alt Hacker NewsIt's not that simple - the problem is that those institutions are market makers. They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing.
The things that they do have massively outsized downstream impact contrasted against their relatively tiny overall participation in the market, and they can afford to behave in ways that manipulate the behavior of the majority.
If you can decouple them from the housing markets, you also decouple the interests of the donor class, and you allow for policy that doesn't maximize the cost of real estate over the interests of the majority of the population.
Replies
> because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing.
> instrumentalized
> securitized
> with derivative products
> speculation
The vast majority of land in the country has been owned by capitalistic profit motivated players since 1776 - individual home owner occupiers.
If you doubt they will lobby to increase their profit, try proposing anything that has a 0.1% risk of their property value going down and see how they react.
An article making that case: https://www.thebignewsletter.com/p/messing-with-texas-how-bi...
A rebuttal to that article from Derek Thompson: https://www.derekthompson.org/p/the-anti-abundance-critique-...
“properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives”
Spoken like someone has no clue what they are talking about and just throwing out jargon
Why doesn't your explanation apply to every commodity? Gold, cocoa, mustard seed, electricity? These are also essential products subject to the influence of markets and market makers.
I somehow doubt these institutions are market makers in the housing market, if they had been ones then they'd be offering to sell and buy houses all the time, this is a market maker's function.
Not buying this. Have you seen studies that support this line of arguments?
A “market maker” provides liquidity that allows trades to clear and keeps prices stable. They make money on the bid-ask spread. They don’t have leverage to raise or lower prices.
If what you say is true, wouldn't the same argument apply to practically every market these institutions are in? Oil, timber, steel, AI stuff, cars, you name it.
The majority of the US population (65% https://fred.stlouisfed.org/series/RHORUSQ156N) are home owners. I agree that high home prices are not in the interest of the majority of the population, but I bet the majority think so.
If you have a model where you can do price manipulation of something while owning 1% of it, I understand why you wouldn’t share it. Where are you on the Forbes Billionaire List, out of curiosity?
Supply and demand sets prices.
The gobbledygook you posted, “ properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing”, is just that, gobbledygook.
Just because a buyer as Inc. behind its name doesn’t give it magical powers to set market prices.
If you think it does, then please explain it to us like we are really slow.
> you allow for policy that doesn't maximize the cost of real estate over the interests of the majority of the population.
How do you think homeowners would feel about a policy that doesn't maximize the value of their homes. That's just another way to phrase "maximizing the cost of real estate"?
Based on the data I've seen, respectfully, you are wrong. No, I can't share it. The data is publicly available, however. Feel free to dig it up and aggregate it. The data is publicly available, the effort to dig into it, finding meaning, and sell it to folks, however, is not.
> They are a tiny portion of the market, but a huge driving force in setting and manipulating prices, because their properties get leveraged, instrumentalized, and securitized, with derivative products, speculation, and all sorts of incentives that you don't normally want operating in the arena of housing.
Raising prices when you only have a tiny portion of the market does not work. People won't buy them when there's another house for less.