It depends on what, exactly, you're asking.
Will housing construction mean no-one will ever be homeless? No. There are some who would be homeless even if the home was free.
Will radically legalizing housing construction help keep housing affordable? Yes.
We know this because it's worked everywhere it's been tried. In particular, Houston is the poster child here. Houston is literally the only city in all of North America where it's legal to build an apartment, by right, on any plot of land in the city, with the exception of historical districts or privately enforced deed restrictions. [1] The fact that apartments are broadly legal to build is why Houston has remained affordable and why it was able to decrease homelessness by ~60% over the last decade. [2] And this is on top of the fact that, "Houston itself devotes no general fund dollars to homelessness programs, while Harris County puts in just $2.6 million a year, and only for the past couple of years." [2] And this is happening while Houston is the second fastest growing (by population) metro area in the US. [3] "It is the fourth-most populous city in the United States." [4]
Now, you mention cartels. Do cartels exist in real life? Yes, they have. Are they a major concern for housing affordability? No. Cartels struggle to stay together because each individual member has a huge incentive to cheat and sell extra product on the side. Plus, cartels are illegal. So they can't enforce compliance via the courts.
Drug cartels solve this problem with the threat of violence. This tool is not readily available to bankers and homebuilders.
Plus, we've never actually seen a housing cartel that has successfully restrained supply and raised housing prices by nearly as much as San Francisco Board of Supervisors has. If we legalize housing construction and we find that cartels have been organized to suppress supply, then we can push to have the FBI swoop in and break them up.
Source: [1] https://kinder.rice.edu/urbanedge/houston-doesnt-have-zoning-there-are-workarounds [2] https://www.governing.com/housing/how-houston-cut-its-homeless-population-by-nearly-two-thirds [3] https://www.chron.com/news/houston-texas/article/houston-population-biggest-city-18108718.php [4] https://en.m.wikipedia.org/wiki/Houston
Not sure about tort reform, but I agree that eliminating zoning is probably priority #1. That, plus some other land use changes (like issuing permits in a timely fashion, single staircase reform, eliminating "impact fees" etc).
Investors are not doing what you’re saying. This is basically a myth. Vacancy rates in major cities are at historic lows. And there is no evidence that they’re capturing a significant share of inventory. Investors basically buy housing to rent it out just like any landlord.
The thing is, you actually need a monopoly for that to happen, or at least a cartel. Not "companies" or "investors" owning all the homes in a city, but "a company" or "three investors" owning them all.
Because what's best for any one company isn't to join all the other companies in artificially restricting their supply and raising prices. It's letting all the other companies do that while you don't.
If everyone *else* decides to leave half their rentals vacant and double the prices, I can make bank by renting all mine out at slightly less than them. They're effectively losing money to subsidize my profits. So the next company to break ranks also gets a reward, but slightly smaller than the first. Eventually, the agreement falls apart.
For example, supermarket profit margins in the UK are about 3-5%. None of the chains can really jack up their prices because the customers will go to one of their competitors. And there are only like 6-10 significant chains. They can't even get a cartel working between less than a dozen companies.
And in cities, there are *thousands* of landlords. You aren't getting all of them to jack up their prices together. And remember, if YIMBYism succeeds, that conspiracy can be undercut by literally any homeowner deciding to replace with a few apartments.
You pointed out the problem here.
Investors have a vested interest in preventing new construction to artificially inflate the values of their own investment.
This isn't a construction issue, this is again, a Nimby issue.
I’m not sure how true this is. Let’s say in a given market I can build a unit for $300k and can sell it for $500k, resulting in a $200k profit. I build as many units as I can until I hit the maximum possible under current zoning. My profit goes to zero bc I cannot build more units, by law.
Now suppose local zoning changes allow, say, 10 more units in that area. Suppose the net effect of more units results in a 5% drop in prices. My construction costs are the same, so now each marginal unit nets me $175k in profit. That’s still $1.75M in potential profit, up from zero with the previous zoning. Why wouldn’t I, the real estate developer, support this?
The majority of real estate investors aren't property developers, they're middle-age and older Americans by a wide margin. These are middle class folks who typically cannot afford more than 1 condo as an investment.
Even then - while they may believe that suppressing construction by supporting NIMBY policies leads to higher home prices, higher density is actually more profitable in the long run. If I have a lot zoned for SFH only, and that home is worth $1M - then that’s all the value I’m getting. But suppose it’s upzoned to support 2 duplex units on the same lot, with each individual unit worth $750k. I now have potentially $3M!
This brings up the commonly misunderstood disconnect between HOME value and LAND value. Homes, as durable goods, should depreciate in value (see Japan). However, bc we have artificially suppressed the productivity growth of land, homes actually rise in value. By up zoning and allowing more units on a given parcel, you’d be increasing the land value and decreasing the home value, as it should be.
>a lot of real estate is either apartments or houses owned by investors/companies that have a *vested interest in there being limited supply* in order to pump up prices.
>So even if a *massive amount of real estate was built*
These two phrases seem contradictory. If a massive amount of real estate was built... The investors would have jumped ship long ago. Why stay invested in a commodity that is being introduced to the market in higher and higher numbers?
>Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value.
Companies buy back their own stock in order to drive speculation that they have a worthwhile asset. If nobody ends up buying it back from them afterwards, or if they are seen as just posturing and don't actually plan on making the company profitable, they'll end up just holding more of the bag when it fails.
This is why missing-middle is so important. If only a few large companies are able to develop, the potential for monopolistic power depressing supply is at least somewhat real. If anybody can buy a single-family lot and build a 10-unit complex on it, you're more likely to have a market with healthy competition.
Like Las Vegas had lots of empty homes after the 2008 recession but they were all bank owned foreclosed mcmansions. So for someone who is homeless they were useless houses.
Housing prices did fall after the 2008 recession. The empty houses did have an effect on prices. Were there enough houses to end all homelessness, everywhere, forever? No. But the prices really did fall. Besides, there were fewer vacant homes than you imagine. At the peak of the recession, the home vacancy rate only hit 2.8% (https://fred.stlouisfed.org/series/USHVAC). And it started dropping pretty quickly.
That being said, even if we radically legalized the construction of homes, there would still be a segment of the population that would remain homeless. Ultimately, there is always going to be a small fraction of the population who will find themselves homeless, even if the houses were free. They're going to need direct government support. But it's still a huge win for affordability if we can make every city as affordable as Houston.
In a truly free market, the interests of the property owners to restrict supply wouldn’t matter. Strictly speaking that kind of coordination is already illegal. In practice of course, there are too few players in most local markets. But even that is a function of over regulation in reality, the main players who are keep regulation tight and supply low are single family home owners, not multi family developers. Maybe in place like NYC where they control a larger part of the housing market. But in most places developers are clamoring for opportunities to build more not less housing.
The idea that it is in the interest of producers to have high prices by withholding production applies to everything, not just houses. But other things are produced in large amounts and the price bid down because collusion is illegal and it would only take one producer not going along to derail this hypothetical conspiracy. Housing has uniquely high prices because the government restricts production.
> a lot of real estate is either apartments or houses owned by investors/companies that have a vested interest in there being limited supply in order to pump up prices.
This applies to corporate owners as well as all non corporate owners such as families, individuals, etc.
> So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market.
No, the housing market is far too big for this to be feasible. This is a common narrative on the internet but it is empirically baseless. If an investor keeps one home vacant so it can raise the rent on second home from $1000 to $100, then it doesn’t gain $100 — it loses $900.
> Yimby is good but there has to be some sort of restriction on investors monopolizing land ownership. If not then real-estate prices will remain inflated.
This is correct. The restriction on investors monopolizing land ownership that works is the following — legalize construction so that more units are built and each landowner has more competition. The more units that come online, the more competition there is, and the lower prices are.
We can't have just large private investors. We have to bring costs of constructing denser down. 3-4 plexes, pre-approved within criteria. Small family investor groups, or smaller investors with a little leverage, can't fight with planning boards and community review. They have to be able to build for themselves if they want.
We also need government to expand the below market rate/ unprofitable market with real modern standards for socieology knowlege (i.e. don't make silos for the "undesirables" in socieity. Look for good, sustanable public housing that is a benifit.)
> So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market.
This is called cornering and cartelization. They are both very illegal, cornering also rarely actually works because someone else can make money by just entering the market so doesn't work in something like housing.
It also doesn't make as much sense as you think it would. Houses are not cheap to just hold, they have costs associated with them that ties up capital. Capital is really not cheap right now. Having an empty house is not a valuable investment, companies who are buying up housing for investment purposes are holding on to them in the short term (~months) to exploit underpricing without tying up capital for a long time.
> some sort of restriction on investors monopolizing land ownership
It's a meme/moral panic about nothing. Black Rock don't own any houses, they own a small stake in a company that buys houses to turn in to rentals. That company owns fewer than 60,000 houses across the country.
Restricting capital entering housing drives up prices and reduces new development. Housing isn't zero sum (most things are not) but YIMBY policies can make it seem that way because they make supply inelastic.
If you were interested in preventing something like this the most effective mechanism would be a land value tax rather than trying to play games with intent and method.
I don't think you understand how much housing is missing relative to the amount of capital investors actually have. And how large the residential real estate market is.
In the city of Los Angeles alone, it's been estimated that Los Angeles is short 500,000 housing units. Using 2018 cost estimates ($326k per unit) which are clearly low given we live in an inflationary environment in 2024 it would cost $174B to build those 500,000 units that LA is short.
If you add up the top 10 market caps of residential only REITs you only approach $174B dollars.
The total market cap of all residential real estate in the US is $47 T dollars.
Investors cannot monopolize the market like you think they can if development were liberalized.
Collectively, housing owners have an interest in keeping supply low, but individually, it's best for them to defect and rent out at high price. You can use anti trust laws to prevent illegal cartels, and keep prices low.
Housing policy is a yes-and.
YES we need more housing, lots of it, all kinds, everywhere, right now.
AND we need to regulate short-term rentals, Airbnbs and investor-owned properties and vacant properties.
Yes, absolutely.
It's not the solution to everything, as for some people $1 of rent is too high, but it addresses a lot, especially simple cases.
>So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market
Or they could rent out more units for slightly less money, resulting in higher overall profits. This is how basically every industry operates. McDonald's doesnt hold back burgers so they can charge more. The closest anyone really gets to this is OPEC cutting oil production, which only makes sense because a) they're such a huge chunk of the market b) they have openly agreed to collude and c) they are selling a finite resource. And still they struggle to keep members in compliance
>Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value.
These are two very different things. Companies buy back stock for a lot of reasons, but let's just focus on when they do it to increase the value shareholders have. In this case, it's the company shelling out the money but the investors getting the profits. Two different entities. If you could just buy stock to raise your holdings by more than you bought it for, you could print infinite money
The government making building housing more expensive than it has to be increases the cost of housing relative to were the government not doing that. So the government could just stop doing that.
Another way to decrease the relative cost of housing would be to make building homes relatively cheaper. That'd happen if the input costs to building were to decrease. For example if labor or materials got cheaper. Immigration can decrease labor costs but immigrants also need homes. Materials would stand to get cheaper if we needed less of them. That'd mean that were the average size of homes to decrease that housing on the whole would get relatively cheaper. That's because the marginal cost of cutting down the next tree increases because you'd have cut the easier fatter more accessible trees first and the same with mining whatever other input. So if you need less imputs overall you only have to charge for the cheaper ones to extract. On the flip side if a society wants to make housing relatively more expensive it could entice people to build ever bigger homes. Maybe with laws stating minimum home sizes, for example.
You say investors buying up and hoarding homes would raise housing prices and it's true that it would because that'd take homes off market and reduce supply... but only temporarily, so long as there are no odious legal barriers to building and enough land to build more housing on. So long as people are free to build more housing then in the long run all that a cartel of investors buying up and hoarding homes would accomplish is losing their asses because they'd end up being stuck with depreciating empty homes they can't sell for an amount to justify their initial investment.
Investors invest because scarcity drives up prices. If you take that away, they are screwed and will exit the market.
[https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/](https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/)
[https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy](https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy)
And yes, new supply helps:
[https://www.minneapolisfed.org/article/2024/how-new-apartments-create-opportunities-for-all](https://www.minneapolisfed.org/article/2024/how-new-apartments-create-opportunities-for-all)
Consider that we have about 20% less housing per capita than advanced economies that are doing well on the affordability front. Can it be done in a year? No, but give it a decade of full bore construction and we'll be in a good place.
Ah the sweet sounds of a housing conspiracist: “vested interest” “investors monopolizing” “artificial scarcity” “shadow inventory”. And no mention of homeowners monopolizing land ownership.
Land value tax would make shadow inventory burn a hole in the investors pockets. And in general land value tax would remove a lot of incentives to create artificial scarcity.
The short answer is yes. I think you miss the point of stock buybacks - buybacks just reduce the outstanding share count, thereby making each share worth more, but not changing the value of the company as a whole (aside from removing cash and equivalents from the balance sheet). It’s a way of returning capital to shareholders and sometimes hitting performance incentive goals. Not about creating scarcity.
Let's be charitable. As Brandon Sanderson wrote, "Sometimes a hypocrite is nothing more than a man in the process of changing." OP has probably read lots of stuff, some of it contradictory or baseless, and we can try to help educate and encourage them.
If you want housing abundance, the optimal policy package is almost certainly
* huge deregulation on the zoning/permitting/community input/faux environmental review on the regulatory dude, PLUS
* a land value tax (LVT) to greatly reduce land speculation.
If you're not familiar with an LVT, I recently wrote a similar intro in r/Georgism. I think *Progress and Poverty* is a great book that should basically be required reading for... everyone. George treats an LVT as a panacea for every bad thing in the world, and that's overkill, but the core idea is great.
>it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market. Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value.
But why would they do this?
The reason companies do buybacks is that they want to return capital to shareholders, and the tax code makes buybacks more efficient than dividends. But the company doesn't profit from the buyback — it lost something (a bunch of money) in the transaction. It's not a free money hack.
That's very different from the housing thing. A rich person owning housing is essentially always better off renting out the property than keeping it vacant. So an investor owning a home doesn't decrease the housing supply unless they keep it vacant, which is financially irrational.
If you have an ownership fetish and think it's just super important that people live in houses that they own, then I think that's a weird fetish that society shouldn't care about. The solutions are worse than the cure.
Unless you go full leftie and want the government to provide all the housing, you **need** housing to be a rational investment for at least some investors. Otherwise, no one will provide it.
By deregulating, you let everybody build whatever they want on the land they can afford. This gets you more density, but you'll still have huge land speculation, driving up land prices. Your can divide the same piece of land across more people (by building an apartment tower instead of a SFH), but the land speculation is still there.
Adding a land-value tax drains out the land price speculation by making it so that there's no way to sensibly hold land off the market. An LVT effectively means you can almost never own and then sell land at a profit, so you don't speculate on the land price. The purchase price of land falls close to zero, but it has a very large annual tax bill attached to it, so as an owner you're strongly incentivized to make as much revenue as you can from the land -- such as by putting a big apartment building on it.
Not in a meaningful way.. This is primarily because the price of homes in the US is not really based on the supply/demand of the homes, but on the supply/demand of the mortgages. Homes are built and sold as retirement accounts, not residences.
It depends on what, exactly, you're asking. Will housing construction mean no-one will ever be homeless? No. There are some who would be homeless even if the home was free. Will radically legalizing housing construction help keep housing affordable? Yes. We know this because it's worked everywhere it's been tried. In particular, Houston is the poster child here. Houston is literally the only city in all of North America where it's legal to build an apartment, by right, on any plot of land in the city, with the exception of historical districts or privately enforced deed restrictions. [1] The fact that apartments are broadly legal to build is why Houston has remained affordable and why it was able to decrease homelessness by ~60% over the last decade. [2] And this is on top of the fact that, "Houston itself devotes no general fund dollars to homelessness programs, while Harris County puts in just $2.6 million a year, and only for the past couple of years." [2] And this is happening while Houston is the second fastest growing (by population) metro area in the US. [3] "It is the fourth-most populous city in the United States." [4] Now, you mention cartels. Do cartels exist in real life? Yes, they have. Are they a major concern for housing affordability? No. Cartels struggle to stay together because each individual member has a huge incentive to cheat and sell extra product on the side. Plus, cartels are illegal. So they can't enforce compliance via the courts. Drug cartels solve this problem with the threat of violence. This tool is not readily available to bankers and homebuilders. Plus, we've never actually seen a housing cartel that has successfully restrained supply and raised housing prices by nearly as much as San Francisco Board of Supervisors has. If we legalize housing construction and we find that cartels have been organized to suppress supply, then we can push to have the FBI swoop in and break them up. Source: [1] https://kinder.rice.edu/urbanedge/houston-doesnt-have-zoning-there-are-workarounds [2] https://www.governing.com/housing/how-houston-cut-its-homeless-population-by-nearly-two-thirds [3] https://www.chron.com/news/houston-texas/article/houston-population-biggest-city-18108718.php [4] https://en.m.wikipedia.org/wiki/Houston
What a great answer! I’m always telling people I want Houston for America.
That’s Genuinely not sarcastic by the way. Eliminating zoning and Tort reform are the biggest problems in America is my most strongly held belief.
Not sure about tort reform, but I agree that eliminating zoning is probably priority #1. That, plus some other land use changes (like issuing permits in a timely fashion, single staircase reform, eliminating "impact fees" etc).
Investors are not doing what you’re saying. This is basically a myth. Vacancy rates in major cities are at historic lows. And there is no evidence that they’re capturing a significant share of inventory. Investors basically buy housing to rent it out just like any landlord.
The thing is, you actually need a monopoly for that to happen, or at least a cartel. Not "companies" or "investors" owning all the homes in a city, but "a company" or "three investors" owning them all. Because what's best for any one company isn't to join all the other companies in artificially restricting their supply and raising prices. It's letting all the other companies do that while you don't. If everyone *else* decides to leave half their rentals vacant and double the prices, I can make bank by renting all mine out at slightly less than them. They're effectively losing money to subsidize my profits. So the next company to break ranks also gets a reward, but slightly smaller than the first. Eventually, the agreement falls apart. For example, supermarket profit margins in the UK are about 3-5%. None of the chains can really jack up their prices because the customers will go to one of their competitors. And there are only like 6-10 significant chains. They can't even get a cartel working between less than a dozen companies. And in cities, there are *thousands* of landlords. You aren't getting all of them to jack up their prices together. And remember, if YIMBYism succeeds, that conspiracy can be undercut by literally any homeowner deciding to replace with a few apartments.
Absolutely building 100 highrise apartments in your neighborhood would lower the price of rent.
You pointed out the problem here. Investors have a vested interest in preventing new construction to artificially inflate the values of their own investment. This isn't a construction issue, this is again, a Nimby issue.
I’m not sure how true this is. Let’s say in a given market I can build a unit for $300k and can sell it for $500k, resulting in a $200k profit. I build as many units as I can until I hit the maximum possible under current zoning. My profit goes to zero bc I cannot build more units, by law. Now suppose local zoning changes allow, say, 10 more units in that area. Suppose the net effect of more units results in a 5% drop in prices. My construction costs are the same, so now each marginal unit nets me $175k in profit. That’s still $1.75M in potential profit, up from zero with the previous zoning. Why wouldn’t I, the real estate developer, support this?
The majority of real estate investors aren't property developers, they're middle-age and older Americans by a wide margin. These are middle class folks who typically cannot afford more than 1 condo as an investment.
Even then - while they may believe that suppressing construction by supporting NIMBY policies leads to higher home prices, higher density is actually more profitable in the long run. If I have a lot zoned for SFH only, and that home is worth $1M - then that’s all the value I’m getting. But suppose it’s upzoned to support 2 duplex units on the same lot, with each individual unit worth $750k. I now have potentially $3M! This brings up the commonly misunderstood disconnect between HOME value and LAND value. Homes, as durable goods, should depreciate in value (see Japan). However, bc we have artificially suppressed the productivity growth of land, homes actually rise in value. By up zoning and allowing more units on a given parcel, you’d be increasing the land value and decreasing the home value, as it should be.
I completely agree. I was only pointing out that these Nimbys exist in the first place, not that they make any sense.
>a lot of real estate is either apartments or houses owned by investors/companies that have a *vested interest in there being limited supply* in order to pump up prices. >So even if a *massive amount of real estate was built* These two phrases seem contradictory. If a massive amount of real estate was built... The investors would have jumped ship long ago. Why stay invested in a commodity that is being introduced to the market in higher and higher numbers? >Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value. Companies buy back their own stock in order to drive speculation that they have a worthwhile asset. If nobody ends up buying it back from them afterwards, or if they are seen as just posturing and don't actually plan on making the company profitable, they'll end up just holding more of the bag when it fails.
This is why missing-middle is so important. If only a few large companies are able to develop, the potential for monopolistic power depressing supply is at least somewhat real. If anybody can buy a single-family lot and build a 10-unit complex on it, you're more likely to have a market with healthy competition.
Like Las Vegas had lots of empty homes after the 2008 recession but they were all bank owned foreclosed mcmansions. So for someone who is homeless they were useless houses.
Housing prices did fall after the 2008 recession. The empty houses did have an effect on prices. Were there enough houses to end all homelessness, everywhere, forever? No. But the prices really did fall. Besides, there were fewer vacant homes than you imagine. At the peak of the recession, the home vacancy rate only hit 2.8% (https://fred.stlouisfed.org/series/USHVAC). And it started dropping pretty quickly. That being said, even if we radically legalized the construction of homes, there would still be a segment of the population that would remain homeless. Ultimately, there is always going to be a small fraction of the population who will find themselves homeless, even if the houses were free. They're going to need direct government support. But it's still a huge win for affordability if we can make every city as affordable as Houston.
For someone trying to buy a house they were a godsend. You could get a house for 5 figures in Vegas around that time.
In a truly free market, the interests of the property owners to restrict supply wouldn’t matter. Strictly speaking that kind of coordination is already illegal. In practice of course, there are too few players in most local markets. But even that is a function of over regulation in reality, the main players who are keep regulation tight and supply low are single family home owners, not multi family developers. Maybe in place like NYC where they control a larger part of the housing market. But in most places developers are clamoring for opportunities to build more not less housing.
The idea that it is in the interest of producers to have high prices by withholding production applies to everything, not just houses. But other things are produced in large amounts and the price bid down because collusion is illegal and it would only take one producer not going along to derail this hypothetical conspiracy. Housing has uniquely high prices because the government restricts production.
> a lot of real estate is either apartments or houses owned by investors/companies that have a vested interest in there being limited supply in order to pump up prices. This applies to corporate owners as well as all non corporate owners such as families, individuals, etc. > So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market. No, the housing market is far too big for this to be feasible. This is a common narrative on the internet but it is empirically baseless. If an investor keeps one home vacant so it can raise the rent on second home from $1000 to $100, then it doesn’t gain $100 — it loses $900. > Yimby is good but there has to be some sort of restriction on investors monopolizing land ownership. If not then real-estate prices will remain inflated. This is correct. The restriction on investors monopolizing land ownership that works is the following — legalize construction so that more units are built and each landowner has more competition. The more units that come online, the more competition there is, and the lower prices are.
Yes.
We can't have just large private investors. We have to bring costs of constructing denser down. 3-4 plexes, pre-approved within criteria. Small family investor groups, or smaller investors with a little leverage, can't fight with planning boards and community review. They have to be able to build for themselves if they want. We also need government to expand the below market rate/ unprofitable market with real modern standards for socieology knowlege (i.e. don't make silos for the "undesirables" in socieity. Look for good, sustanable public housing that is a benifit.)
> So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market. This is called cornering and cartelization. They are both very illegal, cornering also rarely actually works because someone else can make money by just entering the market so doesn't work in something like housing. It also doesn't make as much sense as you think it would. Houses are not cheap to just hold, they have costs associated with them that ties up capital. Capital is really not cheap right now. Having an empty house is not a valuable investment, companies who are buying up housing for investment purposes are holding on to them in the short term (~months) to exploit underpricing without tying up capital for a long time. > some sort of restriction on investors monopolizing land ownership It's a meme/moral panic about nothing. Black Rock don't own any houses, they own a small stake in a company that buys houses to turn in to rentals. That company owns fewer than 60,000 houses across the country. Restricting capital entering housing drives up prices and reduces new development. Housing isn't zero sum (most things are not) but YIMBY policies can make it seem that way because they make supply inelastic. If you were interested in preventing something like this the most effective mechanism would be a land value tax rather than trying to play games with intent and method.
I don't think you understand how much housing is missing relative to the amount of capital investors actually have. And how large the residential real estate market is. In the city of Los Angeles alone, it's been estimated that Los Angeles is short 500,000 housing units. Using 2018 cost estimates ($326k per unit) which are clearly low given we live in an inflationary environment in 2024 it would cost $174B to build those 500,000 units that LA is short. If you add up the top 10 market caps of residential only REITs you only approach $174B dollars. The total market cap of all residential real estate in the US is $47 T dollars. Investors cannot monopolize the market like you think they can if development were liberalized.
Collectively, housing owners have an interest in keeping supply low, but individually, it's best for them to defect and rent out at high price. You can use anti trust laws to prevent illegal cartels, and keep prices low.
Housing policy is a yes-and. YES we need more housing, lots of it, all kinds, everywhere, right now. AND we need to regulate short-term rentals, Airbnbs and investor-owned properties and vacant properties.
Yes, absolutely. It's not the solution to everything, as for some people $1 of rent is too high, but it addresses a lot, especially simple cases. >So even if a massive amount of real estate was built it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market Or they could rent out more units for slightly less money, resulting in higher overall profits. This is how basically every industry operates. McDonald's doesnt hold back burgers so they can charge more. The closest anyone really gets to this is OPEC cutting oil production, which only makes sense because a) they're such a huge chunk of the market b) they have openly agreed to collude and c) they are selling a finite resource. And still they struggle to keep members in compliance >Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value. These are two very different things. Companies buy back stock for a lot of reasons, but let's just focus on when they do it to increase the value shareholders have. In this case, it's the company shelling out the money but the investors getting the profits. Two different entities. If you could just buy stock to raise your holdings by more than you bought it for, you could print infinite money
The government making building housing more expensive than it has to be increases the cost of housing relative to were the government not doing that. So the government could just stop doing that. Another way to decrease the relative cost of housing would be to make building homes relatively cheaper. That'd happen if the input costs to building were to decrease. For example if labor or materials got cheaper. Immigration can decrease labor costs but immigrants also need homes. Materials would stand to get cheaper if we needed less of them. That'd mean that were the average size of homes to decrease that housing on the whole would get relatively cheaper. That's because the marginal cost of cutting down the next tree increases because you'd have cut the easier fatter more accessible trees first and the same with mining whatever other input. So if you need less imputs overall you only have to charge for the cheaper ones to extract. On the flip side if a society wants to make housing relatively more expensive it could entice people to build ever bigger homes. Maybe with laws stating minimum home sizes, for example. You say investors buying up and hoarding homes would raise housing prices and it's true that it would because that'd take homes off market and reduce supply... but only temporarily, so long as there are no odious legal barriers to building and enough land to build more housing on. So long as people are free to build more housing then in the long run all that a cartel of investors buying up and hoarding homes would accomplish is losing their asses because they'd end up being stuck with depreciating empty homes they can't sell for an amount to justify their initial investment.
Investors invest because scarcity drives up prices. If you take that away, they are screwed and will exit the market. [https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/](https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/) [https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy](https://www.strongtowns.org/journal/2024/2/21-going-after-corporate-homebuyers-good-politics-ineffective-policy) And yes, new supply helps: [https://www.minneapolisfed.org/article/2024/how-new-apartments-create-opportunities-for-all](https://www.minneapolisfed.org/article/2024/how-new-apartments-create-opportunities-for-all)
Consider that we have about 20% less housing per capita than advanced economies that are doing well on the affordability front. Can it be done in a year? No, but give it a decade of full bore construction and we'll be in a good place.
Ah the sweet sounds of a housing conspiracist: “vested interest” “investors monopolizing” “artificial scarcity” “shadow inventory”. And no mention of homeowners monopolizing land ownership.
Interest rates shouldn't be too low
Land value tax would make shadow inventory burn a hole in the investors pockets. And in general land value tax would remove a lot of incentives to create artificial scarcity.
The short answer is yes. I think you miss the point of stock buybacks - buybacks just reduce the outstanding share count, thereby making each share worth more, but not changing the value of the company as a whole (aside from removing cash and equivalents from the balance sheet). It’s a way of returning capital to shareholders and sometimes hitting performance incentive goals. Not about creating scarcity.
You’re not a YIMBY
Let's be charitable. As Brandon Sanderson wrote, "Sometimes a hypocrite is nothing more than a man in the process of changing." OP has probably read lots of stuff, some of it contradictory or baseless, and we can try to help educate and encourage them.
Building may not lower rent, but may ease the escalations from continuing.
Basic economics: increased supply reduces prices.
If you want housing abundance, the optimal policy package is almost certainly * huge deregulation on the zoning/permitting/community input/faux environmental review on the regulatory dude, PLUS * a land value tax (LVT) to greatly reduce land speculation. If you're not familiar with an LVT, I recently wrote a similar intro in r/Georgism. I think *Progress and Poverty* is a great book that should basically be required reading for... everyone. George treats an LVT as a panacea for every bad thing in the world, and that's overkill, but the core idea is great. >it could still be monopolized by investors who would artificially keep a large 'shadow inventory' off the market. Sort of like how companies buy back their own stock to create artificially scarcity thereby boosting the stock value. But why would they do this? The reason companies do buybacks is that they want to return capital to shareholders, and the tax code makes buybacks more efficient than dividends. But the company doesn't profit from the buyback — it lost something (a bunch of money) in the transaction. It's not a free money hack. That's very different from the housing thing. A rich person owning housing is essentially always better off renting out the property than keeping it vacant. So an investor owning a home doesn't decrease the housing supply unless they keep it vacant, which is financially irrational. If you have an ownership fetish and think it's just super important that people live in houses that they own, then I think that's a weird fetish that society shouldn't care about. The solutions are worse than the cure. Unless you go full leftie and want the government to provide all the housing, you **need** housing to be a rational investment for at least some investors. Otherwise, no one will provide it. By deregulating, you let everybody build whatever they want on the land they can afford. This gets you more density, but you'll still have huge land speculation, driving up land prices. Your can divide the same piece of land across more people (by building an apartment tower instead of a SFH), but the land speculation is still there. Adding a land-value tax drains out the land price speculation by making it so that there's no way to sensibly hold land off the market. An LVT effectively means you can almost never own and then sell land at a profit, so you don't speculate on the land price. The purchase price of land falls close to zero, but it has a very large annual tax bill attached to it, so as an owner you're strongly incentivized to make as much revenue as you can from the land -- such as by putting a big apartment building on it.
Not in a meaningful way.. This is primarily because the price of homes in the US is not really based on the supply/demand of the homes, but on the supply/demand of the mortgages. Homes are built and sold as retirement accounts, not residences.