Should governments regulate the % of investor owned residential real estate?

You seem to be talking about properties being rented out. Do Omar_Little’s numbers mostly reflect houses being rented? Or is there a significant amount of houses sitting empty?

Because I found this on CBS from last month,

I mean, corporate landlords represent 2% of all single-family rental housing.

~Max

I do not believe there is a significant amount of corporate-owned houses sitting empty.

So how does that square with corporate landlords representing 2% of single-family rental housing, yet 31% of all residential housing?

~Max

I’m not totally sure what you’re getting at here, but I think the difference between those two numbers is that lots of apartment buildings are owned by corporations and relatively few single-family houses. But the rate on the latter is reportedly increasing.

The problem is, if we build more of them, under the current conditions, they just get bought by the corporations, because they have driven the prices up so high that no one with just a regular job income can afford them.

I’ve got a pretty good job, that pays well above average for Canada, but if I had to buy my house today, I could never afford it. This house has almost tripled in value since I bought it, and a big chunk of that has been in just the last two years. That’s great for me as an individual, but I’m sensible enough to realize it’s a disaster for society in general.

No one fix will get us out of this mess, but part of any fix has to be giving regular people some kind of leverage against the far wealthier investment groups who have a vested interest in making it impossible for people to ever own a home, so that they are rendered into a permanent renter class, regardless of how much they may ever earn.

I’m reading the CBS article, and this real estate agent in Jacksonville is getting cash offers on a third of her listings without having to stage the house or anything. A third roughly matches the 31%, not the 2%. I’m wondering if they are really renting these houses out…

And I thought maybe it’s apartment complexes and such too. But a quick search gives me a webpage calling itself a “National Multifamily Housing Council” citing the Census’s ACS. If I’m interpreting that chart correctly, 33% (~14.5m) of rental households are single family homes. And Pew cites the 2019 Census to tell me 36% of households rent, out of 122.8 million households total.

This all seems to me a contradiction. Only 36% of residential housing is rented. Corporate landlords rent out a 33% of all residential housing. That leaves 3% of all residential housing that is rented but not from a corporation. Yet we have at least 14.5 million single family homes that are rented, but not from corporate landlords. 14.5 million is way more than 3% of the 122.8 million…

~Max

If you build just a little more, sure. If you build enough more then the corporations would be fools to buy them because they can’t corner the supply. The reason prices are high is we aren’t building enough houses. We are not slightly undersupplied for houses. We are massively undersupplied. Housing stock hasn’t increased as fast as population for decades. The reasons corporations are interested in this as a financial move is that they think there is not political will to build enough more houses to fix this and they will get to extract large returns from that lack of political will.

Any attempt to limit ownership will have some small effect but also some tradeoffs (fewer housed people, as mentioned above). Building more houses will actually solve the distorted market problem, instead of piling on more distorting rules.

Imagine that the car market was screwed up like this. For decades, car companies could only build cars if they went through a bunch of red tape, and the total number in each geographical area was limited, and there were big politically active “auto owner” groups who argued against any increase in local car ownership because traffic would get worse and the character of the neighborhood would change if more people had cars. In such an environment, you’d have more and more people relying on car rental services because cars would be expensive, and you’d probably have people mad at Hertz and Alamo for perpetuating a “permanent autoless class”. Now, in that environment, if you made it harder for Hertz to own cars, there would be more cars available for people to buy at somewhat lower prices. But that would come at the expense of people who still couldn’t afford to buy cars and would now have to rent fewer of them at higher prices. There’s no free lunch here. A car not owned by Hertz is now owned by an individual (good for that individual) but the total miles driven per car is going down (bad for society and for everyone who still can’t afford a car).

The solution to this is what we already do with cars, and should do with houses. Build more. Build so many that they just sit there in showrooms (metaphorically) and people can walk in off the street and buy one instead of getting into bidding wars. Build so many that people stop thinking of them as investments that always go up and just think of them as consumable things that we use to live in. Build build build, and the problems go away.

Investment groups want to make money, and they don’t really care much how they do it. If you give them functional market rules they’ll often do it by making people’s lives better by supplying great products at reasonable costs. Think about all the great products you buy and how great it is that those companies have investors. I just bought a dishwasher for $600 and it’s amazing! Replaces hundreds of hours of labor a year, uses 1/10th the water I’d use washing by hand, and it’s so quiet they have to put a light on it that shines on the floor because otherwise you can’t tell if it’s running. Nobody is mad at dishwasher investors. But if you give them broken market rules that restrict supply, they’ll do it by cornering the market and charging excess rents. Fix the market, and we don’t have to vilify the investors.

Sounds like it’s:
122.8 total households
36% of those are rentals (44.8 million)
33% of those are single family (14.5 million)
You can’t subtract the 33 from the 36 and get 3 because those aren’t using the same denominator.

That’s probably very dependent on the area - houses in my area are going for what I think is an absurd amount of money , but all the sales I know of have been to regular people with jobs, not to corporations.

That depends on the area , too. I’m sure there are plenty of places where more houses can be built - but not really where I live. You could possibly knock down a single-family house and replace it with a two-family - but since the lots are only 20 feet wide, it would be either two one-bedroom apartments or you’d have to make the building four stories high. Sometimes, the problem is not just the supply, but the demand - I could buy a house twice the size of mine for half the price where my brother-in-law lives near Rochester, NY.

Here’s a house that was recently sold in my neighborhood -

It’s true that you can’t build more single family detached houses in NYC suburbs, but you definitely can build more housing units in such areas with, as you pointed out, apartment buildings, condos, and co-ops.

My mistake, I’ve never been too good with figures. It’d be 36 - 31, where the 31 comes from the OP. But 14.2 million (14.5 x 98%) is over 10% of the 122.8 million. Still not adding up. :confounded:

~Max

The numbers are all mixed up. The only thing I see changing is the end of the Fred and Ethel Mertz model where the owners of an apartment lived in one of the units. My first house was owned by IBM for short term stays while personnel transferred into the area. They sold it after a couple of years when it sat empty for just a few months. If you own a 6 unit building having a 1 tenant leave is not that bad. If you have 1 unit building and 1 tenant leaves you have a problem.

You claim to be a libertarian calling for more government regulation. Isn’t that a contradiction?

Either way, the govt needs to get involved. The reason that more houses are not being built, especially high density housing, is due to government regulations. These are usually local regulations, originating at municipal or county zoning boards, so I’m not sure what state or federal action could be done to change that.

Developers also make more money off of larger houses, and they make more money when there is a housing supply shortage, so they have no real incentive to fix the problem, even if zoning would allow it.

As far as allowing corporations to own all our housing, and we just rent it from them, I disagree that that’s what is best for the community. It raises the cost of housing, and also prevents people from building wealth. The fact that my parents get kicked out of their 4 bedroom house to make room for a new family is not, IMHO, a feature.

I wouldn’t think so. A libertarian is not against all govt regulation, they are against unnecessary govt regulation.

That a libertarian sees that this crisis may need the govt to step in should show how serious the crisis really is.

I’d like to know where houses aren’t being built. I can’t go anywhere without seeing new houses under construction and I can’t find skilled workmen to do work on my house because they’re all busy building new ones.

The problem isn’t that they’re not building any houses, it’s that they’re not building enough, and most of the ones they are building are high-end McMansion type places or luxury condos that contribute to the increase in prices of housing in general.

I can’t think of any recent developments in my area that build the kind of basic house I live in now, or the basic condo I lived in before. The economics of the situation just make those untenable. Why build a moderate condo building with units that sell for 250k, when it’s not much more effort to put in all the luxury stuff, and sell them for 500k, if they’re all going to sell out quickly either way?

Why indeed?

It seems that the hint to a solution was posted up-thread - change the tax incentives for home ownership, particularly at the high end. Tax capital gains aggressively for high-value homes (particularly ones with corporate ownership). Alternatively, provide more attractive tax benefits for lower-value housing. Perhaps have more aggressively progressive property taxes.

If you want less of something, tax it.

Of course, if you really want to wailing and gnashing of teeth, try proposing those ideas at your local municipal board meetings. Current owners in my community have repeatedly shut down any attempts to build apartment buildings, condos, or even reasonably-priced single-family homes.

How? Sure, you could build multi-unit apartment buildings in some areas where there are larger lots or even on larger lots in areas where most of the lots are small. But you couldn’t get more than two small apartments on my lot* - and even in the places where a single family house is replaced by a 2-3 unit building, they are often condos, not rentals ( until a few years ago, I had never heard of a 2-3 unit condo) and I suspect that small condos are similar to houses in terms of people not downsizing when they no longer need three bedrooms.

In fact, in my experience, it’s not at all uncommon for people to stay in the same two or three-bedroom apartment they’ve rented for 20 years when the kids move out ( and they aren’t rent-regulated apartments , so that isn’t the reason). That probably has a lot to do with the fact that in NYC, there are a lot of “permanent renters” ** - but the fact that most single people currently won’t rent a three bedroom house for one person to live in doesn’t really tell you what would happen if a family was renting the same apartment for 20 years and then their kids move out.

* and that’s assuming you can somehow get around requirements for off-street parking in new construction.

** They aren’t renting until they save up a down payment or something like that - they have no intention of ever buying a primary home.

Buy up multiple lots and build a bigger building. That’s how big buildings get built everywhere they get built. The lot size is an arbitrary zoning designation, not a naturally occurring limit.

At the state level, states can generally limit the ability of smaller local governments to control zoning, or require that certain types of building permits be approved within X days, etc. This is happening to some extent. California has taken some steps in the direction lately. The feds have less direct ways of influencing things, but they could do something like offer extra federal funding for any states that increase their housing stock by a certain amount as a carrot.

If you think I’m advocating that, you are mistaken.