The Billionaire Next Door Driving Up Housing Costs for Everyone

Conor here: I’m not sure about the faith the author places in “progressive” Ro Khanna and the proposed legislation, but the piece is a nice reminder about the growing problem. A story from the Las Vegas Review Journal a few days ago in the is another one. That piece, “‘Swapping homes like stocks’: Wall Street-backed firm buys 264 valley homes in a day,” fittingly from the US gambling Mecca, describes how homes are turned into collateralized rental obligations and traded around. It also notes how the trend of private equity and cash-rich investors buying up homes really took off in 2009 during the Obama-backed foreclosure jamboree. Fourteen years later, and “a MetLife Investment Management study shows these companies could own close to 40 percent of all U.S. houses by 2030.”

By Sam Pizzigati, a veteran labor journalist, Institute for Policy Studies associate fellow, and editor at His recent books include: The Case for a Maximum Wage (2018) and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 (2012). Originally published at Common Dreams.

Democracy or plutocracy? Which label better fits today’s US of A? An apt question to contemplate as we enter what could turn out to be our most harrowing political year since Abe Lincoln’s election. Where to begin this contemplation? How about we take a stab at some definitions.

In a democracy, people identify the problems they face and, working together, try to fashion solutions. In a plutocracy, by contrast, a society’s richest employ their power to exploit the most pressing problems their nation faces — and keep real solutions off the table.

Where do these definitions leave the 21st-century United States? In deep plutocratic doo. Consider, for instance, how we’re responding, as a nation, to our contemporary housing crisis.

For younger American families, the classic American dream — a home of your own! — has become an ongoing nightmare. Some 20 percent of young American men between 25 and 34 lived with their parents last year, 12 percent of young women. America’s multigenerational household population, the Pew Research center notes, has quadrupled since the early 1970s.

What explains these stats? The simple story: Fewer and fewer American young people can afford a home of their own. Overall, an Amherst Group analysis has found, some 85 percent of renting households cannot “qualify for a mortgage.” America’s most typical first-time homebuyers last year, adds the National Association of Realtors, had already turned 36 years old. Young people a generation ago were becoming first-time homebuyers in their 20s.

The economic reality behind all these stats: the shrinking share of America’s wealth that belongs to average Americans. Back in the mid-1990s, America’s “middle class” — the middle 60 percent of U.S. households by income — held double the wealth of the nation’s richest 1 percent. Last year, Fed Reserve researchers calculate, top 1 percenters held more wealth than our entire middle 60 percent.

And America’s richest aren’t just enjoying that turnaround. They’re exploiting it — on a wide variety of housing-related fronts.

In Our Unequal World…

…the garbage rises ever higher

Some rich are busy turning the 20th-century dream of owning your own home into the grubby 21st-century reality of renting your own home forever. These rich and the corporations they run have spent recent years buying up homes for sale and turning their new purchases into rental properties.

In big cities ranging from Atlanta to Phoenix, deep-pocket investors have accounted for between a quarter and a third of local home purchases. The impact of this deep-pocket dabbling in the sale of middle-class housing? Corporate landlords turn out to be more likely, a Vox analysis points out, to evict tenants, raise rents, and dodge needed repairs and maintenance.

Apologist for the richest among us are claiming that critics of this deep-pocket interest in middle-class housing are making a mountain out of an investment molehill. They point out, for instance, that private-equity firms and other “institutional investors” drove less than 3 percent of all home sales in 2021 and 2022.

But that low national percentage, note housing experts like Cincinnati’s Laura Brunner, can obscure what’s happening in many actual local neighborhoods. Private-equity dollars can routinely buy up “50 percent of the houses on a single street.”

Other deep-pocketed movers and shakers, meanwhile, are taking different routes to exploiting America’s inadequate supply of affordable housing. Just how inadequate? In the decade that ended in 2022, reported last March, the nation ended up with “a shortfall of 6.5 million single-family homes.” The investor response to that shortfall? An explosion of “residential transition loans.”

These loans go to America’s growing army of house “flippers,” local speculators of various sorts who buy up older homes from families that can’t afford to make badly needed upgrades and repairs. The loans come at a “relatively high interest rate,” as much as 10 percent annually, notes Barron’s.

Financial industry outfits like 1Sharpe Capital, a subsidiary of the Blackstone private-equity colossus, package these high-interest notes into investment funds that offer millionaires returns that can average over three percentage points more than investments in U.S. Treasury funds.

The sharpies at 1Sharpe Capital, for their role in all this, reap an annual management fee of 0.5 percent and a 20-percent “performance fee” if they deliver investment fund returns that run 1.3 percent or more above the three-month Treasury index.

These ample fees ultimately make up only a tiny share of the income that annually pours into the Blackstone private-equity pool. But every little bit helps. Blackstone CEO Stephen Schwarzman, we learned this past August, “received a total adjusted compensation package of $253.1 million in 2022.”

Rewards that outrageous have begun capturing some serious attention from progressive lawmakers in Congress. A year ago this past fall, Rep. Ro Khana from California introduced the Stop Wall Street Landlords Act of 2022, legislation that would, among other provisions, prohibit “large investors from obtaining certain federal mortgage assistance” and create a tax credit that affordable housing developers could tap to build and rehab homes in low-income communities.

Two lawmakers from the Pacific Northwest, Senator Jeff Merkley from Oregon and Rep. Adam Smith from Washington, have recently upped the reform ante. The End Hedge Fund Control of American Homes Act they introduced this past December would, if enacted, ban hedge and private-equity funds from buying up single-family homes and force them to sell off — over the next decade — the homes they already own.

Still another new bill now before Congress, the American Neighborhoods Protection Act proposed by North Carolina lawmakers Jeff Jackson and Alma Adams, would require corporate owners of over 75 single-family homes to pay $10,000 per home annually into a housing trust fund individual families could tap for help on housing downpayments.

None of these pending reforms have any shot at making it through the current Congress, not given America’s current plutocratic realities. America’s richest don’t just have the wherewithal to exploit the real needs of average American families. Their wealth distorts our national political dialogue. Their political power dooms and delays real solutions to the problems average people face.

How can we advance those real solutions? We need to think big. We need to start redistributing the fabulous amounts of wealth that have concentrated at America’s economic summit. Without that redistribution, our wealthiest will continue to exploit our society’s most aggravating unmet needs.

Take, for instance, the wheeling and dealing of one of the latest billionaire entrants into the buy-up-America’s-housing-stock sweepstakes, Jeff Bezos. The investment fund start-up Bezos is backing, Vicereported last month, “is betting on single-family home rentals because fewer people can afford to buy homes and more people are stuck renting.”

California congressman Ro Khana’s reaction?

“The last thing Americans need is a Bezos-backed investment company further consolidating single-family homes and putting homeownership out of reach for more and more people,” Khana noted last month. “Housing should be a right, not a speculative commodity.”

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  1. Wombat

    Another unfortunate point is that even if P.E. is only buying a small percentage of homes, say 3-5% (such as the apologists say), these homes will likely never return for sale to families. P.E. firms may exchange a SFH (single family home) portfolio between each other, but their individual properties will likely never be listed for sale to the public again. What this means is that America’s homes are being absorbed into an absorbing state – ownership by the rentier class. Once in this state, they are stuck there and the whole housing market will be slowly (or swiftly) owned by the rentiers.

    1. sfglossolalia

      What this means is that America’s homes are being absorbed into an absorbing state – ownership by the rentier class.

      In the old days we called that class the feudal lord.

      1. Wombat

        Yes! We are definitely heading to neoserfdom if not already there for many: the rate at which the rentier class buys homes only tells half the story. The rate at which they keep the homes (only occasionally transfering between their fiefdom SFH portfolios) leads to that inevitability.

  2. James T.

    Wow these are some crazy numbers and just prove that unfettered capitalism is not a good economic system, IMHO. The worst part is this will not change anytime soon and unfortunately lead to more wealth inequality. The ruling class has the internet to keep most americans focused away from the problems and spread propaganda so most will never know or actually care and just accept. Great information as always and thank you for sharing.

    1. Payam Sharifi

      Don’t be so hesitant to say the obvious, the ‘IMHO’ is unnecessary. Be more forceful, as long as you know the truth and the details you cannot be wrong.

  3. Thomas F Dority

    Un just taxation that favors investment in and bubbling of the housing market – soon coming to farmland and already in commercial real estate among other areas – like capital gains, tax arbitrage, congressional influence and back door deals to aid in further tax favoritism to the rentier.
    Frankly, an investor will look for the biggest return – they are mandated and legally obliged to operate that way – fiduciary duty and all. Given that everyone everywhere, generally, are looking for the most efficient and time saving way to ‘earn’ a living and, because of tax favoritism and maneuvers to remove the profit limiting effects of tax, thus making it easier to profit – speculative investment is driving up the cost of living in those essential markets. One of many ways (tax laws) to limit it’s spread would be the removal of depreciation expense hokey-pokey that increases capital gains at tax favored rates (increased profit with increased home cost) and increased depreciation expense (lowering taxable income) — of course, when you trade or sell parts of portfolio to a new owner – that new owner investment gets to restart the whole depreciation expense hokey-pokey.
    Why depreciation when the value of property is going up???
    I could be wrong, but the tax laws are what a large part of the Hokey-Pokey is all about.
    It’s not about evil living at the top with diabolical plans of world domination (for the most part) but about a metastasis of compound interest and maximizing shareholder value….business competition (mainly financial business ‘services’ ) maximizing tax efficiency and the baseball card traders (wall street) take home…. at the expense of the real day to day economy (industrial economy) that most of us live in

    1. JR

      Tax professor Deborah Geier a number of years ago wrote that income inequality is worse after the imposition of tax than before it. Kind of hard to believe, isn’t it? Well, actually, no, not that hard to believe… :-(.

      1. Jeremy Grimm

        I have no idea how Deborah Geier concluded: “…that income inequality is worse after the imposition of tax than before it.” Perhaps you could further clarify this point.

        The progressive tax schedules of mid-20th Century America seemed to work reasonably well at constraining income inequality. The earlier inheritance tax laws also helped. Neither of these taxing regimes were entirely successful or without flaws, but they did work much better than our present tax laws and their enforcement. As for redistribution — I believe that would be less helpful than providing U.S. Government and State Government provided services of at least the level of the mid-20th Century. Many New Deal programs and their offspring worked reasonably well.

        There are also a few banking and investment laws put in place after the Great Depression that seemed to work reasonably well until they were methodically removed in deference to the doctrines of Neoliberalism and Money Politics.

        1. redleg

          I’ll bet that that conclusion was reached by analyzing current tax and income data, not mid- 20th century data.
          I haven’t looked into the numbers, but my hypothesis is that income inequality is inversely proportional to progressive taxation.

          1. JBird4049

            The more wealth one has and the more one’s income is not from wages, the more loopholes one has to avoid taxes. If nothing else, FICA 7.65% hits a person’s wages even if they don’t pay income taxes.

            The reduction in the income tax rates have occurred at the same time as all the umpteen loopholes in the tax code. I could go on a very long rant, but there are books on all this, and people much better informed and better writers have covered this.

            As I remember it, FICA puts more money into the Fed’s accounts than corporate income taxes. We really need to reduce the tax code to its relatively simple pre 1960 state, return to the late 1960s tax rates, quadruple the IRS budget, and expand the EITC (earned income tax credit) to its 2021 level but doing any of this would require either the deaths of both major political parties or the near complete replacement of their mid level and senior membership.

            I am really opposed to any violent pushback, but it seems like our ruling elites do not care about anyone or anything excepting themselves, and will only accept a tumbrels-and-heads-on-pikes level of violence before allowing the needed reforms.

        2. JR

          See Geier, Unsolicited Advice for Democrats, 2005 TNT 108-21 (June 7, 2005) (“The distribution of the tax burden worsens inequality because there is less income inequality before annual tax bills are paid than after they are paid … In other words, the government should not be intervening through the tax system to make the gap between the very rich and everyone else actually greater than it otherwise is (in the absence of tax)”).

          See also Hungerford, Changes in Income Inequality Among U.S. Tax Filers Between 1991 and 2006: The Role of Wages, Capital Income, and Taxes, at 19 (“By far, the largest contributor to increasing income inequality (regardless of income inequality measure) was changes in income from capital gains and dividends. The large increase in the contribution of capital gains and dividends to the Gini coefficient, however, is due to the large increase in the share of after-tax income from capital gains and dividends.”).

          1. JR

            PS-DuckDuckGo Emmanuel Saez and Gabriel Zucman for general background on the topic and also take a look at their book: The Triumph of Injustice.

    2. Dan Walsh

      PE lobbyists dictate the tax laws.Makes churning these large portfolios infinitley profitable.

  4. JR

    From anti-competitive price collusion in residential rental markets, to the acquisition of all forms of medical practices, nursing homes, and the acquisition of housing as described in this article, to many other things perhaps to numerous to mention, it is getting harder and harder to escape the conclusion that many of our elites want us to do nothing other than toil and labor and live under grinding conditions all the day and night long.

    Further, it seems pretty clear that the PMC-Centrist Dems and Standand-Issue Repubs have no inclination to try to fix things. Thus, I have to applaud Rep Khana’s efforts, even if they are currently futile. My hope is that the current conditions (which will likely get worse) will generate a new class of leaders who can run for office and bring these issues forward (perhaps some NC readers will be moved to run for office) and make a real run at changing things for the better.

    1. mrsyk

      We are serfs. You mention price collusion, a subject I consider central to institutional investing in real estate. The illiquidity of real estate makes it a particularly fertile ground for fictitious mark to market valuation. This is an important tool to maintain collateral pool value on leveraged positions. If I was a congress critter inspired to push PE out of real estate, this is where I would focus.

      1. Wombat

        Non-occupancy tax or HOA non rental clauses in the covenant seem like a good start at the local level too.

  5. Dwight

    Author says we need to start redistributing. Should say we need to stop redistributing and start reversing redistribution.

  6. john r fiore

    I was reading an old national lampoon parody of the average sunday newspaper, and the real estate section, very funny, showed ramshackle homes being sold at very high prices….today, incredibly, its a reality….

    1. NYMutza

      Every day in my news feed from local media I get stories about this and that ordinary house being sold for some outrageous price. The tone of the stories are always positive, as if ever increasing housing prices are a good thing. However, there is a point to make that existing homeowners just LOVE high housing prices. So do tax assessors. The entire housing “market” is a total cluster****. Them that has gets more, them that doesn’t have never gets any.

  7. AGW

    Every day I get at least 3 or 4 calls asking if I’d like to sell my house. Most of these calls are supposedly from numbers with my North Carolina area code and most of these have callers with an Indian sub-continent accent. Occasionally I call back and invariably find that the number is out of service.

  8. Carolinian

    It sounds like this is more urban than rural so far and that may account for the lack of greater voter outrage about the new feudalism.

    In big cities ranging from Atlanta to Phoenix, deep-pocket investors have accounted for between a quarter and a third of local home purchases. The impact of this deep-pocket dabbling in the sale of middle-class housing? Corporate landlords turn out to be more likely, a Vox analysis points out, to evict tenants, raise rents, and dodge needed repairs and maintenance.

    I doubt that many homes in my town are PE owned even if it’s so very common down the road in Atlanta. But places like Atlanta and Phoenix and CA have long been high growth areas whereas that wasn’t true in my town until recently. Instead what we are now getting is a huge increase in apartment complexes and new home subdivisions not unlike what happened in Atlanta decades ago. So one result of the above described phenomenon could be to squeeze the less affluent out of those large cities into smaller cities around the country. If the Dems have a strategy they might consider how their kowtowing to Wall street is hemorrhaging their usual base. Instead it’s more I’ll be gone you’ll be gone after they get enough campaign cash to at least stick around another term. Demographic politics are their Hail Mary hope and it won’t save them.

    1. TheMog

      I would call my area semi-rural, just far enough away from both Pittsburgh and DC that a daily commute isn’t really feasible. Even here, it’s somewhere between very hard and close to impossible to find a halfway affordable rental for the last few years, although I suspect that it might be more a case of vacation homes than PE buying up anything that’s not nailed down.

      1. earthling

        Yes. An awful lot of homes are falling into this category, the second home, the snowbird home, etc. Upper-class households monopolizing multiple properties per household, while driving prices out of the reach of middle class people who need one place to live.

        You can restrict corporate ownership, and we should, but an awful lot of the housing ‘shortage’ is from individuals and families, who no doubt feel they have a perfect right to hold their wealth in real property instead of all in securities. But they have created a warped market for everyone else.

        1. JBird4049

          Aside from sheer greed, after the house that is your home, then that vacation home, and maybe that small house for the family members or friend in need, just what else do you **need**? I have never understood the need that some people have to keep buying yet another house or to keep trading up. If you like a house and it is good enough, why move?

          At least with that car collection, one can drive them and work on them. Or books, guns, stamps, or porcelain. Hobbies are fun. But I don’t see adding Baronial Mansion #18 to your portfolio is going to bring you more happiness or financial security.

    2. NYMutza

      Don’t forget the 10 million “illegals” Biden plans to legalize and turn into Democrat voters.

  9. LAS

    Yeah, well, free markets are auctions. It matters little how much money you’ve got in the absolute sense. What matters is the distribution and disposition of the people with more money than yourself.

    1. tegnost

      free market? You’re bidding against behemoths who got free money for 15 odd years, and Paris, air bnb is the same thing on a different scale

      1. LAS

        Exactly. That is just what I meant. It’s an auction and they’ve got more money and the will to prevail. An auction does not mean you get to buy on the cheap. Quite often just the reverse. It means you are bidding against others. There are a lot of ways to manipulate an auction.

  10. Mark

    In my view, the author has cause and effect mixed up. Overly strict zoning and other laws have created a shortage of housing, causing an increase in prices and rents, making residential homes attractive to investors. The solution is to encourage more homebuilding, both by governments and individuals, especially denser residential units near public transit lines, by eliminating legal barriers to residential construction.

    1. Wombat

      Great. And now much of the new subdivisions being built by our gracious “affordable housing” providers are whole complexes of rentals- a spread out, picket-fence apartment complex.

      1. Joe Well

        Where *haven’t* you seen overly strict zoning in the US? It’s illegal to build even a four-unit apartment house in most places, and even in places that are zoned for multifamily, there are strict issues with height, design, setback, etc. that often make it impossible.

        1. TomDority

          If you can neither design or build under the extremely lax building codes or zoning regulations then you ought not be in the business of building housing. Codes are minimum for safety reasons zoning for community reasons – like not building a chemical plant in a residential neighborhood.
          Even with these minimums – you got people with enough cash to get around it sometimes.
          But for the most part – if you can’t meet these minimums you should not complain how tough it is but instead – find a different occupation

          1. Joe Well

            We are not talking about chemical plants or anything like that, did you even read my comment before replying? This is about codes to forbid apartments or even just small houses. In most parts of most suburbs, the existing zoning codes explicitly forbid multifamily dwellings, or cap heights at ridiculously low levels, or forbid even very minimal commercial tenants like corner stores which offset construction costs, or mandate large numbers of parking spaces for buildings where most of the tenants won’t be driving (like senior housing), or require community input which is just a way for bigots to prevent affordable housing, and many other codes that otherwise make new construction impossible. This is far more common in the US and Canada than most other countries.

            1. Deborama

              Tom, you’re obviously unfamiliar with New Jersey, the Regulation State. You can’t build SQUAT in Jersey except luxury homes, over-55s, and rental complexes. Every town in Jersey is anti-growth and anti-building and anti-development. Every single homeowner wants no more properties ever built in his town so the value of HIS property can only go up! Zoning and housing board meetings are overrun with NIMBY types, often seniors with time on their hands, no kids in school, and quite a bit of not-so-hidden racism and classism.

      2. samm

        I saw a link here on NC the other day about lying where if you repeat a lie enough times then people start to believe it. Where I live a typical house can go for a million bucks, and real estate developers, landlords, financial analysts, and newspaper columns all claim the only reason is because the city has too many regulations. And we also have the group of people who call themselves urbanists and see themselves as great housing crusaders who go to great lengths fighting some good fight. But really they are just PMCs who think the best way to fight their crusade is to directly cater to the wants and needs of the above mentioned interests. And oh how indignant they get because those durn government regulations and high taxes are the most simple and clear causes of our housing troubles. It’s really easy to see, just ask anyone with a financial interest in the real estate sector and they will tell you it’s all true. /s

  11. Synoia

    Every house I have 0wned is now is now worth over $1,000,000

    Including The one in Raleigh NC we bought for $150,000 In the mid eighties.

    1. NYMutza

      If you do the math, a house purchased for $150K in 1985 and worth now $1M appreciated on an annual basis of approximately 5%. Big money isn’t being made by those who buy and live in residential units for decades.The residential units are roofs over the head, not lucrative investments.

        1. NYMutza

          One used to get 5% risk free returns from simple passbook savings accounts until the central bank completely screwed things up.

        2. TomDority

          Where is a 5% return if you got to find a new place after you sell the old – it’s a zero sum gain IMHO – so sure, sell yourself for the gain and live without shelter to realize that return

  12. David in Friday Harbor

    Funny that Yves should link to an article about the alarming rate that houses in Las Vegas are being snapped-up by “Wall Street” speculators as very attractive investments to be collateralized and securitized. Could the laws of Supply and Demand have some bearing on why these homes appeal as speculative investments?

    A look at the U.S. Census Bureau QuickFacts page for Clark County NV (Las Vegas and environs) shows that the current population is 21.8 percent foreign born.

    Again and again, migration and U.S. Federal immigration policy are distorting housing and infrastructure demand. Somebody’s got to change the sheets and empty the ashtrays at the casino. Employers are bribing their congress-critters to take advantage of the unprecedented global over-supply of human beings in order to engage in wage arbitrage.

    Housing has become appealing as a speculative and extractive investment due to these policies distorting supply and demand. Something’s got to give — but it’s generally the quality of life for the average person that is going to suffer.

    1. skippy

      Demand has increased manifold over the decades and yet even in places like Phoenix, AZ. the price keeps going up, blip in the GFC, and then right back up and then some …

      Veblen had a good handle on this sort of speculation from afar and never mind the socioeconomic factors …

    2. jobs

      Time and again I see housing discussions online where the constant refrain is to “build more housing” (especially multi-story), but nobody talks about the required infrastructure upgrades to support all those extra inhabitants, plus discussions of the unrestrained influx of people to put pressure on both wages (down) and housing prices (up) over the last 2 decades, in part prompted by US foreign policy, are suspiciously absent.

  13. Trisha

    Now 70, I was born and raised in San Francisco, first born of seven kids. My dad – a partially disabled WWII veteran – worked as a clerk in the post office, and my mom worked part-time as a telephone book binder. Over the years they purchased three houses, upsizing once, then downsizing as kids grew up and flew the coop.

    In September 2021, after the death of my mom (my dad died in 2009), I sold their 1,200 sq ft house built in 1929 in a nice San Francisco neighborhood for $1.46 million, to a couple from China who paid in cash, 15 day close, no contingencies.

    My brother – who lives close by – later discovered on walking by the house that it was being gutted down the studs and totally remodeled, to the tune of $700,000 according to the contractor. In September 2022 the house sold for $2.68 million, roughly netting a cool $520,000 return over a single year.

    Which is more than double what my parents paid for any of the houses they purchased. In any event, the beautiful city I grew up in has now been hollowed out between those with extreme wealth and those in extreme poverty. I got squeezed out of the Bay Area by high housing prices in 2000, eventually to land in a more affordable – at that time anyway – Oregon – where the house I purchased is now (according to Zillow) worth 3x what I paid for it.

    1. JG

      Trisha, you may be my neighbor; Southern Oregon? Home of the Shakespeare Festival, and currently, light snowfall.💙❄️💙

  14. dao

    A poster child for what happens when investors buy up all the real estate is Springfield, Missouri.

    It has some of the cheapest housing in the U.S., but it is not affordable given the incomes in the area. The homeownership rate is an abysmally low 42%.

    It currently has drug and homelessness problems rivaling big cities on the coasts and a crime rate that is off the charts for a city of its size.

    It wasn’t always this way. For decades it was an affordable place to live with an average crime rate. Not any more.

  15. Jeremy Grimm

    Perhaps homes should not be treated as investments — as commodities like any other commodity. Perhaps home ownership should be restricted to owner occupants. Michael Hudson has proposed several ways that home appreciation could be better managed through taxing away the increases in value that accrue when public money funds improvements that increase the desirability of a neighborhood.

    The zoning ordinances and fees and delays in house construction tend to favor cookie cutter subdivisions and add to the costs of building housing. The building codes are antiquated and make it difficult to construct the kind of homes and residences we will need in the near future of more violent weather and scarce, costly energy resources.

  16. Karl

    If were going to continue to have high population growth (high immigration) with lower commuting CO2 (and other necessary efficiencies) I see no alternative but to have much higher densities.

    If we don’t want this absurd housing inflation we should encourage corporations and job seekers to move to where the surplus housing is–e.g. the rust belt. Uneven regional economic growth is already a big problem in this country.

    Meanwhile, commercial RE is down, so the financiers need other markets to diversify into. More capital from the financiers fuels more housing inflation, which attracts yet more capital. The next stage is when whole neighborhoods are rezoned under pressure from the banks and financiers to allow much higher densities (from affordable micro studios up to high-end condos).

    The detached single family home may well be a dinosaur. Wall Street may just be facilitating a fairly natural evolution.

    I’d like to see much more capital go into conversion of empty office buldings downtown to other uses, e.g. housing.

    1. skippy

      All of which was kicked off by the Orange County RE model IMO, which it turn was ramped up by RE investor sales seminars [get rich the easy way like I did] with a portfolio of leveraged RE, meets lowing credit risk standards to hand out loans so more MBS can be created and sold on .e.g 25+ of risk for a payday today, all of which its tendrils snake through the entire financial system and can not be allowed to threaten it … full stop.

      Larry Summers memo meets FIRE sector with a side of elite expectations … we earned it … aka status.

  17. Chi Guy

    So many suggestions for new laws or rules or changes to existing rules. If the fund managers are making performance compensation as a spread against the risk free rate, perhaps the easiest solution is to keep that rate higher for longer and make the asset class unattractive to investors vs trying to manufacture an outcome through more laws. It sounded like this asset class became attractive to institutions during the low rate environment. It won’t solve the houses already institutionally owned but it should stop the asset class from growing?

  18. EDS

    Atlantian here. I live in a desirable neighborhood, in a county directly north of town (OTP – outside the perimeter, for those in the know). School districting makes ALL the difference out here. The exact same house design, built by the same company will sell for $100-$150k more in one high school zone vs. another. It’s crazy because we have a senior exemption for school tax – so anyone over 65 doesn’t have to pay for the schools, but they dang sure get to reap the rewards that good schools bring to their property values.

    1. TomDority

      senior exemption for school tax – so anyone over 65 doesn’t have to pay for the schools
      They may get a slight break but, never heard of exemption – ever – send more info please

      1. EDS

        There are exemptions for seniors from all “School General” and “School Bond” taxation in the following Atlanta area counties that automatically activate at various ages: Cobb County(62), Gwinnett County(65), Cherokee County(62), Forsyth County(62). It’s exceedingly popular around here. And, not at all annoying very often members of the school board are over 62/65 – so you have a situation where people making policy decisions for the schools don’t provide any contribution other than the use of their stellar intellect in approving funding and resource allocations.

          1. EDS

            Exactamundo – pretty much every white person over 60 in the metro Atlanta area is a fairly right wing Republican, so as I mentioned, these policies are SUPER popular among the voting class here. “Pulling the ladder up” is their motto.

  19. Oldtimer

    the real question is if this would be happening if we had true market rates of interest, mark to market accounting and no bailouts

  20. Paul Art

    I am curious as to why the famous “demand-supply” dynamic is not working in the housing market. I suspect it is because of collusion and deliberate under building by the few builders in the market?

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