large investment companies buying up homes, turning people into renters

A top rate way to drive off all the builders of homes. A solid system to stifle the housing market.

No smart builder builds where there is rent controls.

 

A REIT is actually A Real Estate Investment Trust. It allows those with less savings to gain profits by investing in a Trust.

When your money only can earn 1 percent in savings, a good way to earn more is to be in bed with the big boys.

 

That is correct. Market prices go up in surges. In a very good area at least. Then it settles down. When the fools of Government get involved it can destroy any housing market for a very long time.

 

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My neighborhood has 50 year old custom made homes by a famous local architect. It was an elite part of town when it was first built and is still a very nice neighborhood and close to everythng.

For over a year, I've been getting many letters or postcards in the mail wanting to buy my house. I just assumed all of them were from flippers.

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I dont support rent controls and very little of the value of most residential properties is the actual structure. At worst, if what I propose were successfully implimented, the average new home would be slightly simpler and slightly smaller, if at all.

 

To some extent there are generational issues, but I think you're still missing the main point.

 

I began selling property for others in 1971. I have owned my own RE firm for many years, Also branched into Federal licensed Appraising for 5 years and also owned my own mortgage firm for many years.
What point am I missing?

 

Well, that is quite a general statement. I believe rent controls harms the entire market. Even for renters. The value of the lot can be much of the value or not as much, depending on location and lot size.

Builders build to their market. If one builds mansions, does little good in a district of rentals. Anyway, I used to lecture on this topic.

 

I have known flippers that deal with the high priced end of the market. Most are scared of those homes. Beware of TV programs promising to make you a very rich person. Sure one can and does get rich that way. But those are also experts. I have known flippers to go bankrupt. Normally those closely aware of the local market start mailing out those letters thinking they will make an easy dollar. Some of them do just that. I have seen them this past 6 months here in Idaho. Prices here have gone up pretty fast.

 

I bought land in SW Mizzouri for $550 an acre and bought 43 acres now it is going for 4k an acre but I am not selling, I plan on dying on it.

 

The truth is that before the rise of the nation state in the 19th century, the only barrier to mixing was language and the only group identity was largely religion.

You have large regions of Eastern Europe that have swung back and forth for centuries and become innately multi-lingual. Silesians are currently Polish but were 'German' when Prussia was dominant and loyal subjects of the Polish crown before that. Now some of them are claiming independence on the grounds that they are neither!

 

Just amazing how these threads go off-topic so fast and ignore the main subject and point of the opening post.

But whatever... I guess I'm not entitled to intelligent revelent discussion.

You people get the government you deserve.

Your inability to understand or care about problems that just take too much brainpower to think about mean those problems are never going to be solved. Guess economics is just "too complicated".
I was at least hoping some of you could at least understand what the dilemma was, but it's not appearing that way.

 

We were discussing REITs and inflation on page 2.


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Fair enough, but that seemed to be only a short discussion. And while it was worthwhile to discuss in this thread, even that was a little tangential to the main economic issue.

The main issue being understanding the economics of these type of actions from a large company to drive prices up and benefit, and then of course what government policy, if any, there should be to address it.

 

LOL. Just because people don't agree with you does not mean that none of us poor old ignorant noobs don't know nothing about nuthin.

20 states have declining populations with more expected to join their ranks. Before those 30 year mortgages are paid off there will be plenty of houses available for responsible people who can actually stay within their lane without needing the government to bang all the dents out of their quarter panels. I am sure when the fed starts jacking up rates and mortgages follow suit, then you will be complaining about nobody can afford houses because them evil banks aren't handing out free money the way the government is now.

 

Yeah, the less desirable states where people don't want to live.

Can find a nice cheap place right outside of Detroit where someone will bash your head in with a pipe if you're walking right outside alone and not minding your surroundings. Some place where suicides are off the charts because the people there have given up hope. Where the climate is harsh, the winters are long and cold.

Yeah, no need to worry if this is only happening in the desirable parts... (sarcasm)

 

I assumed wealthy corporate REITs buying up single family homes were typical capitalist venues to make money and hedge inflation no matter who they hurt in the process.

But [thinking outside the box] what if it is something totally different... what if this current massive single family home buying is part of the cultural marxist CRT agenda to put poor nonwhites in White middle-class neighborhoods ??

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In other words you're arguing there might be some ulterior motive to this that is not about direct profit.

I'm guessing that motive would have to be political, social, or economic (on a wider scale, and implying intervention from the Federal Reserve Bank, or maybe Fannie Mae or Freddie Mac). Maybe some attempted government policy that has gone awry and is leading to unintentional effects.

I'm not saying you were wrong, by the way, with your hypothesis that considerations about inflation are pushing hedge funds into real estate on a gigantic scale.

 

I in 5 homes are investment properties and less than 1 out of every 100 are owned by these "institutional" investors. Just type INVH into your robinhood account and you too can be an evil oppressor of desirables. In the mean time, you are ignoring the economics of why they can do this---They can borrow money at a much lower rate than an individual and therefore can pay more on the purchase price for the same property and still come out even in cost on the deal over the life of the loan. The reason banks give them blank checks is because the banks are loaded down with too much cash because Chuck and Nancy decided to "help" people with trillions in free money on top of Trump's free money on top of Obama's free money and "quantitative easing". The fundamental issue here is no different than "rent controls" making things worse for the rental market because rental units get turned into luxury condos by the owners instead of apartments---investors invest to make money. Whenever the government puts pressure on some part of the equation to drive down yields, those investors will find some other way to make money. The same low interest rates that make home ownership affordable to individuals drive investors to do things like buy up rental units that produce better returns than bonds, or drive up stock prices to unreasonable P/E's. Likewise inflating wages because them evil rich folks can afford to pay more will cause them evil rich folks to hire fewer people if doing something else with that money gives them better returns.

 

Right. Google "Cantillon Effect."

No, they are not "loaded down with cash." They can simply borrow reserves at such low rates that they can create debt money for the rich to buy up everything at low rates. Plus the Fed is buying mortgage backed securities, so whatever mortgages a bank writes, it can immediately just sell them on to the Fed at a profit.

 

That can still end up making a huge price difference in areas where there are already housing shortages.

Keep in mind that this effect is probably much more concentrated in some areas and cities than it is in other areas. The fact that "only 1 in 5" homes in the entire country are investment properties may still be irrelevant to the effect it is having in some cities.

For example, in Miami over 68% of the population are renters.
Boston is over 66%
Glendale in California is 66%
Cincinatti is 62%

 

Is it in the Ozarks?

Before they passed, my parents and grandparents owned farms near Fayetteville in NW Arkansas. My forefathers lived in that area since before the Civil War.

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Unless you have evidence that a significant number of these investment homes being bought are sitting vacant for long periods of time, then the fact that they are rental properties does not mean they are contributing to the housing shortage. If anything, they are adding demand to the housing market which, in turn, encourages more people to build more properties which would alleviate the shortage.

 

They become rental properties instead of being owned by individual homeowners.
And the homeowners who would have owned these homes instead become renters, and are forced to pay more money if they want to live in that city.