Comment on So many expensive homes
NielsBohron@lemmy.world 10 months agoI have a very specific viewpoint on this issue, as I live in a vacation destination. Various investors are buying up every property that comes up for sale in my community (large corporations, small companies, wealthy individuals looking for vacation homes, etc.)
Every single property that gets bought, gets registered or otherwise improved to the point that there’s no chance in hell anyone living and working in the community full-time can afford to buy, unless they bought their first property before 2016. Since then, home ownership among my colleagues has become a pipe dream (and without giving away too many personal details, let me just say my colleagues and I are well-educated professionals making way above the median income for jobs in the area).
As I type this out, I’m listening to a million-dollar house being built in the lot behind me (which will almost certainly sit vacant >80% of the time), a shit rental being turned over next door (which charges $3k/mo for a 3/1.5), and two short-term vacation rentals partying across the street (which usually charge $300-$400/night).
Regardless of who it is, investors buying up housing is a huge problem for people that are trying to own their own home, especially first-time buyers.
RickRussell_CA@lemmy.world 10 months ago
With respect, you’re missing the point.
Sellers don’t determine price. Buyers do. “Investors” (big, small, whatever) are selling homes at those prices (or renting, or VRBOing) because there are customers ready to buy the next available unit. If customers aren’t willing to buy at that price, then the seller will lower the price. Or never build the big house in the first place. Or never renovate. Who would spend money on an investment when nobody will buy it?
They can only sell for those prices because buyers are ready to buy.
Economists have a concept of “economic value”. Regardless of price, “economic value” it what the next buyer is willing to pay for an item RIGHT NOW. People have a lot of weird ideas about what the “value” of something is, and they’ll include all sorts of non-monetary factors because they think value is a feeling or concept of utility that particularly applies to them. They value “walkability” or “views” or “quaint antique design”, or whatever.
But inasmuch as “value” has any objective meaning, the best one economists have managed to come up with is economic value – the price that a unit of something will sell for at this very moment. And I humbly suggest that the economic value of housing in your area something is determined entirely by the buyer: the person or entity that is willing to buy the next available unit of housing.
Devi@kbin.social 10 months ago
You and the other guy are talking about two different things. You're trying to explain supply and demand in a very factual way, the other guy is explaining to you how this is hurting actual people who need somewhere to live.
They haven't missed the point at all but are talking about the human element here.
leadore@kbin.social 10 months ago
The "investors" are the buyers/customers, and they aren't reselling these houses--they're renting them out. It's mostly corporations increasingly doing over the last 15 years or so (I think it started around the 2008 financial crisis). They have the capital to do it and so regular people are being priced out more and more as this practice keeps driving up prices.
It didn't used to be this way. Even in my "cheap" area, when I bought my house back in 2005 all but one house on my block were owner-occupied. Now, more than half the houses are rentals because whenever one came up for sale it was bought by a rental company. This is a serious crisis that needs to be addressed.
RickRussell_CA@lemmy.world 10 months ago
Renting them out is still selling them, just another kind of selling. The company can only charge rent if there is a renter willing to pay. Again, the buyer determines price – if rent is too high, there will be no renters.
leadore@kbin.social 10 months ago
Renting them out is not selling, it's an ongoing income source for the owner. The renter does not determine the price when the alternative is to move elsewhere or live out of your car. There's simply not enough housing--supply is limited. It's not a simple equation like a factory adjusting the output and price of its widgets. If things were as simple as you say, there wouldn't be such a severe housing crisis in the US. Just search for US housing crisis, there are thousands of articles explaining what's going on.
ChonkyOwlbear@lemmy.world 10 months ago
Part of the problem is it’s still more profitable to build an expensive property and wait a couple years to find a buyer who can afford it than to build an affordable property which will sell right away.
RickRussell_CA@lemmy.world 10 months ago
True, there is a “frictional” effect on occupancy rate, that causes property to be idle for some time. I’m about to buy a house that was built by somebody else, but they decided they couldn’t afford it, and backed out, so it’s been sitting there new & idle for a couple of months.
When there is a lot of economic dislocation, or major demographic changes, that frictional rate of idle property may spike up (e.g. in the wake of the 2008 recession/real estate bubble, when some owners decided they would rather wait for recovery than find a buyer at a huge discount), but it’s a transient effect.
jmanjones@lemmy.world 10 months ago
RickRussell_CA@lemmy.world 10 months ago
If the first time buyer cannot afford a house, it means another buyer showed up with a higher offer. It doesn’t really matter who owns the house.
Blaidd@lemm.ee 10 months ago
Because the alternative is to be homeless.
RickRussell_CA@lemmy.world 10 months ago
Or leave the area for lower prices somewhere else.
Blaidd@lemm.ee 10 months ago
So quit your job and pay hundreds, maybe even thousands, of dollars to move somewhere different where you no longer have a source of income and don’t know anyone?