For companies to cause problems they have to buy so many homes they can abuse their market share by forcing rents up
Not necessarily. Your logic only applies to non-necessities. For a necessity, all you need is to own enough of the industry, that you’re the only option for some people. If there only exists enough housing to just barely house everyone who needs a home, then you could own only 1%, and set the price to whatever you want, because someone will have to live there. Everywhere else is occupied.
which you would see as an increasing vacancy rate
No, you wouldn’t. There is no rent that is so high people will decide to live on the street. They’ll keep paying, until they actually can’t.
Again, this logic only applies to non-necessities. If you hike the price of food, people don’t stop eating. They stop bying luxury goods.
And no, if there isn’t an overabundance of food (as you yourself admit, housing is insufficient) they can’t just switch to the competition, because the competition does not have the capacity to serve everyone.
Yeah if you literally only 100%, or close to it, of housing in a city, that’s true. But no company does in anywhere I’m aware of. There are cases of massive consolidation but the largest competitor acquires like 17% of housing. There are also always some vacant houses even if that number is very low.
Housing is a necessity but there is still some elasticity. People can move in with parents, move to a cheaper region unaffected by the attempted market abuse, share with more people, live in their car or literally be out on the streets. All of those options (none of them good ones) mean that some people will not pay the higher rents if there’s an attempted squeeze - some houses would stand vacant. (Or: stand vacant for longer).
This is not a defence of free market economics in housing; I think local authorities should heavily invest in social housing. I just don’t think that we have any evidence of the high cost of housing being due to excessive company involvement in housing. We are seeing housing crises across the western world in all sorts of cities and all sorts of distributions of ownership.
You are bending over backwards to dismiss my points.
Yeah if you literally only 100%, or close to it, of housing in a city, that’s true. But no company does in anywhere I’m aware of.
I’m not even sure what you’re saying here. Did you misunderstand my point that they don’t need to own 100%?
There are cases of massive consolidation but the largest competitor acquires like 17% of housing
That is MASSIVE consolidation! If a huge 10% of homes are unneeded, that means they can set the price for 7% as high as they want!
People can move in with parents
Boomers are selling their homes to these companies, because the payout is ludicrous. They pay so much more than what the home is worth, because the return of renting it back to someone needing a home is literally limitless.
move to a cheaper region unaffected by the attempted market abuse
You know why it’s unaffected? Fewer jobs. The pensioners selling their homes can move out there, sure… But the people who need homes in the area they just sold their old home for millions in? Not so much.
share with more people
Right. Because these companies aren’t chopping big apartments into smaller units so they sell each room individually. Are you suggesting people start sharing studio apartment closets?
some people will not pay the higher rents
Some is not enough. The whole reason this works is that these companies can squeeze people on necessities, because someone always has to buy from them. To fight this, everyone has to have access to a better option, so that these companies have zero customers. Because as long as they can squeeze someone, they can squeeze harder than any luxury industry could ever dream of.
I just don’t think that we have any evidence of the high cost of housing being due to excessive company involvement in housing.
This has literally been studied. It’s not about what you “think”. You are ignoring current economic facts.
We are seeing housing crises across the western world in all sorts of cities and all sorts of distributions of ownership.
No shit. When someone finds a way to make profit, the method gets copied. No to mention that stuff like airBnBs skirt regulation and often literally operate against local law or building rules. My very first point was that companies don’t need to own much to start hiking local prices. Heck, you could be just one wealthy individual who owns two extra houses, and by setting your rents high, contribute to the problem.
There is a thru-line here, but because it’s so pervasive, you’re saying it can’t possibly be it.
Your point by point objections don’t really change the picture - these are all things that people do. In a market that is not completely elastic, if you increase prices, some people will stop paying and we will see that in the data. Every time I’ve checked this for the USA (where this argument is usually made) there is no recent increase in vacancy rates.
So how about I offer you an alternative scenario: investment companies are seeing that housing is shooting up in value already, due to low rates of building, hence making it a more attractive investment relative to other things. So they buy them up and charge high rents - but at the same time all the individual owners of rental property also see that they can charge high rents, and do so. All we’ve done is swapped who is screwing renters, not by how much.
If this has “literally been studied” then I’d be very happy to see the studies - like I said I’ve tried to find data on this, and never found anything to suggest that replacing individual owners with corporate owners increases prices. Maybe my search-engine-fu is lacking (but also… every other time I’ve discussed this online no-one has come up with anything either. What I’m trying to say is that I don’t hold this position for lack of trying to challenge it.) But in contrast, I’ve seen plenty of studies comparing population growth to house building and coming up with a huge deficit.
You’re looking at the wrong stats. When people are forced to spend more on necessities, they don’t cut necessities. They can’t. They’re necessities.
They cut luxuries.
One such relevant stat, would be piracy spiking. Not to mention the spike in homelessness if we are talking about the US.
You yourself point out that housing is not keeping up with need. Things can absolutely be getting worse (and they are), while at the same time not showing up in vacancy rates. The well-off can be moving into new homes faster than the poor are moving back in with parents. Or going homeless.
Another stat is the average age at which people buy their first home increasing.
Another is the ratio of renters increasing in relation to owners.
investment companies are seeing that housing is shooting up in value already, due to low rates of building, hence making it a more attractive investment relative to other things. So they buy them up and charge high rents - but at the same time all the individual owners of rental property also see that they can charge high rents, and do so. All we’ve done is swapped who is screwing renters, not by how much.
This is a distinction without a difference. You’re saying the chicken came first, while I’m trying to explain chickens come from eggs, and the entire relationship between the two.
Increased consolidation increases the co-ordination of price hiking, hence increasing “how much” screwing is going on. But that doesn’t mean a tiny bit of screwing can’t get it started.
I’m saying it has gotten so bad because the problem feeds itself. By allowing more investment, the screwing gets harder.
All we’ve done is swapped who is screwing renters, not by how much.
This is a truly insane take. You’re saying if all rented properties were owned by single landlords who owned no other properties, rents today would still be just as high?
When people are forced to spend more on necessities, they don’t cut necessities. They can’t. They’re necessities.
Well then, we’re back to some people cutting their costs by doing all the things I said above. You dismissed them all as if reasons why they’re not practical are reasons why they’re impossible.
You’re saying if all rented properties were owned by single landlords who owned no other properties, rents today would still be just as high?
All those landlords have the exact same incentives to charge as much as they can get away with, to subdivide properties and to exploit their renters as corporate landlords do. Consolidation can allow prices to increase - but it doesn’t always, and typically not by a lot, until consolidation reaches very high levels. 3-7% is what I’ve read for company mergers (note that the case studies include large market shares and companies dealing in necessities).
So I propose that corporate landlords have manipulated the market by no more than 10%. So about 6 months of house price increases at current rates, or two years at less crazy rates. Everything else is caused by low supply and such.
Well then, we’re back to some people cutting their costs by doing all the things I said above. You dismissed them all as if reasons why they’re not practical are reasons why they’re impossible.
No. I dismissed them as insufficient to show up in the stats. In order to significantly impact the situation, the alternative needs to be valid for any individual. Not just some.
All those landlords have the exact same incentives to charge as much as they can get away with, to subdivide properties and to exploit their renters as corporate landlords do.
Duh. But are you really going to claim single property owners competing with every other single property owner, wouldn’t have different results than duopolistic companies carving up cities and throwing their weight around in legislation?
Have you considered that larger companies are also able to act to maintain the low supply?
Real-estate and construction overlap a great deal, and that influence also grows with consolidation.
And thanks for linking to a study that confirms what I’m trying to say? 3-7% of the largest bill most people have is not nothing.
Does that percentage account for wage stagnation? Which is also exacerbated by mergers.
Everything else is caused by low supply and such.
A few comments ago you were clamining low supply is the only problem.
If people really thought that companies buying real estate might, at most, contribute a few percent of the price, while limited supply has led to price increases of hundreds of percent, then we’d be getting constant memes about insufficient house-building and pushes to change that, rather than this kind of thing.
I want to change the narrative, because if all people hear is “COMPANIES ARE BUYING UP HOUSES AND JACKING UP RENTS” they won’t push for the policies which will have a bigger impact.
EDIT: Here is a chart of the ratio of population growth to house-building in the USA. Notice that it’s increased from about 1.5 to about 2.5. That is a massive difference. A company with 17% of the homes in a city can squeeze residents in that city for 17% of its available housing if they don’t mind sitting on an asset that isn’t paying them anything.
Meanwhile, the population has increased by about 50%, but you only built homes for half that. That’s a bigger effect even if you believe that companies are willing to sit on vast quantities of empty housing, which we know they’re not.
Not necessarily. Your logic only applies to non-necessities. For a necessity, all you need is to own enough of the industry, that you’re the only option for some people. If there only exists enough housing to just barely house everyone who needs a home, then you could own only 1%, and set the price to whatever you want, because someone will have to live there. Everywhere else is occupied.
No, you wouldn’t. There is no rent that is so high people will decide to live on the street. They’ll keep paying, until they actually can’t.
Again, this logic only applies to non-necessities. If you hike the price of food, people don’t stop eating. They stop bying luxury goods.
And no, if there isn’t an overabundance of food (as you yourself admit, housing is insufficient) they can’t just switch to the competition, because the competition does not have the capacity to serve everyone.
Yeah if you literally only 100%, or close to it, of housing in a city, that’s true. But no company does in anywhere I’m aware of. There are cases of massive consolidation but the largest competitor acquires like 17% of housing. There are also always some vacant houses even if that number is very low.
Housing is a necessity but there is still some elasticity. People can move in with parents, move to a cheaper region unaffected by the attempted market abuse, share with more people, live in their car or literally be out on the streets. All of those options (none of them good ones) mean that some people will not pay the higher rents if there’s an attempted squeeze - some houses would stand vacant. (Or: stand vacant for longer).
This is not a defence of free market economics in housing; I think local authorities should heavily invest in social housing. I just don’t think that we have any evidence of the high cost of housing being due to excessive company involvement in housing. We are seeing housing crises across the western world in all sorts of cities and all sorts of distributions of ownership.
You are bending over backwards to dismiss my points.
I’m not even sure what you’re saying here. Did you misunderstand my point that they don’t need to own 100%?
That is MASSIVE consolidation! If a huge 10% of homes are unneeded, that means they can set the price for 7% as high as they want!
Boomers are selling their homes to these companies, because the payout is ludicrous. They pay so much more than what the home is worth, because the return of renting it back to someone needing a home is literally limitless.
You know why it’s unaffected? Fewer jobs. The pensioners selling their homes can move out there, sure… But the people who need homes in the area they just sold their old home for millions in? Not so much.
Right. Because these companies aren’t chopping big apartments into smaller units so they sell each room individually. Are you suggesting people start sharing studio apartment closets?
Some is not enough. The whole reason this works is that these companies can squeeze people on necessities, because someone always has to buy from them. To fight this, everyone has to have access to a better option, so that these companies have zero customers. Because as long as they can squeeze someone, they can squeeze harder than any luxury industry could ever dream of.
This has literally been studied. It’s not about what you “think”. You are ignoring current economic facts.
No shit. When someone finds a way to make profit, the method gets copied. No to mention that stuff like airBnBs skirt regulation and often literally operate against local law or building rules. My very first point was that companies don’t need to own much to start hiking local prices. Heck, you could be just one wealthy individual who owns two extra houses, and by setting your rents high, contribute to the problem.
There is a thru-line here, but because it’s so pervasive, you’re saying it can’t possibly be it.
Your point by point objections don’t really change the picture - these are all things that people do. In a market that is not completely elastic, if you increase prices, some people will stop paying and we will see that in the data. Every time I’ve checked this for the USA (where this argument is usually made) there is no recent increase in vacancy rates.
So how about I offer you an alternative scenario: investment companies are seeing that housing is shooting up in value already, due to low rates of building, hence making it a more attractive investment relative to other things. So they buy them up and charge high rents - but at the same time all the individual owners of rental property also see that they can charge high rents, and do so. All we’ve done is swapped who is screwing renters, not by how much.
If this has “literally been studied” then I’d be very happy to see the studies - like I said I’ve tried to find data on this, and never found anything to suggest that replacing individual owners with corporate owners increases prices. Maybe my search-engine-fu is lacking (but also… every other time I’ve discussed this online no-one has come up with anything either. What I’m trying to say is that I don’t hold this position for lack of trying to challenge it.) But in contrast, I’ve seen plenty of studies comparing population growth to house building and coming up with a huge deficit.
You’re looking at the wrong stats. When people are forced to spend more on necessities, they don’t cut necessities. They can’t. They’re necessities.
They cut luxuries.
One such relevant stat, would be piracy spiking. Not to mention the spike in homelessness if we are talking about the US.
You yourself point out that housing is not keeping up with need. Things can absolutely be getting worse (and they are), while at the same time not showing up in vacancy rates. The well-off can be moving into new homes faster than the poor are moving back in with parents. Or going homeless.
Another stat is the average age at which people buy their first home increasing.
Another is the ratio of renters increasing in relation to owners.
This is a distinction without a difference. You’re saying the chicken came first, while I’m trying to explain chickens come from eggs, and the entire relationship between the two.
Increased consolidation increases the co-ordination of price hiking, hence increasing “how much” screwing is going on. But that doesn’t mean a tiny bit of screwing can’t get it started.
I’m saying it has gotten so bad because the problem feeds itself. By allowing more investment, the screwing gets harder.
This is a truly insane take. You’re saying if all rented properties were owned by single landlords who owned no other properties, rents today would still be just as high?
Well then, we’re back to some people cutting their costs by doing all the things I said above. You dismissed them all as if reasons why they’re not practical are reasons why they’re impossible.
All those landlords have the exact same incentives to charge as much as they can get away with, to subdivide properties and to exploit their renters as corporate landlords do. Consolidation can allow prices to increase - but it doesn’t always, and typically not by a lot, until consolidation reaches very high levels. 3-7% is what I’ve read for company mergers (note that the case studies include large market shares and companies dealing in necessities).
So I propose that corporate landlords have manipulated the market by no more than 10%. So about 6 months of house price increases at current rates, or two years at less crazy rates. Everything else is caused by low supply and such.
No. I dismissed them as insufficient to show up in the stats. In order to significantly impact the situation, the alternative needs to be valid for any individual. Not just some.
Duh. But are you really going to claim single property owners competing with every other single property owner, wouldn’t have different results than duopolistic companies carving up cities and throwing their weight around in legislation?
Have you considered that larger companies are also able to act to maintain the low supply?
Real-estate and construction overlap a great deal, and that influence also grows with consolidation.
And thanks for linking to a study that confirms what I’m trying to say? 3-7% of the largest bill most people have is not nothing.
Does that percentage account for wage stagnation? Which is also exacerbated by mergers.
A few comments ago you were clamining low supply is the only problem.
If people really thought that companies buying real estate might, at most, contribute a few percent of the price, while limited supply has led to price increases of hundreds of percent, then we’d be getting constant memes about insufficient house-building and pushes to change that, rather than this kind of thing.
I want to change the narrative, because if all people hear is “COMPANIES ARE BUYING UP HOUSES AND JACKING UP RENTS” they won’t push for the policies which will have a bigger impact.
EDIT: Here is a chart of the ratio of population growth to house-building in the USA. Notice that it’s increased from about 1.5 to about 2.5. That is a massive difference. A company with 17% of the homes in a city can squeeze residents in that city for 17% of its available housing if they don’t mind sitting on an asset that isn’t paying them anything.
Meanwhile, the population has increased by about 50%, but you only built homes for half that. That’s a bigger effect even if you believe that companies are willing to sit on vast quantities of empty housing, which we know they’re not.
Did I at some point say we don’t need more housing?
Protip: switch to “yes, and”.
You won’t get a positive response by continuing with “no, actually”.
I believe these same corporate forces are a major reason why housing isn’t being built. Hence my focus is on them, not simply “build more homes”.
In my city, homes are being built, but only by the rich for the rich. I’m finnish, btw.