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re: WSJ: Wall Street Has Spent Billions Buying Homes. A Crackdown Is Looming.
Posted on 4/29/24 at 11:25 am to BilbeauTBaggins
Posted on 4/29/24 at 11:25 am to BilbeauTBaggins
quote:
Do you think homeownership is cheap?
Where did I say that? You understand that as a renter, you are paying 100% of the costs to own PLUS a profit? There’s an extra cost, the landlords profit.
If you can’t afford to buy, you can’t afford to buy. That’s a topic for another day, institutional owners aren’t preventing those people from buying. You are moving the goal posts.
1
Posted on 4/29/24 at 11:25 am to baldona
quote:
You guys are upset because you assume an institution is out there out bidding people that then have to go rent. It’s not like that at all.
What do you think happens to a development/local market if a firm buys up 50 of the 100 houses that DR Horton or DSLD are building?
Posted on 4/29/24 at 11:26 am to baldona
quote:
You guys are upset because you assume an institution is out there out bidding people that then have to go rent. It’s not like that at all.
I know of 3 different occasions near me where people I knew (or friends of friends) were out bid by institutional buyers. This isn't a problem invented on the OT. It is a known issue nationally in the housing market and it needs regulation.
quote:
Are you saying you can’t develop a home?
Nope, that is different. You are adding to the supply, not buying up pre-existing supply.
quote:
Or you are saying you can’t buy an already built home?
If you're an institutional buyer that has hit (a yet to be determined) limit of owned single family freestanding homes, yes, I am saying that.
quote:
What if no one else wants to buy it?
Tough. Re-price it or sit on it. This is exactly the situation where institutional investors salivate. They don't care about near term losses in equity value so they buy an overpriced home, which we know is overpriced due to it not selling, and sit on it. They do this is swaths. That artificially inflates home values.
You're making it more complicated than it has to be.
Posted on 4/29/24 at 11:28 am to stout
quote:
Those homes would eventually hit the market if firms weren't buying them before they are finished
Prove it? You don’t know that. Maybe they built extra homes, maybe they sell to individual landlords, maybe something else.
The point here is that institutional ownership is preventing someone from renting, from buying a home.
So, let’s stay on topic.
Posted on 4/29/24 at 11:28 am to Chicken
quote:
renting doesn't make you have to come up with a 20% down payment...the problem with many wanna-be first time buyers, unless they are getting help from family, will have trouble coming up with the down payment, even if homes cost significantly less than now.
First and last month's rent down is only 16.67% of a 1 year agreement. Yuge savings.
Posted on 4/29/24 at 11:29 am to baldona
quote:
institutional owners aren’t preventing those people from buying.
Inventory shortages has been the largest factor for several years in price increases. The more houses that firms buy up the more shortages we have.
That is the entire argument of the proposed law and you have to be obtuse to think this isnt an issue.
In some cities during CV 1 in 4 houses sold were bought by investment firms.
Posted on 4/29/24 at 11:30 am to CatfishJohn
quote:
Tough. Re-price it or sit on it. This is exactly the situation where institutional investors salivate. They don't care about near term losses in equity value so they buy an overpriced home, which we know is overpriced due to it not selling, and sit on it. They do this is swaths. That artificially inflates home values.
lol. How do you know this? It’s laughable.
Have you seen the housing market lately? In many places it is not doing well. It’s not up all over like it has been in the past.
The entire point of an institutional owner is to make money. You can’t just buy property for a loss over and over and make money.
Posted on 4/29/24 at 11:31 am to baldona
quote:
Prove it? You don’t know that.
I do know that. I can take you to a neighborhood about two miles from me that DSLD was already building. A firm named Kairos Living came in and bought two streets worth of houses that were already going to be built no matter what.
It happened with a 100 house development a few years ago in Houston and made national news. DSLD worked with the city to get it approved as SFH to be sold to individuals then once approved a hedge fund came in and prebought all 100 houses.
It happens all of the time.
This post was edited on 4/29/24 at 11:33 am
Posted on 4/29/24 at 11:31 am to stout
quote:
In some cities during CV 1 in 4 houses sold were bought by investment firms.
Absolutely. How many of those cities across the country? What percentage of homes in general?
I’m not going to pick a small suburb of Atlanta and claim that’s happening every single place in America.
Posted on 4/29/24 at 11:33 am to baldona
quote:
The entire point of an institutional owner is to make money. You can’t just buy property for a loss over and over and make money.
They aren't in this for near term profit. They aren't calculating ROI in 1,2,3 years. They are looking at 20+ years. They want to rent them out as much as they can and sit on them.
This isn't some guess I'm making. These are known things.
Posted on 4/29/24 at 11:34 am to CatfishJohn
quote:
They aren't in this for near term profit. They aren't calculating ROI in 1,2,3 years. They are looking at 20+ years.
I think this thread is over his head.
Posted on 4/29/24 at 11:36 am to ragincajun03
I was curious, so I looked up rentals in my neighborhood. Extremely small sample size, but one is listed. It's 300sq/ft smaller than my house and clearly hasn't been updated in the last half century.
The rent is 30% higher than my monthly mortgage payment. That's brutal.
The rent is 30% higher than my monthly mortgage payment. That's brutal.
This post was edited on 4/29/24 at 11:46 am
Posted on 4/29/24 at 11:39 am to ragincajun03
I don't even have a problem with these companies buying houses. What I have a huge problem with is they are allowed to do it with zero risks. If the bottom falls out of the market, you know who the politicians are going to rush to save from default? The corporations. They won't have to let go of inventory at a 30% discount to relieve their obligations. Joe American on the other hand...
Posted on 4/29/24 at 11:42 am to baldona
quote:
Ultimately if you have a down payment owning is still going to be cheaper than renting
Ehhh, not necessarily. Rent is pretty freaking expensive, but...
Mortgage, property tax, insurance, maintenance.....owning 10-15 years ago was certainly cheaper. Now? Not so much.
This post was edited on 4/29/24 at 11:46 am
Posted on 4/29/24 at 11:42 am to Boss13
quote:
I don't even have a problem with these companies buying houses. What I have a huge problem with is they are allowed to do it with zero risks. If the bottom falls out of the market, you know who the politicians are going to rush to save from default? The corporations.
Some of these firms are technically buying these houses with your retirement money. I bet your 401K has money tied up in a few REITs
Posted on 4/29/24 at 11:47 am to ragincajun03
I was told that "Wall Street buying single family homes" was a conspiracy theory.
Posted on 4/29/24 at 11:51 am to baldona
quote:
As stout said, an institutional buyer will go to someone like DSDL and offer to buy 5,10, 25 or whatever homes at a price. Those aren’t hitting the market.
This isn’t the only way though. They do it multiple ways. Back in the height of it in 2020-2021 they were outbiddding individuals for homes on the MLS in north Texas.
This post was edited on 4/29/24 at 12:01 pm
Posted on 4/29/24 at 11:52 am to ragincajun03
Won't make a difference. Isn't institutional buying less than 2% of all Real Estate.
Posted on 4/29/24 at 11:52 am to baldona
quote:
What about the guy that owns 10,20, or 30 rentals?
I think you have to let these people continue to operate as a local business. There's nothing inherently wrong with rentals or landlords or even large rental management companies. It's when it becomes "corporatized" on a large, integrated scale that creates the problem. Keep things on a Mom and Pop level instead of transitioning to the Walmart/Home Depot system.
And there's a practical aspect to this too. You rent a home that is owned by a state registered LLC, which in turn is owned by a REIT from out of state, which in turn is owned by a Wall St hedge fund incorporated in Delaware, which is in turn owned by some publicly traded finance company. What are you going to do, call up some securities manager at Blackrock and demand someone fix or replace your crappy HVAC unit? I mean slumlords suck but at least you know who they are and where to find them. Good luck fighting Wall St on some landlord-tennant dispute.
Not to mention these institutional investors also make money by leveraging, securitizing and generally moving paper around amongst themselves to fatten margins or inflate profits. We saw this in the housing crisis back in 2008-2010. Some poor schmuck is sacrificing and suffering to pay his inflated rent every month and then he gets a foreclosure notice and he finds out the company he wrote that check to every month actually transfered the mortgage three times to other institutions who layered nine layers of shite into one layer of gold to create fraudulent security instruments or bonds.
The bottom line is don't frick with housing. It's too integral to the American Dream and the social and financial welfare of our citizenry.
Posted on 4/29/24 at 11:57 am to Limitlesstigers
In Texas it’s a much larger percentage.
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