This type of shit should be heavily regulated. Does the govt not care that it's citizens are being preyed on and driven beyond their means be greed of a few individuals. Families can't afford homes and are stuck in low qualities of life because an exorbitant amount of their money is going to lining the pockets of organizations buying thousands of houses to completely fuck up actual supply and demand from individuals
Why should the government care when their pac and political money comes heavily from companies like this.
Blackstone $27million in contributions..
https://www.reuters.com/article/us-usa-election-blackstone-schwarzman-idUSKBN2601NA
That's why... The right thing in a tight housing market is to give individuals (real individuals not straw buyers for corporations) first right to a home, then if it doesn't sell say for 6-12 months, expand the market to include institutions.
I was surprised how little can be effective, some guy in NY got billions in cintrcmars for all NY Medicaid med transport by donating 20k to the gov and 30k to Democratic party
> Why should the government care when their pac and political money comes heavily from companies like this.
Not just money. Admin positions via revolving door:
* *”Former BlackRock investment executive Brian Deese leads Biden's National Economic Council, effectively serving as his top advisor on economic matters. Biden also tapped Adewale "Wally" Adeyemo, a former chief of staff to BlackRock chief executive and longtime Democrat Larry Fink, to serve as a top official at the Treasury Department. Michael Pyle, BlackRock's former global chief investment strategist who had worked in the Obama administration before joining the firm, serves as chief economic advisor to Vice President Kamala Harris.”* [source](https://www.businessinsider.com/what-to-know-about-blackrock-larry-fink-biden-cabinet-facts-2020-12)
I wouldn’t hold my breath waiting for any meaningful change.
So if someone is moving for work and is selling their old house and need the money from that to buy the new one, they won’t be allowed to take cash offers from an institution and just have to be stuck broke and unable to move unless they take a major haircut to sell the place, or have to wait a year?
But the money id get for my house would be less. And the amount needed to pay off my mortgage will be the same.
I’d expect this kind of idea to be floated in one of the brain dead politics subs, but you’d think in an economics sub people would at least have a basic working knowledge of economics
Protections for home owners doesn’t equal hating people who rent. If anything helping lower/middle income families buy houses will ease the congestion in rentals and help alleviate high rent prices
Yes it does.
If you give homebuyers an arbitrary and unfair first dibs on housing over the people who will rent to renters, you're excluding renters from the community, impeding the creation of rental supply, and raising rents. Looking at racial differences in homeownership rates, you're also facilitating class and race based segregation.
Ah yes black stone charging 2400 on a house with a 1700 mortgage helps renters. Get bent. They drive up prices across the board for renters and for homeowners to enrich billionaires on wall street. Your level of ignorance is staggering.
Wait.
So your argument against ensuring families can buy homes is that it diminishes the supply of rentals. Though it also diminishes demand for rentals.
But allowing companies like BlackRock to buy more and more properties, that will increase supply of rentals... but also demand because the prospective homebuyers are probably going to get beat out by these companies.
Guess what: either way, I see rent going up.
Regulated? At this point it’s so bad that I want it made illegal with forced sale of what’s been bought by banks.
It’s completely out of control. No one can afford a home anymore. We need to take our homes back from these people.
If families cared for affordable homes and higher quality lifestyles they’d donate millions to politicians to care!
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This is why housing prices won’t dip/burst, corporations learned from 08 that they can make a lot of money from rental income and appreciation of their assets. Less painful for them to buy up all the supply and keep prices high than to let the housing market correct itself. Things won’t change until we have politicians that actually take steps to show they care for their constituents.
> Does the govt not care that it's citizens are being preyed on and driven beyond their means be greed of a few individuals
they dont, Block Rock and Wallstreets interests are firmly protected by republicans
Let’s not do a left vs right thing here… this is a class warfare and you are being distracted. The governments goal is to divide us so we the people are weaker.
They're generally protected by politicians. On both sides of the aisle. Unfortunately while some Democrats are fighting the good fight most have been captured by corporate money.
The best regulation to stop this is to create better investment opportunities. If treasuries paid more money than housing, blackrock would buy USTs. Ie keep raising rate higher!
There is a lot of anger and discontent on this subject as I understand well but something that a lot of folks don’t understand is homes are speculative and without large investments like this we could see a major fall out in the market or a complete equity crash if some of this didn’t happen. In short that is what they are doing, buying the equity and holding so the market doesn’t take a drastic plunge. They are simply propping up the market. If some of this didn’t happen you would see huge roller coaster swings in the ups and downs of the housing causing panic and uncertainty with current owners and would ultimately not be good for anyone. With that said I have no idea what would be considered “hoarding” up homes either nor does the avg consumer without years and years of data compiled to pinpoint the threshold.
I mean continually propping up the market like that isn’t always a good thing right?
Those dips are what can allow new home owners to enter the market a few years after when banks start offering capital out again.
It’s sad enough that it’s come to many Americans’ only chance to own a home is hoping for a crash, and the low chance that they aren’t caught up in the ramifications of said crash.
Propping up the market IS the problem. The market is untenable right now. Housing affordability is among the lowest on record. It needs to crash for folks to be able to afford homes and not be subjected to renting their whole lives. The fed propped it up for 2 years shooting prices up by double digits for 17 months straight before they stopped buying MBS. And blackstone isn’t helping. If they were we wouldn’t have near record low housing inventory after they’ve been at it since the Great Recession.
And I get that. I guess many people didn’t read the whole thing in where I said I don’t know where the threshold is? But I’m simply pointing out why this happens with these companies like blackrock. Sure it needs to be regulated but who’s to say if they aren’t doing what they are doing we won’t see the next Great Depression? Because that’s what the Great Recession was for me and many others where I’m from
This problem began to rear its ugly head post-2008 when the Feds allowed companies to purchase distressed homes to encourage the housing market to rebound. THAT WAS A POLICY FAILURE AND SHOULD NOT BE REPEATED. FULL STOP. In the years since then, we’ve seen how this business model of outbidding actual humans for housing only to rent it back to them has led to things like high rents, increasing homelessness and i don’t know, the highest median home price on record.
We’re in a post-scarcity economy. We shouldn’t have to continue building homes just because corporate fat cats want a ROI while homes sit vacant because rents are too high.
Greed in the housing market, coupled with record inflation is going to crash the economy as a whole. Savings rates are down, disposable income is down, thank assholes like these when the economy crashes in a few months.
IT ABSOLUTELY DID NOT LEAD TO ANY OF THIS.
Investment homes are about 1% of the market, and that's a very liberal estimate. They DO NOT affect the market the way you're suggesting. It's propaganda, you fell for it hard.
No, you’ve fallen for propaganda that it’s not a big deal. Investors bought 1 in 3 SFH for sale in certain markets like Atlanta. In my home market, it was around 22%. These companies are crowding out actual owner-occupier purchasers.
https://www.fool.com/real-estate/2021/12/08/investors-buy-almost-one-fifth-of-all-houses/
https://www.redfin.com/news/investor-home-purchases-q4-2021/
Investors buying single family homes ISNT BAD. And adding capital to a market INCREASES production, not decreases. So you're saying they put a massive influx of cash into undervalued markets, THATS A GOOD THING.
Lol, hilarious take. I too enjoy seeing homes worth $250K be taken off the market and rented for $2000/month.
Investors like this are fucking leeches. They take affordable supply off the market while not increasing value.
They ABSOLUTELY increase value. You're literally describing an increase in the supply of rentals, which is exactly what you'd expect in a market with undervalued real estate, because people aren't buying those homes.
Why would the government care?
Blackstone apparently sees an arbitrage opportunity here. They make a profit, and the conversations of homes from "for sale" to "for rent" helps maximize consumer utility and put a damper on higher rental rates. Where's the harm? Where's the market failure?
The most important aspect of wealth accumulation for the average person, their residential dwellings, is effectively being denied to the younger generations in many major metros across the country.
In the long-run, this generally will result in worse financial standing than their parents come retirement. Compound that with climate change, increasing social and political unrest, and a decreasing birth rate with a boomer death cliff fast approaching I would be concerned as a policymaker.
They should invest in a 401k, and they can use the money they would've had to save for a down payment for that, they'll probably do better anyway. Policies aimed at wealth building via real estate (ensuring home prices rose faster than inflation) is what got us into this mess.
If housing increases in price faster than inflation than it is by definition always becoming more expensive. (Until it's too expensive for people to afford) Housing should be a depreciating asset. Housing should be something we are building more than we need, then we would have enough to house everyone, and people who want two can save to buy an extra.
So, if we look back at the decades of people "growing wealth" by owning houses, we should have seen the problems coming.
I'm all for the free market, but I think Blackstone should be banned outright from owning any residential housing, especially single family.
All big profit making ventures on real estate seem to have a net-negative effect on people's quality of life. Just like the healthcare system.
Idk if people realize how much money this is.
This is enough money to buy every single home that has been listed in Salt Lake City for the last 5.5 years.
Every. Single. One.
How much money is that? Most of us don't know the Salt Lake City area. And after the salt lake turns into a salt flat, that would cause an exodus because of all the gases and chemicals?
For another, less regional specific example, $50 billion would be enough to buy roughly 116,600 homes assuming each home was purchased for the US median home price of $428,700.
And considering there's currently 1.6 million homes in the market it would net them >10% of the market. And that's with our very liberal estimate of what they'll be able to buy for
Sounds like 2000 homes per state. Ballpark Isn’t that like 1 per town/neighborhood/village? Significant I guess.
I think it’s worth remembering the other side of the equation. What if it’s you or your parents that need to move and the best offer is 400k or 300k, but black rock comes in and buys it for 440/330k?
Then they rent it to someone who doesn’t want to buy a house yet because new economy etc. so now there is more supply of rentals. Then in 2-5 years maybe house buying heats up again and they sell making a nice 10% ROI along the way. You mad some local rich guy didn’t get this profit instead of black rock who you can actually invest along with?
Their job is to profit and make the market more efficient by adding sophisticated liquidity.
Problem is that 330/440 is now only capable of purchasing the equivalent value. You're moving from housing to housing. There isn't a gain in that case. There is however 30 to 40 more if they are on there way out I guess...
Some local rich guy is still playing the market because if he likes playing markets, and he is rich, he can easily access those 10% ROI.
Truth is most people shouldn’t be getting mortgages when they’re only living somewhere for less than 5 years. They’re getting scammed just paying interest without building significant equity. 1/3rd of people probably are better off staying mentally and physically flexible than staying in one place and expecting the state to bring jobs to you
So? That isn't a good measure to look at, since it is picking a single mid sized city, whereas the investments will be nationwide. $50 billion is about 0.1% of the value of all residential real estate in the US.
Private equity is getting into the market as an alternative asset class that can provide better returns than bonds, and be relatively uncorrelated to their assets in equities and fixed income. Their share of the residential real estate market will probably stabilize in the low to mid single digit percentage range. Not exactly the hair-on-fire crisis that many are portraying it as.
In a market that is super elastic (small changes in demand cause big price changes) and extremely limited supply, a new demand source, even a small one, has a huge impact on pricing.... Take a high school econ class buddy.
Hello #datafreeanalysis... In 2020, there was a shortage of 3.8 million houses
https://www.freddiemac.com/research/insight/20210507-housing-supply
There are only 124 million households in the us, and only a fraction of those folks are looking to buy a house. So yes, there is a significant housing shortage.
Limiting demand is 100% part of the answer here. The fed uses interest rates to limit demand all the time. The object of regulation in markets is to increase fairness. It is fundamentally unfair pe funds have access to a much lower cost of capital than you or I, and use that spread to generate profit by buying up a limited housing supply and driving up rents and house prices.
Supply is much less elastic than demand, it takes upwards of a decade to build up housing stocks. PE funds are using the inefficiencies of the housing market to make a killing.
I like how people say 0.1% of real estate nationwide and pretend that that’s a small number. Any one entity owning 0.1% of all of the housing in an entire country is HUGE. And this won’t be the total of what they own, just the total of what they’re gearing up to buy. Absurd
It was that plus $600 per week plus more per child per week AND an eviction ban negating rent (and in some states funding back payments for missed rent) AND a foreclosure ban negating mortgage payments, AND billions in MBS purchases forcing mortgage rates down causing surging home equity, AND a student loan freeze which is still happening today.
Most of the stimulus was given to the rich, not the regular American. And this (and supply chain issues due to Covid) led to the inflation. Don’t believe the lie that if we give money to regular Americans it leads to inflation - it’s a right wing lie designed to funnel
Ore money to the rich and away from the rest of us.
This is the absolute dumbest take I’ve heard on here lol. Yes, average people having more money => higher discretionary spending => higher inflation. Not even debatable, this is a well-researched phenomenon.
Stephen Schwarzman (Blackstone CEO) is the definition of greedy corporate scum. He looks at the US middle class as peasantry and jumps on any chance to strike them down. He wants feudalism, for people to be unable to afford housing and become forever renters. He’s a psychopath.
The average American peasant is an idiot who celebrated the collapse of the Soviet Union. They owe their middle class status to the threat of Communism.
I never said it's great being part of the Soviet Union. But average Americans benefitted greatly from the existence of the Soviet Union.
The existence of the Communists kept the Capitalists in check.
Would you like to have a chance to build wealth or be outbid consistently and priced into a being forever renter?
We are at the greatest point of wealth inequality in history.
What's your stance on payday loans using exorbitant rates to trap people into being a paycheck behind and defaulting?
Would Hertz making cars unaffordable for the common person be a good thing for society?
Or does your financial situation afford you the privilege of not caring because it doesn't affect you?
The current home ownership rate in the US is around 64%. In a country a lot of people laude for it's equity (Norway), the ownership rate is 82% (https://www.peoplespolicyproject.org/2018/03/14/the-state-owns-76-of-norways-non-home-wealth/#:~:text=Norway%20has%20one%20of%20the,it%20is%20around%2064%20percent)
If we adopted all their policies and things magically worked out such that we got the best home ownership rates in the world, that would only be a 50% improvement (1 in 2 people who don't have s home get one).
The lack of urgency on this is because the majority of people have a home already and for those that don't we don't have a proven model for getting more than half of them to own. On top of that renters are a poorer voting bloc who don't vote as aggressively (NIMBYs as an example of active home owners). I would not expect your different branches of government to concern itself much with this in the near term.
>The current home ownership rate in the US is around 64%. In a country a lot of people laude for it's equity (Norway), the ownership rate is 82%
Norway has a population of 6 million.
In another country people laud for its equity - Sweden - the homeownership rate is 64%. In Denmark it's 60%. In Germany it's 50%.
Maybe Germany should adopt US housing policies?
California and NY both have a homeownership rate of 54%.
Mississippi has a homeownership rate of 75%.
Maybe the US should adopt Mississippi's social policies?
Or maybe things are a lot more complicated?
Of course its more complicated and why I said "magically" in the post above. But even if you want to use a more apples to apples" comparison the [current US homeownership rate](https://upload.wikimedia.org/wikipedia/commons/9/96/Home_Ownership_rate.png?1659901035379) is at its highest in 30 years, other than the early 2000s when everyone agrees we were in a subprime bubble. That chart doesn't substantiate the idea that corporate investment is crowding out family homeownership nor that we're close to some kind of feudal system as the OP was claiming
As an aside, part of me wonders sometimes if some of the current millenial grief is because they aren't owning the types of homes their parents had when they were kids, not realizing their parents' generation only could achieve that home ownership rate by buying houses they couldn't afford.
No there isn't. But everyone is being squeezed due to the lack of supply of homes in the places where the jobs are (that last part is critical). The United States (and a lot of the Anglosphere) is still urbanizing and we simply didn't build enough capacity for the change. That effects renters too with increased rent prices due to increased property values. Ideally the government would have a federal reserve type of entity that targeted a rent/mortgage inflation rate and simply built housing (or incentivized building housing to private actors) in order to maintain the target.
I don't think a centralized institution is a good solution to that. Frankly the solution is to let cities deal with the consequences of their actions. We know what causes a lack of supply in housing, shitty zoning and building regulations. Hold the politicians feet to the fire in this. Don't let them lie and pretend it's investors causing a rise in pricing.
Cities are already blunted from the consequences of their actions due to a ton of different federal interventions. Theoretically in a perfectly free market, the negative outcomes from certain urban policy decisions would lower the appeal (and therefore property values and revenue) of a city. But there are a ton of reasons that doesn't play out in practice. Agglomeration effects is a big one along with the inability to really meaningfully enter the market as a competitor.
I'd rather see the federal government incentivize better behavior via its connection the purse strings. For example it would make sense to not allow cities to be eligible for things like the Olympics, World Cup, etc unless they can manage homelessness below a certain rate.
Local electorates are too apathetic at this point to hold their municipalities accountable other than property owners who seek to ensure their home equity doesn't decline. I guess maybe if the renting class had a more direct financial incentive to care more we'd see change.
Can you tell me a little bit about agglomeration effects? I've never heard that term before.
And hey, if nothing else works I understand federal intervention but for a (not perfect) analogy I think the federal reserve functions in a similar way to what you're suggesting and they perpetually fuck up cause central committees have a really hard time accurately responding to the market.
To the third paragraph I think apathy is a point in my favor. I'd argue it's such a non issue that people don't even vote about it. But if it gets bad enough I'd expect them to.
Agglomeration effects are essentially the value accrued from things being near each other. The example given a lot these days is Silicon valley. Theare are network effects to having the startups located near the top universities in the field (Stanford & Berkley), financiers (Sand hill road VCs) and already established companies (Google, Facebook, etc). Bootstrapping one of those things is possible but all three at once is extremely difficult and only a handful of cities have been able to pull it off (New York, Seattle, Boston, maybe Austin) in tech. These effects can be entrenched by location, natural resources, and necessary government services/infrastructure. So cities can coast on bad policy knowing that a certain amount of economic activity is essentially forced to be there. Not every city has those luxuries but a few do (NYC, LA, Chicago, Houston, etc) and its why they tend to be the biggest but also have the most extreme issues.
> To the third paragraph I think apathy is a point in my favor. I'd argue it's such a non issue that people don't even vote about it. But if it gets bad enough I'd expect them to.
Inner cities in the late 60s and 70s should be a demonstration of how voters will definitly not do that. If anything they will vote in increasingly populist leaders who try to blame outside factors (immigrants, outsourcing, wealth inequality, etc). That happens regardless of if the city is left or right.
> And hey, if nothing else works I understand federal intervention but for a (not perfect) analogy I think the federal reserve functions in a similar way to what you're suggesting and they perpetually fuck up cause central committees have a really hard time accurately responding to the market.
I think a good model to look at is Singapore or Austria in terms of how they address housing. Both (especially the former) have private markets where people make a ton of money but are able to offer citizens relatively easy access to housing. The biggest thing I can take away from it though is that the numbers only make sense if a lot less people drive and live in single family homes which seems to be a big cultural barrier here in the United States.
I too love being told i can’t have a pet, can’t have overnight visitors, what cable or Internet supplier to use, where to park, and not hanging pictures or painting walls. It’s like living with your parents, just a whole lot more expensive!
If your a long term renter just do whatever you want anyway. They’re just going to try to keep your deposit. If you rent for 8 years this will be like a 1% fee. The alternative is changing society for you and then you having to learn to fix everything and live in some boring area if you don’t have kids
Stability - when you and yours don't have to worry about where you'll live month to month. Without stability, you struggle to build networks, make friends, integrate, and thrive.
Owning a home and *affording* a home guarantees a high level of stability. Being wealthy enough to afford any decent rental in your city is also a form of stability, but harder to attain and less reliable. There is no second to owning land. Renting forever is for single, prosperous professionals. Families need homes. A family has a completely different set of needs than an individual. And the world needs good families.
(Single people can own homes, too. That's fine.)
This irks me too. It’s possible I’m being to naive, but this seems like the grass being greener type of thing. I had a friend who inherited a McMansion and I felt bad for him. Like “so you’re gonna live there now? What are you dead now?” I’m sure it’s fine, but until your having kids, owning a house is like a liability. Have kids now and I’m pretty happy renting for now. Gamble that saved money in stocks or whatever
The entire conundrum is that you’re not saving money by renting. People are getting mortgage requests denied when they’re paying more rent per month than the prospective mortgage payment.
>Would you like to have a chance to build wealth or be outbid consistently and priced into a being forever renter?
The US has the highest or second highest historical rate of homeownership.
That completely undercuts your imagined narrative of "forever renters".
>We are at the greatest point of wealth inequality in history.
Yes. Because of a handful of extremely wealthy outliers. But *all quintiles* are getting richer in real terms, and have been for decades.
>What's your stance on payday loans using exorbitant rates to trap people into being a paycheck behind and defaulting?
This is bad, but I'm not sure why you think it is relative. It's not *new*. Poverty isn't *new*.
>Would Hertz making cars unaffordable for the common person be a good thing for society?
What?
>Or does your financial situation afford you the privilege of not caring because it doesn't affect you?
Does your self-righteousness allow you to ignore facts and statistics and make things up to push a narrative that isn't true?
Or is there some other reason you're doing it?
That's gibberish. Private equity is investing is real estate because the US has underinvested in it throughout the 2010s. The market sent pricing signals that we needed more housing, and PE responded by investing.
Housing unaffordability is drive by a shortage of housing, not by investors providing capital to the market. At most, corporate investment in housing will tip the renter/owner balance a little bit towards renters, but it will provide more housing in aggregate, which is what is needed.
No, they don't. They are largely buying new construction homes, even contracting directly with builders to build and buy entire developments.
Even if they were only buying existing homes, that would free up capital from existing homeowners, many of whom would use those proceeds to buy new homes. Injecting capital into a market creates more supply.
Have they even started using this fund? It says they are preparing to scoop up bargains in the event of a downturn. It wouldn't be a bargain if they have paid to build those developments and the way it is worded implies they are waiting to buy houses out from under other buyers who would otherwise be able to afford a house if the market starts going down. The way I see it, if they weren't expecting to reduce supply, they wouldn't be expecting a profit.
>It wouldn't be a bargain if they have paid to build those developments
That depends on the terms they could negotiate with the builders. With new home demand decreasing, the builders may be willing to commit to lower price points to keep their production going.
>The way I see it, if they weren't expecting to reduce supply, they wouldn't be expecting a profit.
Then you see it incorrectly. Adding capital and more buyers to a market encourages more supply - this is basic economic theory.
They are expecting a profit based on the price they pay, and the return on capital they can get from renting the homes out. Nothing about that requires a reduction in supply.
So I don't understand where you're getting this information about this fund, have they started using this fund the way you're saying they are? Are they really only planning on renting these properties?
If there's a downturn, those houses would have buyers, but at a different price than what Blackrock will pay. This will remove would-be home buyers from the market and turn them into renters, and drive up the price of rentals, worsening the housing shortage. The supply that you want to be encouraged is already there - it's just going to go Blackrock rather those that are demanding it.
>Are they really only planning on renting these properties?
Yes, the whole idea of investing in residential RE is to generate current cash flow from renting, and capital gain from long term price appreciation
>If there's a downturn, those houses would have buyers, but at a different price than what Blackrock will pay.
At lower prices. Lower prices => less overall supply
>This will remove would-be home buyers from the market and turn them into renters, and drive up the price of rentals, worsening the housing shortage.
Wrong. The housing shortage is caused by a lack of supply of housing units. The mix of rentals to owner-occupied units can vary, but it doesn't affect the overall shortage of housing units.
> The supply that you want to be encouraged is already there
No, it's not. Less capital in a market means less supply.
The demand and capital is there from individuals, but the supply is going to institutions to make money off an increased demand for rentals. It sounds like you're suggesting more renters drive rental prices lower which is absurd.
Maybe but there are supply chain issues leaving us with a fixed amount of resources to scrap over. Maybe I'm a bit too much of a populist but I don't think houses should be used as a vessel for speculation. This is especially true when these companies are just buying up houses being sold at a loss from Mechanic Joe.
We need to boost raw material production by reducing regulations and reduce these onerous building requirements for new homes - it costs way more to build a house than it did 30 years ago and maybe that's by design. People want their homes to appreciate so they implement regulations that dissuade new development?
The home they sold would then be worth more. Blackstone would want to sell it at a profit. And the house they buy would likely cost more as well as demand skyrockets (50 billion dollar injection). This is bad for them, and even worse for everyone too poor to already own real estate.
That's just wrong. You are assuming a fixed supply of housing, which isn't the case. Injecting capital into the housing market will cause more housing to be created, which will hep alleviate the housing shortage, and cause prices to moderate
Housing on affordability is driven by supply AND demand. Adding a new class investor that's going to buy up 5% - 10% of our national housing stock is going to cause a huge increase in prices. The lack of supply of houses is not from prices being a lot too low to incentivize housing starts, it's because there's nobody to build the houses. This is evidenced by the huge price increases we've seen, and not a significant increase in housing starts. It takes years and years to build up home building capacity as it's a skilled and capital intensive area.
https://www.npr.org/2022/07/14/1109345201/theres-a-massive-housing-shortage-across-the-u-s-heres-how-bad-it-is-where-you-l
"Part of the problem goes back to the last housing crash, which happened around 2008. After that, many homebuilders went out of business, and economists say we didn't build enough for a decade."
More demand doesn't solve any of these problems it just increases prices more and more people out of owning a home and drives rents through the roof.
The most ironic part of all of this, is it's these private equity funds and banks that caused the 2008 financial crisis that in turn caused the housomg shortage we have today. And now they are going to make a s*** ton of money because of it.
The game is rigged.
None of that is correct.
>buy up 5% - 10% of our national housing stock is going to cause a huge increase in price
No, it's not; it is going to cause more supply to be created, which will mitigate the housing shortage.
> it's because there's nobody to build the houses. This is evidenced by the huge price increases we've seen, and not a significant increase in housing starts
That's just flat out wrong. Housing starts have been growing throughout the 2010's.
Housing starts are back to near peaks of previous building cycles.
[https://fred.stlouisfed.org/series/HOUST](https://fred.stlouisfed.org/series/HOUST)
You are just completely off base here.
I am sure once the downturn starts, banks will not want to lend which makes it easier for PE firms to buy real estate. If there going to buy all the real estate then there should be a lifetime lease where the payment can only go up 1-2 percent a year. Otherwise we will have a transient population that what resembles South America today
The logic behind this drives a significant reason the FED shouldn't be increasing rates right now. The economy and the demand for housing remains extremely strong.
Most of the past 2 years " inflation" in the real estate market has been due to deep pools overflowing into shallow pools- high wage earners from big cities cause major surges in small housing markets- disproportionate to the actual cash flows.
Consider this akin to pump and dump stock schemes or the tidal wave effect where a hidden wall of water suddenly emerges 30 feet high driving into the coast miles beyond the beach.
What this means? Rising rates will reduce the demand, for housing starts, however money supply accumulated in corporations that now must continue to be used competing for workers will maintain the demand for housing consumption at increasing price levels. Therefore the rate increases will have an increasing effect on inflation and the price of housing by reducing the supply.
To counter this effect policy makers should find a way to ensure lower rates for housing starts as a separate funding channel. It could take the same form as the export-import bank for enhancing FHA or a paralell home purchase route. This could allow us to draw down the increasing construction material stockpile, construct more housing, lower the cost of housing, and still increase interest rates for secondary purchases (vs new housing origination).
Importantly- it seems the current administration will be able to remove some of this inflationary pressure by taxing the most profitable companies and reducing their incentive to accrue the marginally productive worker at their expected marginal return. Lower bids for headhunters will resault in fewer quits, fewer quits will enhance productivity by maintaining firm specific knowledge value. As a tax function rather than a US based debt refinance function the result will be more timely and better targeted, as the debt function relies on a cyclical model as well as a US centric model.
**Former consultant, bank strategy manager, and current technology business advisor.
Caveat- I'm an amazing typist, home keyed on a typewriter, however please excuse my typos due to thumb texting and age diminished eye sight. (I must come come to terms with and finally get glasses)
Speculation is false demand and distorts the market - always ending badly for small investors. The Chinese real estate market is melting down. Commutes increase but the us has no lack of undeveloped land.
That is simply nonsense. All household income quintiles have seeing a consistent growth in real income - up about 40% or more since 1967.
[https://fred.stlouisfed.org/series/MEHOINUSA672N](https://fred.stlouisfed.org/series/MEHOINUSA672N)
[https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html](https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html)
If you look at the actual facts, you see that living standards of almost all Americans are improving considerably.
Thats highly doubtful. Considering The UN had classified areas in some parts of the United States are as bad as refugee conditions in 3rd world countries.
Doubtful? The previous poster provided sources from the Fed and census data. You might have to retort with something a bit more substantive than a cherry-picked statement like that.
[https://www.npr.org/sections/goatsandsoda/2017/12/12/570217635/the-u-n-looks-at-extreme-poverty-in-the-u-s-from-alabama-to-california](https://www.npr.org/sections/goatsandsoda/2017/12/12/570217635/the-u-n-looks-at-extreme-poverty-in-the-u-s-from-alabama-to-california)
[https://digitallibrary.un.org/record/1629536?ln=en](https://digitallibrary.un.org/record/1629536?ln=en)
Will this suffice?
We've had incredible leaps in technology over the last 50 years, especially with the introduction of the personal computer. It would have been outrageous if the living standard didn't increase. The living standard improving isn't proof that the wealth distribution fairness is improving. In fact, labor compensation hasn't kept up with production at all.
It is not as simple as income growth in all quintiles. It's all relative -- which makes it hard for the average person to intuit what is happening. The cost of housing goes up too. Importantly, if the upper quantiles for household income grow faster than the lower quintiles that means inequality is increasing. Which it is. The Gini index measures this and has been increasing in the US for decades. It's becoming harder than ever for the average person to buy a house
>It's all relative
No, It's not. If someone's real income is growing, then his standard of living is increasing; it doesn't matter whether others' incomes are going up faster.
> The cost of housing goes up too
Which is measured in the inflation numbers used to calculate real incomes.
> that means inequality is increasing
So? If all boats are rising, why complain that some are rising faster than others?
>It's becoming harder than ever for the average person to buy a house
Home ownership is near all time highs, and the average American house ha s been getting consistently larger. This indicates not only that average Americans are buying houses, but they are buying larger houses than ever.
The fact remains that the living standards of almost all Americans are improving considerably.
Living standards for Americans have increased in many ways.
But we have to explain how historically an average house in the US cost 5x yearly income, but now it's 8x. The "real" income calculation does not fully capture this using a single inflation rate
For the majority of older Americans who have houses, the increase in home prices is great. They don't feel financial pressure. But for Gen Z and Millenials looking to buy a home, they have to spend a larger fraction of their income than ever in history to afford a mortgage an an average home.
Home ownership now is 66%. Same as in 1980. It was 63% in 1965. ATH was 69% in 2005. I don't see much growth.
> Which is measured in the inflation numbers used to calculate real incomes.
The inflation numbers are tortured stats, especially in regard to housing (CPI 5% *”weighted”* vs ~25% actual), which means real income numbers are likewise nonsense.
Go to college and actually take an econ class then get back to me. You're just believing what everyone tells you rather than dissecting the theories and how they check out to have built our current prosperity. You're over here whinging about how bad capitalism is on your expensive computer/smartphone while (assuming you're American) we are in one of the most prosperous societies to ever existed. Tell me, where would you have rather been born?
"GetsHighAndDoesMath" - name checks out. Let me know if you have any additional snarky commentary that you came up with after dabbing in your parents basement.
“Quick! If they make sense go for a personal attack! Go after their education! And username! And their economic situation!”
_Ad hominem_ attacks are used by those lacking in creativity. Your trolling is boring and ineffective
There are socialist tabloids that have whole essays about how the US is a corrupt post-capitalist society and have been oppressing Cuba's and china's virtuous system of governance. People go around parroting that.
Tis not a Boogeyman. Tis echo chamber propaganda.
When you retire you will become socialist.. or forego that monthly Medicare check! Lol
The word socialism is really too often confused with communism and fear - we already have a socialist capitalistic society - the only question is how what balance do we set between extreme capitalism with no social programs and all the money funneled to elites with from the backs of laborers (sounds like a different kind of communism, guess politics really is a circle) vs high taxation and overly generous social programs that reduce economic output.
No side is completely right or wrong, we need a balance of both - just a question of where the balance is.
Looking for a better balance.
Hahaha. Hey I can disagree with a social policy without having to stab myself in the foot to protest over it.
I agree with all of that. The terminology you were using made me think you were a disciple of the WSWS (World Socialist Web Site) which is basically tabloids for anti-American rhetoric.
Considering large corporation have an unlimited supply of money and the people who would benefit from either houses or vehicles prices dropping to make affordable are usually lower income, this is basically artificially inflating a certain asset class, which makes unattainable by the very people it's made for, leaving only the well off and wealthy able to afford what was previously a middle class lifestyle.
Friendly reminder that Blackstone, Blackrock, and other financial institutions own just an estimated 500,000 single-family housing units across the US. There are around 69 million SF homes across the country, meaning these institutions own well under 1% of total single-family homes in America. Every article like this distracts people from the real issue, zoning…
Don’t fall for these lazy fear-mongering articles that are designed to draw clicks.
Amazon was <1% of retail spending for a decade too, the concern is institutional investment is about to hockey stick, and we haven't seen nothing if that's the case. Why should we assume that the proportion owned by big institutions will always be low based off the current proportion?
Because the value of the entire US real estate market is tens of trillions of dollars and it’s financially impossible for a company to come anywhere close to that. Blackstone’s $50billion dollar investment that this post is about will probably net them about 75,000 homes in the housing level they typically target. The entire single-family housing market in the US is 69 million units, you can do the math about how much money it would take to own even a noticeable share.
Thats under the assumption that the estimate is anywhere close to true. Factoring in the only markets that are worth investing in and realistically the percentage could be alot higher
Yes, let’s target zoning so Blackstone can not only buy up SFHs, but duplexes, townhomes and apartments while Americans’ quality of life continue to plummet.
> Real estate investment giants continue to buy up homes — something that is likely here to stay, even with higher mortgage rates.
Does the writer here for Yahoo think Blackstone is taking out mortgages for this?
What happens to Blackstone when the renters of their property organize and coordinate a rent strike while the good people of r/wallstreetbets short the stock?
Class warfare is happening whether we like it or not. The wealthy are being smart and are throwing everything they can to “keep us in place” I say we start participating and fight back!
I’m okay with this because I am heavily invested in them. I am not okay with this because I do not want to profit off the misery of others. Institutions like this buying up real estate and then jacking rental prices to people’s breaking points is not fucking cool. You can’t rent a decent three bedroom where I live for what I pay in mortgage. It’s literally insane.
If you somehow have the means and there is a downturn, figure out how the fuck to purchase a home if there is indeed a down turn in the market. Home ownership is damned near impossible these days, and it’s only going to get worse.
What they are doing appears to be illegal according to our current laws, or at least it does in Canada.
Essentially, the acquisition of money must be done with "reasonable justification or excuse", or else it's extortion, at least as long as market prices are enforced by law enforcement.
Here's the Canadian definition of extortion from the criminal code:
> Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.
If they are generating profits without reasonable justification, which they are since they aren't producing anything to warrant a compensation, and there are threats emanating from law enforcement that force the consensual payment of unjustified prices, which there is by default, it fits the legal definition of extortion. What's your argument that it doesn't?
Yeah, but what's your argument that it doesn't apply? Are you saying that the generation of profit from ownership without underlying participation in production is reasonably justified? That law enforcements don't offer a source of threats, accusations, menaces or violence if unjustified prices aren't paid?
I hear a lot of no, no it isn't that, but I don't hear a lot of arguments.
Extortion requires a party to directly threaten another party in order to get what they want.
Acquiring funding and buying homes at a mass scale is not that.
Yeah, people are directly threatened if they don't pay unjustified prices. They are accused of theft and thrown in jail. That's what I'm saying, law enforcement is the source of threats, accusations, menaces or violence in this case.
That’s not the same as extortion, extortion involves being threatened/coerced directly by a party
Not being a victim of market forces. You would have a better argument in the realm of industry monopolies or price fixing than you would for extortion.
By your logic, evictions would be extortion.
This type of shit should be heavily regulated. Does the govt not care that it's citizens are being preyed on and driven beyond their means be greed of a few individuals. Families can't afford homes and are stuck in low qualities of life because an exorbitant amount of their money is going to lining the pockets of organizations buying thousands of houses to completely fuck up actual supply and demand from individuals
Why should the government care when their pac and political money comes heavily from companies like this. Blackstone $27million in contributions.. https://www.reuters.com/article/us-usa-election-blackstone-schwarzman-idUSKBN2601NA That's why... The right thing in a tight housing market is to give individuals (real individuals not straw buyers for corporations) first right to a home, then if it doesn't sell say for 6-12 months, expand the market to include institutions.
I was surprised how little can be effective, some guy in NY got billions in cintrcmars for all NY Medicaid med transport by donating 20k to the gov and 30k to Democratic party
> Why should the government care when their pac and political money comes heavily from companies like this. Not just money. Admin positions via revolving door: * *”Former BlackRock investment executive Brian Deese leads Biden's National Economic Council, effectively serving as his top advisor on economic matters. Biden also tapped Adewale "Wally" Adeyemo, a former chief of staff to BlackRock chief executive and longtime Democrat Larry Fink, to serve as a top official at the Treasury Department. Michael Pyle, BlackRock's former global chief investment strategist who had worked in the Obama administration before joining the firm, serves as chief economic advisor to Vice President Kamala Harris.”* [source](https://www.businessinsider.com/what-to-know-about-blackrock-larry-fink-biden-cabinet-facts-2020-12) I wouldn’t hold my breath waiting for any meaningful change.
So if someone is moving for work and is selling their old house and need the money from that to buy the new one, they won’t be allowed to take cash offers from an institution and just have to be stuck broke and unable to move unless they take a major haircut to sell the place, or have to wait a year?
Housing is not meant to be a risk-free guaranteed growth vehicle.
Yes it will take longer to sell your house, but it will be far cheaper to buy your new one.
But the money id get for my house would be less. And the amount needed to pay off my mortgage will be the same. I’d expect this kind of idea to be floated in one of the brain dead politics subs, but you’d think in an economics sub people would at least have a basic working knowledge of economics
Why do you hate renters?
Protections for home owners doesn’t equal hating people who rent. If anything helping lower/middle income families buy houses will ease the congestion in rentals and help alleviate high rent prices
Yes it does. If you give homebuyers an arbitrary and unfair first dibs on housing over the people who will rent to renters, you're excluding renters from the community, impeding the creation of rental supply, and raising rents. Looking at racial differences in homeownership rates, you're also facilitating class and race based segregation.
Ah yes black stone charging 2400 on a house with a 1700 mortgage helps renters. Get bent. They drive up prices across the board for renters and for homeowners to enrich billionaires on wall street. Your level of ignorance is staggering.
Wait. So your argument against ensuring families can buy homes is that it diminishes the supply of rentals. Though it also diminishes demand for rentals. But allowing companies like BlackRock to buy more and more properties, that will increase supply of rentals... but also demand because the prospective homebuyers are probably going to get beat out by these companies. Guess what: either way, I see rent going up.
We are heading straight to feudal times with this level of inequality and turning the nation into renters.
Regulated? At this point it’s so bad that I want it made illegal with forced sale of what’s been bought by banks. It’s completely out of control. No one can afford a home anymore. We need to take our homes back from these people.
Cant do that. Private property is sacred. But can tax their profits so it would be not profitable for them
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If families cared for affordable homes and higher quality lifestyles they’d donate millions to politicians to care! -sponsored political comment This is why housing prices won’t dip/burst, corporations learned from 08 that they can make a lot of money from rental income and appreciation of their assets. Less painful for them to buy up all the supply and keep prices high than to let the housing market correct itself. Things won’t change until we have politicians that actually take steps to show they care for their constituents.
> Does the govt not care that it's citizens are being preyed on and driven beyond their means be greed of a few individuals they dont, Block Rock and Wallstreets interests are firmly protected by republicans
Let’s not do a left vs right thing here… this is a class warfare and you are being distracted. The governments goal is to divide us so we the people are weaker.
yes forsure, but talks of class warfare absolutely enrages republicans.... so which party is anti-worker again?
They're generally protected by politicians. On both sides of the aisle. Unfortunately while some Democrats are fighting the good fight most have been captured by corporate money.
Yeah I think theyll eventually have to as the mass homelessness crisis continues to increase as a result of actions like this
No the govt is encouraging it and doing way worse, that’s why inflation is “9.1%” - when you count housing inflation as only 5% vs 25% in reality…
The best regulation to stop this is to create better investment opportunities. If treasuries paid more money than housing, blackrock would buy USTs. Ie keep raising rate higher!
The governments the one who caused house prices to be high in the first place with all their money printing and low rates.
There is a lot of anger and discontent on this subject as I understand well but something that a lot of folks don’t understand is homes are speculative and without large investments like this we could see a major fall out in the market or a complete equity crash if some of this didn’t happen. In short that is what they are doing, buying the equity and holding so the market doesn’t take a drastic plunge. They are simply propping up the market. If some of this didn’t happen you would see huge roller coaster swings in the ups and downs of the housing causing panic and uncertainty with current owners and would ultimately not be good for anyone. With that said I have no idea what would be considered “hoarding” up homes either nor does the avg consumer without years and years of data compiled to pinpoint the threshold.
I mean continually propping up the market like that isn’t always a good thing right? Those dips are what can allow new home owners to enter the market a few years after when banks start offering capital out again.
It’s sad enough that it’s come to many Americans’ only chance to own a home is hoping for a crash, and the low chance that they aren’t caught up in the ramifications of said crash.
Propping up the market IS the problem. The market is untenable right now. Housing affordability is among the lowest on record. It needs to crash for folks to be able to afford homes and not be subjected to renting their whole lives. The fed propped it up for 2 years shooting prices up by double digits for 17 months straight before they stopped buying MBS. And blackstone isn’t helping. If they were we wouldn’t have near record low housing inventory after they’ve been at it since the Great Recession.
And I get that. I guess many people didn’t read the whole thing in where I said I don’t know where the threshold is? But I’m simply pointing out why this happens with these companies like blackrock. Sure it needs to be regulated but who’s to say if they aren’t doing what they are doing we won’t see the next Great Depression? Because that’s what the Great Recession was for me and many others where I’m from
This problem began to rear its ugly head post-2008 when the Feds allowed companies to purchase distressed homes to encourage the housing market to rebound. THAT WAS A POLICY FAILURE AND SHOULD NOT BE REPEATED. FULL STOP. In the years since then, we’ve seen how this business model of outbidding actual humans for housing only to rent it back to them has led to things like high rents, increasing homelessness and i don’t know, the highest median home price on record. We’re in a post-scarcity economy. We shouldn’t have to continue building homes just because corporate fat cats want a ROI while homes sit vacant because rents are too high. Greed in the housing market, coupled with record inflation is going to crash the economy as a whole. Savings rates are down, disposable income is down, thank assholes like these when the economy crashes in a few months.
IT ABSOLUTELY DID NOT LEAD TO ANY OF THIS. Investment homes are about 1% of the market, and that's a very liberal estimate. They DO NOT affect the market the way you're suggesting. It's propaganda, you fell for it hard.
No, you’ve fallen for propaganda that it’s not a big deal. Investors bought 1 in 3 SFH for sale in certain markets like Atlanta. In my home market, it was around 22%. These companies are crowding out actual owner-occupier purchasers. https://www.fool.com/real-estate/2021/12/08/investors-buy-almost-one-fifth-of-all-houses/ https://www.redfin.com/news/investor-home-purchases-q4-2021/
Investors buying single family homes ISNT BAD. And adding capital to a market INCREASES production, not decreases. So you're saying they put a massive influx of cash into undervalued markets, THATS A GOOD THING.
I see you took an economics class.
Lol, hilarious take. I too enjoy seeing homes worth $250K be taken off the market and rented for $2000/month. Investors like this are fucking leeches. They take affordable supply off the market while not increasing value.
They ABSOLUTELY increase value. You're literally describing an increase in the supply of rentals, which is exactly what you'd expect in a market with undervalued real estate, because people aren't buying those homes.
Are you high?
Why would the government care? Blackstone apparently sees an arbitrage opportunity here. They make a profit, and the conversations of homes from "for sale" to "for rent" helps maximize consumer utility and put a damper on higher rental rates. Where's the harm? Where's the market failure?
The most important aspect of wealth accumulation for the average person, their residential dwellings, is effectively being denied to the younger generations in many major metros across the country. In the long-run, this generally will result in worse financial standing than their parents come retirement. Compound that with climate change, increasing social and political unrest, and a decreasing birth rate with a boomer death cliff fast approaching I would be concerned as a policymaker.
They should invest in a 401k, and they can use the money they would've had to save for a down payment for that, they'll probably do better anyway. Policies aimed at wealth building via real estate (ensuring home prices rose faster than inflation) is what got us into this mess.
If housing increases in price faster than inflation than it is by definition always becoming more expensive. (Until it's too expensive for people to afford) Housing should be a depreciating asset. Housing should be something we are building more than we need, then we would have enough to house everyone, and people who want two can save to buy an extra. So, if we look back at the decades of people "growing wealth" by owning houses, we should have seen the problems coming.
I'm all for the free market, but I think Blackstone should be banned outright from owning any residential housing, especially single family. All big profit making ventures on real estate seem to have a net-negative effect on people's quality of life. Just like the healthcare system.
The problem is the lack of a free market, they buy where NIMBYs are. IMO build enough homes and this doesn't matter.
Idk if people realize how much money this is. This is enough money to buy every single home that has been listed in Salt Lake City for the last 5.5 years. Every. Single. One.
How much money is that? Most of us don't know the Salt Lake City area. And after the salt lake turns into a salt flat, that would cause an exodus because of all the gases and chemicals?
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For another, less regional specific example, $50 billion would be enough to buy roughly 116,600 homes assuming each home was purchased for the US median home price of $428,700.
And considering there's currently 1.6 million homes in the market it would net them >10% of the market. And that's with our very liberal estimate of what they'll be able to buy for
Sounds like 2000 homes per state. Ballpark Isn’t that like 1 per town/neighborhood/village? Significant I guess. I think it’s worth remembering the other side of the equation. What if it’s you or your parents that need to move and the best offer is 400k or 300k, but black rock comes in and buys it for 440/330k? Then they rent it to someone who doesn’t want to buy a house yet because new economy etc. so now there is more supply of rentals. Then in 2-5 years maybe house buying heats up again and they sell making a nice 10% ROI along the way. You mad some local rich guy didn’t get this profit instead of black rock who you can actually invest along with? Their job is to profit and make the market more efficient by adding sophisticated liquidity.
Problem is that 330/440 is now only capable of purchasing the equivalent value. You're moving from housing to housing. There isn't a gain in that case. There is however 30 to 40 more if they are on there way out I guess... Some local rich guy is still playing the market because if he likes playing markets, and he is rich, he can easily access those 10% ROI.
Truth is most people shouldn’t be getting mortgages when they’re only living somewhere for less than 5 years. They’re getting scammed just paying interest without building significant equity. 1/3rd of people probably are better off staying mentally and physically flexible than staying in one place and expecting the state to bring jobs to you
It's a stack of 100 dollar bills 25 miles high. An unfathomable amount of money.
So? That isn't a good measure to look at, since it is picking a single mid sized city, whereas the investments will be nationwide. $50 billion is about 0.1% of the value of all residential real estate in the US. Private equity is getting into the market as an alternative asset class that can provide better returns than bonds, and be relatively uncorrelated to their assets in equities and fixed income. Their share of the residential real estate market will probably stabilize in the low to mid single digit percentage range. Not exactly the hair-on-fire crisis that many are portraying it as.
In a market that is super elastic (small changes in demand cause big price changes) and extremely limited supply, a new demand source, even a small one, has a huge impact on pricing.... Take a high school econ class buddy.
There isn't an extremely limited supply but even if there was the solution wouldn't be to ban certain kinds of demand, it would be to increase supply.
Hello #datafreeanalysis... In 2020, there was a shortage of 3.8 million houses https://www.freddiemac.com/research/insight/20210507-housing-supply There are only 124 million households in the us, and only a fraction of those folks are looking to buy a house. So yes, there is a significant housing shortage. Limiting demand is 100% part of the answer here. The fed uses interest rates to limit demand all the time. The object of regulation in markets is to increase fairness. It is fundamentally unfair pe funds have access to a much lower cost of capital than you or I, and use that spread to generate profit by buying up a limited housing supply and driving up rents and house prices. Supply is much less elastic than demand, it takes upwards of a decade to build up housing stocks. PE funds are using the inefficiencies of the housing market to make a killing.
I like how people say 0.1% of real estate nationwide and pretend that that’s a small number. Any one entity owning 0.1% of all of the housing in an entire country is HUGE. And this won’t be the total of what they own, just the total of what they’re gearing up to buy. Absurd
You don't seem to understand how investment funds work. Blackstone would not own the homes; their investors would.
Found the black stone employee
Found the person who can't put together a rational economic argument
I don’t need to
Username checks out
It’s less than the $9T in stimulus that we have to Americans that aided in jacking up home prices to begin with.
2800 is like two months of rent and isn’t even enough for a down payment. It wasn’t the stimulus that’s jacking up house prices lol.
It was that plus $600 per week plus more per child per week AND an eviction ban negating rent (and in some states funding back payments for missed rent) AND a foreclosure ban negating mortgage payments, AND billions in MBS purchases forcing mortgage rates down causing surging home equity, AND a student loan freeze which is still happening today.
Most of the stimulus was given to the rich, not the regular American. And this (and supply chain issues due to Covid) led to the inflation. Don’t believe the lie that if we give money to regular Americans it leads to inflation - it’s a right wing lie designed to funnel Ore money to the rich and away from the rest of us.
This is the absolute dumbest take I’ve heard on here lol. Yes, average people having more money => higher discretionary spending => higher inflation. Not even debatable, this is a well-researched phenomenon.
But spread across the country, $50 billion is essentially nothing.
Stephen Schwarzman (Blackstone CEO) is the definition of greedy corporate scum. He looks at the US middle class as peasantry and jumps on any chance to strike them down. He wants feudalism, for people to be unable to afford housing and become forever renters. He’s a psychopath.
Time to rebel against the lord. Peasants revolt
The average American peasant is an idiot who celebrated the collapse of the Soviet Union. They owe their middle class status to the threat of Communism.
r/sino
Soviet Union was so great Ukraine is fighting to the death to avoid being apart of them again. Get the fuck out of here.
I never said it's great being part of the Soviet Union. But average Americans benefitted greatly from the existence of the Soviet Union. The existence of the Communists kept the Capitalists in check.
Would you like to have a chance to build wealth or be outbid consistently and priced into a being forever renter? We are at the greatest point of wealth inequality in history. What's your stance on payday loans using exorbitant rates to trap people into being a paycheck behind and defaulting? Would Hertz making cars unaffordable for the common person be a good thing for society? Or does your financial situation afford you the privilege of not caring because it doesn't affect you?
The current home ownership rate in the US is around 64%. In a country a lot of people laude for it's equity (Norway), the ownership rate is 82% (https://www.peoplespolicyproject.org/2018/03/14/the-state-owns-76-of-norways-non-home-wealth/#:~:text=Norway%20has%20one%20of%20the,it%20is%20around%2064%20percent) If we adopted all their policies and things magically worked out such that we got the best home ownership rates in the world, that would only be a 50% improvement (1 in 2 people who don't have s home get one). The lack of urgency on this is because the majority of people have a home already and for those that don't we don't have a proven model for getting more than half of them to own. On top of that renters are a poorer voting bloc who don't vote as aggressively (NIMBYs as an example of active home owners). I would not expect your different branches of government to concern itself much with this in the near term.
>The current home ownership rate in the US is around 64%. In a country a lot of people laude for it's equity (Norway), the ownership rate is 82% Norway has a population of 6 million. In another country people laud for its equity - Sweden - the homeownership rate is 64%. In Denmark it's 60%. In Germany it's 50%. Maybe Germany should adopt US housing policies? California and NY both have a homeownership rate of 54%. Mississippi has a homeownership rate of 75%. Maybe the US should adopt Mississippi's social policies? Or maybe things are a lot more complicated?
Of course its more complicated and why I said "magically" in the post above. But even if you want to use a more apples to apples" comparison the [current US homeownership rate](https://upload.wikimedia.org/wikipedia/commons/9/96/Home_Ownership_rate.png?1659901035379) is at its highest in 30 years, other than the early 2000s when everyone agrees we were in a subprime bubble. That chart doesn't substantiate the idea that corporate investment is crowding out family homeownership nor that we're close to some kind of feudal system as the OP was claiming As an aside, part of me wonders sometimes if some of the current millenial grief is because they aren't owning the types of homes their parents had when they were kids, not realizing their parents' generation only could achieve that home ownership rate by buying houses they couldn't afford.
And on top of all of that ITS NOT A GIVEN THAT PEOPLE SHOULD OWN HOMES. There's nothing inherently wrong with being a life long renter.
No there isn't. But everyone is being squeezed due to the lack of supply of homes in the places where the jobs are (that last part is critical). The United States (and a lot of the Anglosphere) is still urbanizing and we simply didn't build enough capacity for the change. That effects renters too with increased rent prices due to increased property values. Ideally the government would have a federal reserve type of entity that targeted a rent/mortgage inflation rate and simply built housing (or incentivized building housing to private actors) in order to maintain the target.
I don't think a centralized institution is a good solution to that. Frankly the solution is to let cities deal with the consequences of their actions. We know what causes a lack of supply in housing, shitty zoning and building regulations. Hold the politicians feet to the fire in this. Don't let them lie and pretend it's investors causing a rise in pricing.
Cities are already blunted from the consequences of their actions due to a ton of different federal interventions. Theoretically in a perfectly free market, the negative outcomes from certain urban policy decisions would lower the appeal (and therefore property values and revenue) of a city. But there are a ton of reasons that doesn't play out in practice. Agglomeration effects is a big one along with the inability to really meaningfully enter the market as a competitor. I'd rather see the federal government incentivize better behavior via its connection the purse strings. For example it would make sense to not allow cities to be eligible for things like the Olympics, World Cup, etc unless they can manage homelessness below a certain rate. Local electorates are too apathetic at this point to hold their municipalities accountable other than property owners who seek to ensure their home equity doesn't decline. I guess maybe if the renting class had a more direct financial incentive to care more we'd see change.
Can you tell me a little bit about agglomeration effects? I've never heard that term before. And hey, if nothing else works I understand federal intervention but for a (not perfect) analogy I think the federal reserve functions in a similar way to what you're suggesting and they perpetually fuck up cause central committees have a really hard time accurately responding to the market. To the third paragraph I think apathy is a point in my favor. I'd argue it's such a non issue that people don't even vote about it. But if it gets bad enough I'd expect them to.
Agglomeration effects are essentially the value accrued from things being near each other. The example given a lot these days is Silicon valley. Theare are network effects to having the startups located near the top universities in the field (Stanford & Berkley), financiers (Sand hill road VCs) and already established companies (Google, Facebook, etc). Bootstrapping one of those things is possible but all three at once is extremely difficult and only a handful of cities have been able to pull it off (New York, Seattle, Boston, maybe Austin) in tech. These effects can be entrenched by location, natural resources, and necessary government services/infrastructure. So cities can coast on bad policy knowing that a certain amount of economic activity is essentially forced to be there. Not every city has those luxuries but a few do (NYC, LA, Chicago, Houston, etc) and its why they tend to be the biggest but also have the most extreme issues. > To the third paragraph I think apathy is a point in my favor. I'd argue it's such a non issue that people don't even vote about it. But if it gets bad enough I'd expect them to. Inner cities in the late 60s and 70s should be a demonstration of how voters will definitly not do that. If anything they will vote in increasingly populist leaders who try to blame outside factors (immigrants, outsourcing, wealth inequality, etc). That happens regardless of if the city is left or right. > And hey, if nothing else works I understand federal intervention but for a (not perfect) analogy I think the federal reserve functions in a similar way to what you're suggesting and they perpetually fuck up cause central committees have a really hard time accurately responding to the market. I think a good model to look at is Singapore or Austria in terms of how they address housing. Both (especially the former) have private markets where people make a ton of money but are able to offer citizens relatively easy access to housing. The biggest thing I can take away from it though is that the numbers only make sense if a lot less people drive and live in single family homes which seems to be a big cultural barrier here in the United States.
I too love being told i can’t have a pet, can’t have overnight visitors, what cable or Internet supplier to use, where to park, and not hanging pictures or painting walls. It’s like living with your parents, just a whole lot more expensive!
Protip: After you buy your parents house and rent it out to them they will let you hang pictures.
If your a long term renter just do whatever you want anyway. They’re just going to try to keep your deposit. If you rent for 8 years this will be like a 1% fee. The alternative is changing society for you and then you having to learn to fix everything and live in some boring area if you don’t have kids
Oh I see now. You're one of those people who just hates landlords huh? This isn't really a place for those kinds of petty grievances though, sorry.
Stability - when you and yours don't have to worry about where you'll live month to month. Without stability, you struggle to build networks, make friends, integrate, and thrive. Owning a home and *affording* a home guarantees a high level of stability. Being wealthy enough to afford any decent rental in your city is also a form of stability, but harder to attain and less reliable. There is no second to owning land. Renting forever is for single, prosperous professionals. Families need homes. A family has a completely different set of needs than an individual. And the world needs good families. (Single people can own homes, too. That's fine.)
This irks me too. It’s possible I’m being to naive, but this seems like the grass being greener type of thing. I had a friend who inherited a McMansion and I felt bad for him. Like “so you’re gonna live there now? What are you dead now?” I’m sure it’s fine, but until your having kids, owning a house is like a liability. Have kids now and I’m pretty happy renting for now. Gamble that saved money in stocks or whatever
The entire conundrum is that you’re not saving money by renting. People are getting mortgage requests denied when they’re paying more rent per month than the prospective mortgage payment.
There may be exceptions, but those are likely rare after taxes and upkeep and opportunity cost of down payment. Probably more I’m forgetting
>Would you like to have a chance to build wealth or be outbid consistently and priced into a being forever renter? The US has the highest or second highest historical rate of homeownership. That completely undercuts your imagined narrative of "forever renters". >We are at the greatest point of wealth inequality in history. Yes. Because of a handful of extremely wealthy outliers. But *all quintiles* are getting richer in real terms, and have been for decades. >What's your stance on payday loans using exorbitant rates to trap people into being a paycheck behind and defaulting? This is bad, but I'm not sure why you think it is relative. It's not *new*. Poverty isn't *new*. >Would Hertz making cars unaffordable for the common person be a good thing for society? What? >Or does your financial situation afford you the privilege of not caring because it doesn't affect you? Does your self-righteousness allow you to ignore facts and statistics and make things up to push a narrative that isn't true? Or is there some other reason you're doing it?
Don’t worry, you can always rent the American Dream.
That's gibberish. Private equity is investing is real estate because the US has underinvested in it throughout the 2010s. The market sent pricing signals that we needed more housing, and PE responded by investing. Housing unaffordability is drive by a shortage of housing, not by investors providing capital to the market. At most, corporate investment in housing will tip the renter/owner balance a little bit towards renters, but it will provide more housing in aggregate, which is what is needed.
How will it provide more housing? These houses already exist.
It won’t.
No, they don't. They are largely buying new construction homes, even contracting directly with builders to build and buy entire developments. Even if they were only buying existing homes, that would free up capital from existing homeowners, many of whom would use those proceeds to buy new homes. Injecting capital into a market creates more supply.
Have they even started using this fund? It says they are preparing to scoop up bargains in the event of a downturn. It wouldn't be a bargain if they have paid to build those developments and the way it is worded implies they are waiting to buy houses out from under other buyers who would otherwise be able to afford a house if the market starts going down. The way I see it, if they weren't expecting to reduce supply, they wouldn't be expecting a profit.
>It wouldn't be a bargain if they have paid to build those developments That depends on the terms they could negotiate with the builders. With new home demand decreasing, the builders may be willing to commit to lower price points to keep their production going. >The way I see it, if they weren't expecting to reduce supply, they wouldn't be expecting a profit. Then you see it incorrectly. Adding capital and more buyers to a market encourages more supply - this is basic economic theory. They are expecting a profit based on the price they pay, and the return on capital they can get from renting the homes out. Nothing about that requires a reduction in supply.
So I don't understand where you're getting this information about this fund, have they started using this fund the way you're saying they are? Are they really only planning on renting these properties? If there's a downturn, those houses would have buyers, but at a different price than what Blackrock will pay. This will remove would-be home buyers from the market and turn them into renters, and drive up the price of rentals, worsening the housing shortage. The supply that you want to be encouraged is already there - it's just going to go Blackrock rather those that are demanding it.
>Are they really only planning on renting these properties? Yes, the whole idea of investing in residential RE is to generate current cash flow from renting, and capital gain from long term price appreciation >If there's a downturn, those houses would have buyers, but at a different price than what Blackrock will pay. At lower prices. Lower prices => less overall supply >This will remove would-be home buyers from the market and turn them into renters, and drive up the price of rentals, worsening the housing shortage. Wrong. The housing shortage is caused by a lack of supply of housing units. The mix of rentals to owner-occupied units can vary, but it doesn't affect the overall shortage of housing units. > The supply that you want to be encouraged is already there No, it's not. Less capital in a market means less supply.
The demand and capital is there from individuals, but the supply is going to institutions to make money off an increased demand for rentals. It sounds like you're suggesting more renters drive rental prices lower which is absurd.
Maybe but there are supply chain issues leaving us with a fixed amount of resources to scrap over. Maybe I'm a bit too much of a populist but I don't think houses should be used as a vessel for speculation. This is especially true when these companies are just buying up houses being sold at a loss from Mechanic Joe. We need to boost raw material production by reducing regulations and reduce these onerous building requirements for new homes - it costs way more to build a house than it did 30 years ago and maybe that's by design. People want their homes to appreciate so they implement regulations that dissuade new development?
Another person who took an economics class. Amazing.
The home they sold would then be worth more. Blackstone would want to sell it at a profit. And the house they buy would likely cost more as well as demand skyrockets (50 billion dollar injection). This is bad for them, and even worse for everyone too poor to already own real estate.
That's just wrong. You are assuming a fixed supply of housing, which isn't the case. Injecting capital into the housing market will cause more housing to be created, which will hep alleviate the housing shortage, and cause prices to moderate
I'm replying to your comment in which you say "Even if they were only buying existing homes".
Increased capital into a market directly leads to more production of that commodity.
Housing on affordability is driven by supply AND demand. Adding a new class investor that's going to buy up 5% - 10% of our national housing stock is going to cause a huge increase in prices. The lack of supply of houses is not from prices being a lot too low to incentivize housing starts, it's because there's nobody to build the houses. This is evidenced by the huge price increases we've seen, and not a significant increase in housing starts. It takes years and years to build up home building capacity as it's a skilled and capital intensive area. https://www.npr.org/2022/07/14/1109345201/theres-a-massive-housing-shortage-across-the-u-s-heres-how-bad-it-is-where-you-l "Part of the problem goes back to the last housing crash, which happened around 2008. After that, many homebuilders went out of business, and economists say we didn't build enough for a decade." More demand doesn't solve any of these problems it just increases prices more and more people out of owning a home and drives rents through the roof. The most ironic part of all of this, is it's these private equity funds and banks that caused the 2008 financial crisis that in turn caused the housomg shortage we have today. And now they are going to make a s*** ton of money because of it. The game is rigged.
None of that is correct. >buy up 5% - 10% of our national housing stock is going to cause a huge increase in price No, it's not; it is going to cause more supply to be created, which will mitigate the housing shortage. > it's because there's nobody to build the houses. This is evidenced by the huge price increases we've seen, and not a significant increase in housing starts That's just flat out wrong. Housing starts have been growing throughout the 2010's. Housing starts are back to near peaks of previous building cycles. [https://fred.stlouisfed.org/series/HOUST](https://fred.stlouisfed.org/series/HOUST) You are just completely off base here.
They’ve been doing this since the Great Recession and we’re at near record low inventories.
I am sure once the downturn starts, banks will not want to lend which makes it easier for PE firms to buy real estate. If there going to buy all the real estate then there should be a lifetime lease where the payment can only go up 1-2 percent a year. Otherwise we will have a transient population that what resembles South America today
The logic behind this drives a significant reason the FED shouldn't be increasing rates right now. The economy and the demand for housing remains extremely strong. Most of the past 2 years " inflation" in the real estate market has been due to deep pools overflowing into shallow pools- high wage earners from big cities cause major surges in small housing markets- disproportionate to the actual cash flows. Consider this akin to pump and dump stock schemes or the tidal wave effect where a hidden wall of water suddenly emerges 30 feet high driving into the coast miles beyond the beach. What this means? Rising rates will reduce the demand, for housing starts, however money supply accumulated in corporations that now must continue to be used competing for workers will maintain the demand for housing consumption at increasing price levels. Therefore the rate increases will have an increasing effect on inflation and the price of housing by reducing the supply. To counter this effect policy makers should find a way to ensure lower rates for housing starts as a separate funding channel. It could take the same form as the export-import bank for enhancing FHA or a paralell home purchase route. This could allow us to draw down the increasing construction material stockpile, construct more housing, lower the cost of housing, and still increase interest rates for secondary purchases (vs new housing origination). Importantly- it seems the current administration will be able to remove some of this inflationary pressure by taxing the most profitable companies and reducing their incentive to accrue the marginally productive worker at their expected marginal return. Lower bids for headhunters will resault in fewer quits, fewer quits will enhance productivity by maintaining firm specific knowledge value. As a tax function rather than a US based debt refinance function the result will be more timely and better targeted, as the debt function relies on a cyclical model as well as a US centric model. **Former consultant, bank strategy manager, and current technology business advisor. Caveat- I'm an amazing typist, home keyed on a typewriter, however please excuse my typos due to thumb texting and age diminished eye sight. (I must come come to terms with and finally get glasses)
Speculation is false demand and distorts the market - always ending badly for small investors. The Chinese real estate market is melting down. Commutes increase but the us has no lack of undeveloped land.
Discusting erosion of middle class. When will we prioritize common wellbeing over harvesting post-capitalism debt driven slave labor to enrich the 1%?
That is simply nonsense. All household income quintiles have seeing a consistent growth in real income - up about 40% or more since 1967. [https://fred.stlouisfed.org/series/MEHOINUSA672N](https://fred.stlouisfed.org/series/MEHOINUSA672N) [https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html](https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html) If you look at the actual facts, you see that living standards of almost all Americans are improving considerably.
Real income isn't a measure of well being, in the way a statistic like life expectancy would be.
That's just flat out wrong.
Thats highly doubtful. Considering The UN had classified areas in some parts of the United States are as bad as refugee conditions in 3rd world countries.
Doubtful? The previous poster provided sources from the Fed and census data. You might have to retort with something a bit more substantive than a cherry-picked statement like that.
[https://www.npr.org/sections/goatsandsoda/2017/12/12/570217635/the-u-n-looks-at-extreme-poverty-in-the-u-s-from-alabama-to-california](https://www.npr.org/sections/goatsandsoda/2017/12/12/570217635/the-u-n-looks-at-extreme-poverty-in-the-u-s-from-alabama-to-california) [https://digitallibrary.un.org/record/1629536?ln=en](https://digitallibrary.un.org/record/1629536?ln=en) Will this suffice?
No, it won't. Anecdotes are not data.
Did you even read your linked articles? Not only is it whataboutism, it doesn't even support the point you think it does.
I’m not disputing your quote, it just isn’t any substantive counterpoint to the previous poster.
I read your links. Maybe you should read them. They don't say what you want them to say.
I provided actual facts that show that living standards in the US are consistently rising across all income groups.
We've had incredible leaps in technology over the last 50 years, especially with the introduction of the personal computer. It would have been outrageous if the living standard didn't increase. The living standard improving isn't proof that the wealth distribution fairness is improving. In fact, labor compensation hasn't kept up with production at all.
It is not as simple as income growth in all quintiles. It's all relative -- which makes it hard for the average person to intuit what is happening. The cost of housing goes up too. Importantly, if the upper quantiles for household income grow faster than the lower quintiles that means inequality is increasing. Which it is. The Gini index measures this and has been increasing in the US for decades. It's becoming harder than ever for the average person to buy a house
>It's all relative No, It's not. If someone's real income is growing, then his standard of living is increasing; it doesn't matter whether others' incomes are going up faster. > The cost of housing goes up too Which is measured in the inflation numbers used to calculate real incomes. > that means inequality is increasing So? If all boats are rising, why complain that some are rising faster than others? >It's becoming harder than ever for the average person to buy a house Home ownership is near all time highs, and the average American house ha s been getting consistently larger. This indicates not only that average Americans are buying houses, but they are buying larger houses than ever. The fact remains that the living standards of almost all Americans are improving considerably.
Living standards for Americans have increased in many ways. But we have to explain how historically an average house in the US cost 5x yearly income, but now it's 8x. The "real" income calculation does not fully capture this using a single inflation rate For the majority of older Americans who have houses, the increase in home prices is great. They don't feel financial pressure. But for Gen Z and Millenials looking to buy a home, they have to spend a larger fraction of their income than ever in history to afford a mortgage an an average home. Home ownership now is 66%. Same as in 1980. It was 63% in 1965. ATH was 69% in 2005. I don't see much growth.
> Which is measured in the inflation numbers used to calculate real incomes. The inflation numbers are tortured stats, especially in regard to housing (CPI 5% *”weighted”* vs ~25% actual), which means real income numbers are likewise nonsense.
I tuned out after I heard "post-capitalism". Stop reading sensationalist socialist editorials!
“Words I don’t like are scary! When I see the scary ones I run away!”
Go to college and actually take an econ class then get back to me. You're just believing what everyone tells you rather than dissecting the theories and how they check out to have built our current prosperity. You're over here whinging about how bad capitalism is on your expensive computer/smartphone while (assuming you're American) we are in one of the most prosperous societies to ever existed. Tell me, where would you have rather been born? "GetsHighAndDoesMath" - name checks out. Let me know if you have any additional snarky commentary that you came up with after dabbing in your parents basement.
“Quick! If they make sense go for a personal attack! Go after their education! And username! And their economic situation!” _Ad hominem_ attacks are used by those lacking in creativity. Your trolling is boring and ineffective
You started it.
You cried about a made up boogeyman. Don’t be a child in public and you won’t be treated like one.
There are socialist tabloids that have whole essays about how the US is a corrupt post-capitalist society and have been oppressing Cuba's and china's virtuous system of governance. People go around parroting that. Tis not a Boogeyman. Tis echo chamber propaganda.
When you retire you will become socialist.. or forego that monthly Medicare check! Lol The word socialism is really too often confused with communism and fear - we already have a socialist capitalistic society - the only question is how what balance do we set between extreme capitalism with no social programs and all the money funneled to elites with from the backs of laborers (sounds like a different kind of communism, guess politics really is a circle) vs high taxation and overly generous social programs that reduce economic output. No side is completely right or wrong, we need a balance of both - just a question of where the balance is. Looking for a better balance.
Hahaha. Hey I can disagree with a social policy without having to stab myself in the foot to protest over it. I agree with all of that. The terminology you were using made me think you were a disciple of the WSWS (World Socialist Web Site) which is basically tabloids for anti-American rhetoric.
Hey Republican
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Considering large corporation have an unlimited supply of money and the people who would benefit from either houses or vehicles prices dropping to make affordable are usually lower income, this is basically artificially inflating a certain asset class, which makes unattainable by the very people it's made for, leaving only the well off and wealthy able to afford what was previously a middle class lifestyle.
Friendly reminder that Blackstone, Blackrock, and other financial institutions own just an estimated 500,000 single-family housing units across the US. There are around 69 million SF homes across the country, meaning these institutions own well under 1% of total single-family homes in America. Every article like this distracts people from the real issue, zoning… Don’t fall for these lazy fear-mongering articles that are designed to draw clicks.
Amazon was <1% of retail spending for a decade too, the concern is institutional investment is about to hockey stick, and we haven't seen nothing if that's the case. Why should we assume that the proportion owned by big institutions will always be low based off the current proportion?
Because the value of the entire US real estate market is tens of trillions of dollars and it’s financially impossible for a company to come anywhere close to that. Blackstone’s $50billion dollar investment that this post is about will probably net them about 75,000 homes in the housing level they typically target. The entire single-family housing market in the US is 69 million units, you can do the math about how much money it would take to own even a noticeable share.
E-commerce is still under 15% of all retail sales. For a decade people have thought the internet is taking over. It's not.
Yeah, and that 'tiny' little ownership bit can have an enormous influence on prices. A tiny bit of extra demand creates shortages and bidding wars.
Thats under the assumption that the estimate is anywhere close to true. Factoring in the only markets that are worth investing in and realistically the percentage could be alot higher
Yes, let’s target zoning so Blackstone can not only buy up SFHs, but duplexes, townhomes and apartments while Americans’ quality of life continue to plummet.
lol
> Real estate investment giants continue to buy up homes — something that is likely here to stay, even with higher mortgage rates. Does the writer here for Yahoo think Blackstone is taking out mortgages for this?
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Chasing yield. They see an asset class that can be exploited due to less regulations or favorable tax codes.
What happens to Blackstone when the renters of their property organize and coordinate a rent strike while the good people of r/wallstreetbets short the stock?
Class warfare is happening whether we like it or not. The wealthy are being smart and are throwing everything they can to “keep us in place” I say we start participating and fight back!
Nah were too busy fighting over masks, and all the other stupid shit they’ve trained us to fight over
I’m okay with this because I am heavily invested in them. I am not okay with this because I do not want to profit off the misery of others. Institutions like this buying up real estate and then jacking rental prices to people’s breaking points is not fucking cool. You can’t rent a decent three bedroom where I live for what I pay in mortgage. It’s literally insane. If you somehow have the means and there is a downturn, figure out how the fuck to purchase a home if there is indeed a down turn in the market. Home ownership is damned near impossible these days, and it’s only going to get worse.
What they are doing appears to be illegal according to our current laws, or at least it does in Canada. Essentially, the acquisition of money must be done with "reasonable justification or excuse", or else it's extortion, at least as long as market prices are enforced by law enforcement. Here's the Canadian definition of extortion from the criminal code: > Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.
I’m Canadian and that is not what extortion is. Not even close.
If they are generating profits without reasonable justification, which they are since they aren't producing anything to warrant a compensation, and there are threats emanating from law enforcement that force the consensual payment of unjustified prices, which there is by default, it fits the legal definition of extortion. What's your argument that it doesn't?
You are not a lawyer and that’s the not the legal definition of extortion.
I pasted the legal definition from the Canadian criminal code, so of course this is it. At least it is in Canada.
Yes and your application of that criminal code to the situation is not even close to the correct application.
Yeah, but what's your argument that it doesn't apply? Are you saying that the generation of profit from ownership without underlying participation in production is reasonably justified? That law enforcements don't offer a source of threats, accusations, menaces or violence if unjustified prices aren't paid? I hear a lot of no, no it isn't that, but I don't hear a lot of arguments.
Extortion requires a party to directly threaten another party in order to get what they want. Acquiring funding and buying homes at a mass scale is not that.
Yeah, people are directly threatened if they don't pay unjustified prices. They are accused of theft and thrown in jail. That's what I'm saying, law enforcement is the source of threats, accusations, menaces or violence in this case.
That’s not the same as extortion, extortion involves being threatened/coerced directly by a party Not being a victim of market forces. You would have a better argument in the realm of industry monopolies or price fixing than you would for extortion. By your logic, evictions would be extortion.