It's a trendy thing to say, especially in certain political circles, but could you substantiate it with something from a serious, non-partisan economist? AFAIK, for example, inflation isn't much related to it - rates have been very low for a long time, sans inflation.

> the Fed has the tiger by the tail and is paralyzed with fear

Again, anything substantive to support this? They are 'paralyzed with fear'?

Apartment complexes make sense as rentals because there's a great deal of efficiencies vis-a-vis property maintenance & management. Plus the added benefit of greatly reduced property taxes per unit. The downside is that they don't appreciate as quickly as other real estate can.

SFHs make a lot of sense for small-time landlords because they can be bought up in increments. But even small-time landlords pretty quickly realize the value in multi-tenant rentals and move to acquire more of them.

Blackrock, et al, will hold onto these so long as they continue to appreciate at double-digit rates. But after a few years of inflation-level appreciation, they will begin to dump these as their profits tumble due to the inherent inefficiencies of SFHs.

The fed is now so fucked it can't even raise rates without immediately causing property value declines as mortgages decrease. There really is no solution and we are in for horrific pain eventually. It's simply a question of how long they can stall it.

Edit to add: I looked up the exemption calculation. It excludes up to $432,666 from the assessed value. Multiply that exclusion by the rate of 0.00585 ($5.85 per $1K per year) and the exclusion reduces a homeowner's taxes by $2,531.10/yr.

You have to consider that legislative members tend to own property and tend to be baby boomers. They are far removed form the experiences that younger generations have to deal with - from their perspective, their home value can go up 20% in 2 years and that will be rationalized as a normal market. They are not talking about it because they are benefiting financially, and talking about may make them hurt financially. This will change, baby boomers cannot live forever even though they behave as though no future generations exist.

Whenever people say anything complex can be fixed easily with legislation, I'm pretty sure they don't have a clue.

These types of issues are never easy to fix, because they're cause by many factors that have taken years to form. There are no easy legislative fixes in practice. They only exist in theory.

Still makes it possible to own several houses/apartments (eg. summer home), but makes it impossible to do at a scale that those companies do.

Of course this would be a giant pain of a workaround to scale, but for the non-mega corporations it'd probably work. I'm sure that the huge corporations owning large swaths of residential properties would figure out scaleable loopholes.

They could also add in a carrot, to reduce capital gains on sale of non-primary residences.

There are too many incentives currently to hoard properties like the damn monopoly man, so you need to start clawing away at them. Taxing the eventual sale just encourages people to not ever sell, so tax them for hoarding directly.

I'll be 90% or more own multiple houses.

In places with the most constrained supply, they cannot afford to buy. They stick to once affordable suburbs and reduce supply.

Are you sure you aren't just thinking within the box of the United States?

Housing prices continuously rising to slurp up any marginal income has been studied by economists for a couple of centuries (rent extraction), and taxation solutions such as a Land Value Tax were suggested by Adam Smith himself.

https://blogs.imf.org/2021/10/18/housing-prices-continue-to-...

> We have selected markets that we believe will experience strong population, household formation and employment growth and exhibit constrained levels of new home construction.

Source: https://www.sec.gov/Archives/edgar/data/1687229/000119312517...

Fight back: https://yimbyaction.org/2021/ - and have fun and meet cool people while doing so!

If BlackRock doesn't continue to gobble up homes at current prices & rates - then his argument falls apart.

Does anyone have evidence that BlackRock is STILL buying properties en masse?

As long as mortgage money is cheap, the most profitable course of action is to use the 30 year mortgage, but keep a large chunk of money in reserve and invest the rest in the market for the long term. And never allow yourself to not be well-cushioned.

Debt gets people in trouble when they use it to get things that put them on the edge, where losing a job causes them to miss a payment. For people who stay far away from the edge, and are good with money, it's very profitable.

Regardless though, as a result of working at a successful unicorn and selling a lot of my equity on the secondary market, I ended up benefitting from the Fed's insane money printing anyway (the prices offered for my equity doubled and doubled again in 24 months).

I'm now sitting on a pile of cash. I invested a small amount (about 25%) into stocks (mostly REITs and dividend yielding stocks), but the rest I left in cash with the hopes of buying a home without debt (I can always take out a mortgage later to invest).

But the homes just keep increasing in value. The homes I looked at in 2016 in the Bay Area that were 600K are now 1.5M and up. I took my family out of the Bay Area into the Sacramento area, and even here houses have gone up 30% in the last year. Houses that were 800K are now going for about 1.2M.

But I'm still being patient. Now we're looking to leave the state entirely. I could buy a home here, but I'm looking at the economics for someone who is entry level or working a blue collar job (or being a teacher or caretaker), and I realize I don't want to live here. Apart from housing, I also have to think about what kind of teachers my kids will have, what kind of chefs will be at resteraunts, etc. A California that is unaffordable for everyone but me is a lame place to live.

After checking out Texas, Colorado, and Florida, we've decided we'll get way better value for our money, in terms of lifestyle for the family if we leave. California is bad and only getting worse.

I have found a happy (to me) medium - I invest all of it diversified across low to high risk assets (muni bonds, i bonds, tips, mREITs, dividend stocks, stablecoins, growth stocks), and at this point just the interest/dividends (NOT counting unrealized gains!) almost cover even my crazy rent (3500/month, for the house we are renting which is valued at about 1.5m). I just don't have the time or the energy for a house. Also a house doesn't MAKE anything other than provide shelter. Psychologically it doesn't make much sense to me to "invest" in a single house, tied to one area, such a large % of my networth. My friends bought houses recently, and even the "flips" turned out to be fixer/uppers. The supply is so bad right now you can really get burned.

Once the supply improves - and really this means most of the government distortions disappear, I would reconsider. By government distortions i mean specifically 0) stimulus checks 1) extra unemployment (bonus monthly $, extra time, and expanding benefits to people that would not have otherwise been covered) 2) mortgage forbearance programs 3) student loan forbearance 4) super low rates. i agree at one point these distortions were necessary when we were all hunkered down and hospitals were being overrun, but we are far from that these days.

Eventually I just simplified things. Living in a property you own gives so much more for your money compared to what one could afford at the same level renting. And on a long enough timeline crashes have had minimal impact. Many of those disruptions would affect the financial markets too so unless you’re extremely conservative leaving the money in stocks is not very safe either. I’m not renting for another 5 to 15 years with a small place and a nosey landlord jacking up rent regularly. So I bought.

Ultimately I chose the former. Because at the end of the day, a house represents shelter to me. And roughly speaking, shelter is fungible. If the value of my shelter goes up by 50%, the value of the other shelter around me goes up 50%. If it goes down by 50%, so does the shelter around me. So buying into the market gives me a foot in the door to, roughly speaking, be able to move to similarly desirable dwellings regardless of where they are.

This is obviously a bit simplistic, but I think its a fair way to look at it.

A lot of homeowners who needed help during the start of the pandemic were able to get a forbearance on their mortgage. Thus, there was not a huge increase in foreclosures and instead people just had extra payments tacked onto the end of their mortgage.

3) If anything, wealthy homeowners are getting a tax break. Congress is considering a repeal of the SALT deduction limit, which helps homeowners.

5) The number of people who were fired or quit due to mandates has been very small.

If you're buying just to buy, then hold off.

4 you have to ask yourself about real rates, not nominal rates. Yes you want to get paid interest, but you also have a loss on inflation. Also, you pay tax on nominal but you don't get a credit on inflation.

What you really want to think about is whether rates will get so high that people can't afford to refinance, and are thus forced to sell.

As sad as it sounds, you may want to look into that forced seller thing. When someone hits hard times, it gets even harder due to them having to sell at a loss compared to the market, which for you as a buyer is straight up money in your pocket. See about your local foreclosure markets, I think a lot of them might still be done in an old fashioned show-up-in-real-life and shout way. Depends on where you live.

Finally, it's good to list risks as you do. The big question though, is always whether the market already reflects your thoughts.

1) This will impact rentals much more than home sales, and evicted renters aren't going to increase demand in the home sales market. It's also a positive factor if you're buying: Don't be in a hurry, wait 2-3 months to see how the end of the moratorium impacts supply. If supply increases, sticker price should go down-- you win.

2) This seems too vague of a threat to factor in. Neither side wants an all out trade war (though idiot meaningless wars have been waged before) If you mean military? Well, anything significant enough to trickle into the housing market may not spare you as a renter either. Outcomes in that scenario are beyond the event horizon. If you really think that's a significant enough threat to factor into home buying decisions then you should be buying a home way outside of urban circle-- one with solar power, well water & purification, and two levels of basement for all of your prepper material.

3) Easy enough: factor that possibility in to what you're willing to spend. Let's say a worst case is a 10% increase to your marginal rate. Unless you're over $400k/year that is very unlikely anyway from the (still too few) details I've seen out of congress.

4) Okay, just don't crash the market on purpose. The rest of us have to live here too

5) From areas (NYC) that have implemented these mandates, non-compliance has been very small. And I'm willing to bet that extremely few hold outs are from people who would lose their home & suffer economic ruin over a refusal. Anyway, there's a simple solution here too: wait 2-3 months to see how they shake out.

You're likely making a bad bet by holding on to cash. The inflation and low rates are doing their job for the most part by driving investment and spending, and you're swimming against the current by doing exactly what you're not supposed to be doing: hoarding cash.

> 5) Vaccine mandate job losses. Supply.

We're already back to full employment. These threats of en masse departures haven't really materialized, the few who haven't caved are just helping newer employment market entrants by offering up some nice safe jobs.

They have enough experience, data, and skill to time the market cycle. Companies like Zillow do not.

Lastly, it's hard to overstate to a non-American how much owning a home is seen as a central part of American identity. It's almost like part of "growing up" in a way. I say this in a tone of trying to explain haha, please don't perceive this as being pedantic.

More likely, people flush with cash see inflation eroding it, think the stock market is already too high.

An MLS is nothing but an local organization. There are zero laws requiring a property to be posted on an MLS. I know of zero states with any regulations like what you propose. There's also confusion around the term "Realtor" because "Realtor" isn't actually a thing. It's a brand, a "real estate agent" on the other hand is an actual job.

The real estate industry is *truly* and exceptionally fucked up. The confusion around MLS, "Realtor," and probably loads of other things I'm forgetting are intentional.

https://en.wikipedia.org/wiki/Pocket_listing

There are similar private requirements for the cartel known as NAR. What this means in practice is that pocket listings actually make to to the MLS for one day before apparently being sold "in 1 day".

Zillow as property owner is not part of NAR. Zillow as broker is also not part of NAR, although if they were, they'd do exactly as individuals using pocket listings do. Arrange a sale privately with an institution, place the listing on MLS, then sell it "on the open market" in 1 day.

there are so many problems with your post but the assumption that defunding the police is necessarily going to cause prices to collapse is probably the most obviously biased one.

the idea that you should view housing as simply a matter of supply and demand and not consider any externalities is an abominable position. All people need shelter, it's not something that people opt into for the enjoyment of it alone. By the logic you have presented, the top 1% of people banding together and buying up all of the housing and squeezing everyone else is perfectly fine if it makes the numbers look nice, regardless of how it affects people's lives. The way you have framed the problem is inhumane.

Another way to make rent more affordable is to raise the tax rate on income generated from residential rentals to the point that people are not buying up all of the housing stock for the sake of investment alone. Income from residential rentals is taxed at the same rate as ordinary income, the kind you get from actually doing something. Why would anyone work if they can just own someone else's house instead?

If there are any cities for which this is true, it’s cities like Seattle and Portland. Theoretically, they are not desirable to live in because of COVID, very high crime rates, not idea for working from home, huge public safety problems, etc.

But rent is higher than it has ever been.

Home buyers have many choices and at a certain price, its simply too much and they go elsewhere.

I think zillow is trying to unload their mistake onto some entity they can convince it is still worth it.

Because if they're just off a few percent, I don't know why Zillow wouldn't just hold on for a bit.

Sure, medium/large flippers may have investors putting up the money.

And I agree that Zillow is not likely backing out of the game all together. They just had an expensive lesson learning what they don't know about how to go about this. But their current strategy was also only viable during rapid price increases. A completely different one is needed in other market condition.

Making money flipping in a flat market is even harder: It takes more work to find depressed homes at below-market prices. There's no good algorithm that will do that without boots on the ground looking at the property in person, not to mention the surprises you get when you open up the walls or floors to start a refurb. That doesn't mean Zillow can't do it: what I'm saying is that it's very much not in the realm of their core competencies. Building out large scale logistics networks for this IRL is much different than their current line of business. I'm sure they'll try again, but I'm also almost as sure that they'll have a few more significant stumbles along the way.

Yeah, we do. Massive housing speculation in the mid-2000s.

> The fact that Zillow failed on their initial attempt does not imply that this can't work

I'm reminded of Gamestop here. Around the time $GME first spiked and then fell you saw lots of people trying to encourage everyone to hold. What this ignored is that someone would be left holding the bag and the long interest holders knew it so it was a question of not being left holding the bag.

This is classic Prisoner's Dilemma, basic human nature (ie to act in self interest) and exactly why markets work long term.

The boom and bust cycle reflects basic human psychology of fear and greed.

Asset bubbles aren't new. Attempting to corner or even just manipulating markets isn't new. Ultimately these things always revert to mean. Sometimes you can predict the reason. Often you can't.

I personally favour fairly radical and progressive real estate reform. This includes (much) higher property taxes for non-resident owners, treating owners as tax residents and thus taxing their income, ending special treatment for real estate assets in asset reporting and withholding taxes at source on real estate income.

Cities should be for those that live in them, first and foremost. Having landlords is fine as long as those landlords themselves are residents of the same city. Residential property shouldn't be for investment funds or oligarchs hiding money from governments.

Concentrating on the likes of Zillow however is largely unnecessary and a diversion. The focus should be on the game not the players.

But I also firmly believe that the prisoner's dilemma and human psychology will limit the impact of institutional real estate buying just as in any other market.

Zillow is far from they only one. PE emerged as one of the largest buyers of foreclosed houses and distressed sales.

Unfortunately we do have precedent. Through all of history almost no one owed their own home. It was by extraordinary government intervention in the 20th century through loan programs, incentives and building, and impediments to speculation, that made it uniquely happen in our era.

As the government steps back from continuous intervention favoring individual home ownership and low to nonprofit housing, the more profitable rental economy will re assert itself: it is always more profitable to own a property to rent out then to live in it and the market will reflect that if left to itself.

Price fluctuations (eg 2008) do not change the fact that land price increases have far outpaced wages for decades. So yes, it is rational to be very concerned.

And note that Zillow is not selling these 7k properties to would be homeowners but to investors.

False equivalence. The real estate business which Zillow failed is massively capital intensive, whereas figuring out a quant strategy is not necessarily so. In other words, it is very possible to go out of business before a business model is worked out (assuming there is an undiscovered, workable business model).

Investors will not endlessly fund money losers, and Zillow is a huge money loser from both a income and cash flow perspective–a trend that predated their entry into the iBuyer space. Now you might say, the investor appetite for money losing Zillow is bottomless, just look at asset class X, which is totally unproven and yet has insane valuations. To which I would reply, "That is true until it isn't." One common characteristic of all financial bubbles is that its participants claim "this time is different."

Supposing iBuyers do become a significant force in the SFH market, so what? Large companies already participate directly in housing in a massive way. Who do you think built all of these apartments? Also, don't YIMBY's want to eliminate SFH anyway?

This example works against you. Quant firms did succeed but they did not corner the stock market nor are they cause for concern. There is a long history of firms that failed to corner a market or become a monopoly. True natural monopolies are extremely rare and don't typically last very long.

Everything is a balance and the only way to make money long term is to be undeniably useful to a majority of people.

Anything below that bar will die down in shame, infamy or violence.

1 - https://archive.md/tNaDt

It was never apparent in the homeownership rate (https://fred.stlouisfed.org/series/RHORUSQ156N) which has been broadly stable for decades, and the jumps over the last few years are, if anything, towards increased homeownership, not less.

If they actually thought that they must have been high af

Their tool is absolutely terrible

Be very careful over-extrapolating based on known variables. That's my point.

For decades we've have the concentration of populations in a few urban centers because of employment opportunities and other factors. Two years ago, you wouldn't have even thought about that trend ending anytime soon.

Yet here we are with what seems to be the beginning of a structural change to the employment market to remote work for a significant number of potential jobs. We're not there yet of course. But this seems to have already been a boon to medium-sized regional cities (eg Boise).

This was all possible two years ago but it didn't happen. Covid was a big catalyst. No one predicted that.

Likewise, you see young people rejecting the 30 year mortgage, have kids then retire model that was the norm for Baby Boomers. Living remote, tiny homes, van life, etc.

I fully support residential real estate not being used for money laundering, hiding assets from governments and an exchange-traded asset class, to be clear. The focus there should be on the governments who create the rules that allow this to happen and not the players however.

Lot of people saying buying houses is hard, unrealistic, or impractical want to buy mansions with a 10 second commute to their workplace in silicon valley but the reality is most people are not living like that.

Wage workers are still buying houses no problem in what are considered "low income" areas as they have been and interest rates are better than ever.

I hope so, but keep in mind, the Fed has lacked the will to tighten even in the most favorable conditions -- strong market, no covid -- merely because banks screamed bloody murder about having to pay slivers of a basis point more on overnight loans or (heaven forbid) stay more liquid so they don't need to get as many loans.

HN stories about "liquidity injections":

https://news.ycombinator.com/item?id=22559175

https://news.ycombinator.com/item?id=21731848

https://news.ycombinator.com/item?id=21477855

Many young people had no opportunity to pursue a real career after taking on four years of educational debt through no fault of their own. "Go to college and get a good job" was revealed to be a complete farce. A few years later as things picked up, there was a fresh crop of new grads behind them without any awkward employment gap or strange jobs to explain. Even those who managed to make their way into solid careers missed out on the stock market and housing asset boom of the last decade because they did not have the deposits and credit history needed to contemplate buying a home until fairly recently when prices went vertical.

This deserves to be stated on its own.