alt Hacker NewsEven if this goes through without a mountain of loopholes and exceptions, I doubt it will have a significant impact. "Wall Street Investors" implies they're targeting large institutional ownership, which is only around 0.5% of housing ownership as cited in the article. That number is also flat-ish or maybe decreasing depending on the chart you look at, from what I recall.
Outside of a few metro areas where institutional ownership is very high, I don't think this would change anything. As long as houses remain an attractive investment, non-institutional smaller investors will happily buy the properties for a few thousand dollars less than the institutions would.
Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
Replies
> Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
And just in general reducing the restrictions on building in places with high rent to income ratios.
> because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
Oh I thought the one extremely obvious way was to fix local policy roadblocks. After all, it's not like a lacking supply of housing is a new issue they suddenly appeared out of nowhere within the last dozen months.
Making it hard for cities to deny all permission to build new housing through impossible zoning laws should also be on the cards.
The material costs are high too because of regulations that require specific lumber for framing etc.
It’s more complex than just reducing tariffs and inviting cheap labor. It’s systemic red tape put in by the large builders to prevent anyone but them to be able to build. When they do build, it’s never to code. The code they themselves help write. Ryan Homes for example…
Encouraging the creation of new housing is the way to go. One thought— what percentage of new home purchases are made by large investors and is it growing? This seems like the most important metric to look at rather than existing ownership.
Zoning laws are the number one obstacle to building housing. They need to be regulated into oblivion. Then we need to incentivize building dense housing.
The tariffs are a bit of a new phenomenon so I think that may be motivated reasoning. Construction productivity has also been stagnant for about 60 years. I think the most important factor is that housing prices, in the United States at least, are governed by how much a bank will lend. Very small but affordable houses will never be built because a bank will not finance a $10,000 loan over 30 years. In the same vein, it’s technically feasible for automobiles to be built for just a few thousand dollars, but, again, they will not finance $2500 over five years. So cars and houses are just built to the price point which will satisfy the lenders. You may not hate financialization nearly as much as it deserves.
Those "few metro areas" are on the scale of 10s of millions of houses. Remember that the top 10 largest cities have a third of the US population in it.
>because there's one extremely obvious way to lower the price of building new housing:
Cheaper housing doesn't mean that institutions won't still try to buy it up.
It seems like in some areas (the good ones) its much higher (12%): https://econofact.org/factbrief/do-private-equity-firms-own-...
It also seems like it might be important to determine what share of _new_ development is being created for investment. The share of existing homes being owned isn't as important.
There's also the 2nd order effect. The price of property might go down if there weren't investors with tons of money to spend on a property.
Even if it is only 0.5% I would prefer that large institutional investment firms not be allowed into the housing market.
This is pretty far down in the list of consequences we should be thinking about but building more housing in desirable, coastal areas of the US will only serve to exacerbate the political and cultural divide between the two Americas.
I know we all hate on the electoral college, but it exists and it isn't going away anytime soon.
I'm not saying the answer is to force folks to move to "flyover country", but that's what you'd do if you wanted to avoid another presidential victory by a trump-like character.
they don't even have affordable housing in the country all those tarriffed materials and equipment come from.
Anyone familiar with basic economics is pulling their hair out reading this, because there's one extremely obvious way to lower the price of building new housing: Reducing or eliminating tariffs on construction equipment and materials and ensuring a robust supply of low-cost labor.
That's quite an extreme political take.
A more humble basic economic theory question would be:
If you ban large institutional investors from buying homes, and then you ban small institutional investors from buying homes. And only owners directly can buy homes, no renting. Would that be good? Sure homes would be cheap, but very shortly after that the supply of new housing would drop dramatically, as there's no one to finance building homes, maybe the ultra rich will just invest in their own mansions or yachts?
Just very basic economics is the discussion here, not tariffs and china politics, but just a variant of the highschool/red-scare question of, "will anti-wealth laws have a positive effect on the economy"? in the past it was determined that no, and that you were a communist for suggesting it, but maybe there's a nuanced take like making a difference between some type of "institutional" investors and other types of investors?
Not sure. But I’ve been hearing of this being an issue from both progressives, leftists as well as conservatives and rightists. Maybe they’re all misinformed by their bubbles, but there seems to be some smoke…
I agree with the first half of what you posted, but immediately jumping to blaming tariffs in your last paragraph seems weak (and a slight attempt at a gotcha).
Concrete, gypsum and steel are primarily domestically produced. Similar goes for wood (although a substantial amount is imported, e.g. from Canada - the tariffs range from 25% to 50%). Labour & Materials may make up say 60% of the cost of a house, but only 50% of this is likely materials, with likely a minority of the materials tariffed.
What is likely to actually reduce rent and house prices is making development permission and laws more lax, as well as preventing rent control.