COVID lack of interest in commercial property?

[mr_toad]

> If this continues, expect to see more and more radical policy proposals by young people.

The inability of people (specifically ex-soldiers) to acquire land and make a living provided a platform for Julius Caesar to take control of Rome and effectively end the Republic.

[dboreham]

Hence Romania.

[patcon]

Yes, more radical policy proposals are my expectation too.

When the status quo is already extreme (re: property ownership), the appropriate response will seem even MORE extreme because we've gotten used to that opposite one.

[some_random]

Non news to you maybe, but I would have predicted an order of magnitude below and I suspect most of the public shares my less-informed view.

[rayiner]

Journalists are, on average, shockingly innumerate. Here is Brian Williams (famous anchor) and Mara Gay (NYT Editorial Board member) thinking that $500 million is enough to give all 327 million people in America $1 million: https://www.independent.co.uk/news/world/americas/msnbc-bloo....

Note that this was pre-planned. They had a little graphic overlay prepared for this and everything. Probably a dozen people laid eyes on this and they didn't catch it. If you're a functioning human, your gut-level understanding of the world should have caught this. It would be like reporting that the weather in phoenix this weekend will be 327 degrees F.

It reminds me of my dad's story of watching about the moon landing on TV from Bangladesh. The guy next to him said he didn't believe it, because "how did they break through the dome of the sky?" That's what American reporters are like with statistics and economics.

[SoftTalker]

How did they break through the dome in the sky?

The rocket had a sharp point on the top.

[anigbrowl]

So what? You're just deflecting attention from this story to a poorly researched one written by someone else. That's like me saying people should ignore anything you say because some other lawyer used ChatGPT in court. Do better.

[bix6]

And no replacement births.

[bee_rider]

On the bright side, the folks who bought houses as investments might see that investment collapse along with the population.

[potato3732842]

I think it's as much a social problem as a numbers one. The greatest generation and the silent generation were rich enough to buy up tons of property but mostly didn't. In contrast every thousandaire boomer and gen X is trying to get into the rental game.

So it's possible we get to a point where a minority of the people own enough housing that the rest just vote to say fuck 'em.

[paulryanrogers]

> the rest just vote to say fuck 'em.

The rentier class has tools to prevent such coordinated voting. They divide us with scare tactics on fringe issues, religion, encourage over identifying with things/movements/celebrities, etc.

I'm afraid things would have to fundamentally and undeniably bad to rally enough people to change things. It's amazing how much folks with overlook or rationalize if given an effective distraction, like fear or hate.

[aaomidi]

And now there’s money in preventing building more housing.

It’s a bad cycle as lobbying spending will convince harder than people not being able to afford homes.

[davidw]

There was already money in preventing it. In a link I posted elsewhere about a hearing, the same people raised nearly $8,000 to try and stop one apartment building from going up in their neighborhood.

Not private equity, not 'tHe ChINesE' (or whichever 'bad' foreigners are currently in vogue), but wealthy local NIMBYs.

[dylan604]

And yet just a couple of days ago, HN threads were saying the opposite that stories about non-private ownership was essentially FUD.

[ch4s3]

Almost none of the purchases are PE firms, the vast majority are small investors who own 1-5 properties.

From the article:

> Of those, mom-and-pop investors, or those who own between 1 and 5 homes, account for 85%

Mid sized and large real estate investors make of most of the rest. PE firms account for 0.5-2% of the market.

*edit anyone downvoting this should make an effort to refute what I’m saying with some facts.

[7e]

The problem isn’t a lack of housing, it’s a lot of breeding. US population has doubled since 1950. It quadrupled since 1900.

As long as people keep having babies in excess of the replacement rate, housing will always be good investment. They don’t make any more land, and the earth is, frankly, full.

[darth_avocado]

Problem is absolutely lack of housing and population growth has nothing to do with it.

Average house size was about 1000 sqft in the 1900 and average household size was 5. This remained relatively the same in 1950 where the average household size was 4. These days, the average size of a house is 2600sqft and household size is 3. We have created a system where we build fewer larger houses. This is because policy (often dictated by people who already own houses) makes it impossible to build small high density housing or even if it is possible to build it, it’s not profitable.

[derektank]

The US birth rate hasn't exceeded the replacement rate since the 1970s

[sorcerer-mar]

You should consider getting in an airplane and meandering around and reporting back on how full the earth is.

[appreciatorBus]

People don’t live in land, they live in floorspace, and we can make plenty of that if we choose.

[jfengel]

Much of the news lately has been about how we're going below the replacement rate, and somehow that's also a crisis.

[AnimalMuppet]

The US is nowhere near full.