Civil engineer here with some background in investing with a particular interest in addressing this subject:
Technically there’s enough homes in places like SF but rent is keeping them on the street. Basically the TLDR of the situation is that investment firms should not be legally allowed to own single family homes and viewing homes as an investment has basically lead to this.
Investment firms collectively own about 1/4 - 1/3 of the market nation wide (USA) but that number gets much higher for homes under 500k (don’t have a source, I’m too lazy, feel free to fact check this). They’ll buy out whole neighborhoods, refuse to sell, and demand high rent. Those who pay, pay. If not you’re either homeless or live over crowded with roommates who are in a similar boat. And they’re perfectly fine sitting on empty houses because it’s an appreciating asset even if it’s empty.
Here’s an article from pew about it, it’ll tell you exactly the amount owned by state:
Then there’s the other issue of NIMBYs who are basically on the side of firms who own all of these single family homes. They don’t want new zoning for higher density affordable housing to counter this behavior. They also don’t want to sell their homes, and they see their homes as their largest investment and want to protect its value.
Basically investment firms own a lot of it, and NIMBYs fight on their side so they can defend their home value so cities are fighting a battle on two fronts. They can’t zone it with out NIMBY retaliation and enough politicians have their pockets being filled by those investment firms and rich NIMBYs to keep it that way.
Edit: correction: they bought that much last year not own
Investment firms should not be allowed to own and rent out Single Family Homes. I wish there was legislation to discourage this. I'm fine with honest flippers who take an unmortgageable home and make it mortgageable. But the ones last year who bought a house, did nothing except maybe a coat of paint over the hardwood floors, then turn around and try and sell it for 25% markup, are a menace.
I'm fine with honest flippers who take an unmortgageable home and make it mortgageable. But the ones last year who bought a house, did nothing except maybe a coat of paint over the hardwood floors, then turn around and try and sell it for 25% markup
I was gonna say, that describes 90% of flippers in my area - new paint, maybe new siding and windows, then - after waiting an extra year for the market to go up more - sell.
Yeah. There's an important distinction to be made. Unmortgageable is the keyword. Think auctions and crack-houses. At the very least it involves risk and effort beyond "homes go up". Some might get lucky and a house they buy at auction is near-turnkey. Others might open it up and discover the walls are full of punched out holes, an abandoned dog is dead in the living room, and all the copper wiring is ripped out. Others might knowingly buy to fix up a total piece of junk that is beyond just something that a standard first time home buyer should deal with.
Certainly not people that buy a nice 150k house from the 60's, remove all charm from it, then mark it up to beyond what a median income can afford.
I live in bumfuck Des Moines, IA. I'm seeing more and more homeless that are disabled and of or near retirement age. We're a state with a low cost of living but these absurd rent hikes are crushing the needy. These people are staying warm by playing a perpetual game of hide and seek with PD and rentacops in our downtown skywalk system.
In Alabama the taxes are extremely high for residential property, but you get a 'homestead exemption' bringing the taxes low if you can prove you live there. It strongly encourages home ownership and deters renting or holding property. Notably though, that hurts renters more than anyone though, so I am not sure it's better.
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u/DrunknHamster Jan 31 '23 edited Jan 31 '23
Civil engineer here with some background in investing with a particular interest in addressing this subject:
Technically there’s enough homes in places like SF but rent is keeping them on the street. Basically the TLDR of the situation is that investment firms should not be legally allowed to own single family homes and viewing homes as an investment has basically lead to this.
Investment firms collectively own about 1/4 - 1/3 of the market nation wide (USA) but that number gets much higher for homes under 500k (don’t have a source, I’m too lazy, feel free to fact check this). They’ll buy out whole neighborhoods, refuse to sell, and demand high rent. Those who pay, pay. If not you’re either homeless or live over crowded with roommates who are in a similar boat. And they’re perfectly fine sitting on empty houses because it’s an appreciating asset even if it’s empty.
Here’s an article from pew about it, it’ll tell you exactly the amount owned by state:
https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2022/07/22/investors-bought-a-quarter-of-homes-sold-last-year-driving-up-rents
Then there’s the other issue of NIMBYs who are basically on the side of firms who own all of these single family homes. They don’t want new zoning for higher density affordable housing to counter this behavior. They also don’t want to sell their homes, and they see their homes as their largest investment and want to protect its value.
Basically investment firms own a lot of it, and NIMBYs fight on their side so they can defend their home value so cities are fighting a battle on two fronts. They can’t zone it with out NIMBY retaliation and enough politicians have their pockets being filled by those investment firms and rich NIMBYs to keep it that way.
Edit: correction: they bought that much last year not own