Zillow, Other Tech Firms Are In an 'Arms Race' To Buy Up American Homes (vice.com) 154
An anonymous reader quotes a report from Motherboard: Zillow is doing a $450 million bond deal to get the money it needs. Opendoor went public via a Chamath Palihapitiya-backed SPAC deal to scale as quickly as it can. Even Rocket Homes is getting into the action. The race is on among tech firms to gobble up U.S. housing stock and dominate the increasingly competitive high-tech house-flipping market, otherwise known as the fast-growing "iBuyer" industry. "There's almost an arms race to get the most inventory possible," said Daren Blomquist, vice president of market economics at Auction.com, who described the state of the iBuyer market as "almost frenzied." "It's less about making money off that inventory, at least initially, and more about who can get the most inventory the fastest."
High-tech middlemen like Opendoor and Zillow Offers, Zillow's home-buying platform, first inserted themselves into the housing scene a few years ago, armed with cheap money and hoping to profit off the bedrock of American middle-class wealth. iBuyers target mid-level homes that are in decent condition, offer to buy the house with cash, and make the selling and moving process quick and convenient. They then make a few repairs and quickly put it back on the market, ideally at a higher rate. In exchange, they charge the homeseller a fee that varies according to a variety of factors. While small relative to the $36 trillion residential real estate market, the nascent industry is growing rapidly with unforeseeable consequences as firms compete to establish themselves as the predominant brand. An analysis published this week by Mike DelPrete, a scholar-in-residence at the University of Colorado Boulder who studies the iBuyer market, found that iBuyers have recently shifted "to a free-for-all, acquire at any cost strategy." At present, both Opendoor and Zillow's homes division are losing money in the process.
High-tech middlemen like Opendoor and Zillow Offers, Zillow's home-buying platform, first inserted themselves into the housing scene a few years ago, armed with cheap money and hoping to profit off the bedrock of American middle-class wealth. iBuyers target mid-level homes that are in decent condition, offer to buy the house with cash, and make the selling and moving process quick and convenient. They then make a few repairs and quickly put it back on the market, ideally at a higher rate. In exchange, they charge the homeseller a fee that varies according to a variety of factors. While small relative to the $36 trillion residential real estate market, the nascent industry is growing rapidly with unforeseeable consequences as firms compete to establish themselves as the predominant brand. An analysis published this week by Mike DelPrete, a scholar-in-residence at the University of Colorado Boulder who studies the iBuyer market, found that iBuyers have recently shifted "to a free-for-all, acquire at any cost strategy." At present, both Opendoor and Zillow's homes division are losing money in the process.
All my spam calls these days are house flippers (Score:3)
When I occasionally answer the phone because I'm expecting a call, it will inevitably instead be some house flipper; "Hi! We're a group of investors who want to buy your house!" I get unknown numbers dialing in at least twice a day and I bet if I answered them most would be these jerks.
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I hear the same crap, multiple times a day. Have you ever considered selling [address]? Pokemon cards are going crazy too.
You know inflation is going to be bad when people seem to have more confidence that Pokemon cards won't be over-printed than the USD.
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You know inflation is going to be bad ...
Normal CPI inflation may not get worse. There has been little so far.
But asset-price inflation has been happening since Obama's stimulus. Trump's tax cut, the pandemic checks, and now Biden's infrastructure deal are adding fuel.
All of the monetary expansion seems to be flowing into housing and equity. It can't go on forever, but there is no reason to believe it will stop anytime soon.
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Interest rates are so low that people are chasing all different kinds of assets... real estate is just the latest.
I do wonder about these people buying up real estate in this overheated market. I know they are looking for a "greater fools" to take it off their hands but what happens when they run out of fools?
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Right after the first publishing (in this area you have to publish three consecutive weeks) the phone calls for real estate agencies and snail mail home offers started. After two years the mail keeps coming, although I guess that was around the time they started bombarding everyone with a mailing address. I
Ah, yes. (Score:5, Insightful)
Let's disrupt and innovate everything straight back to feudalism. But we'll call it something like Agile Employment-Residence Synergy, use Corporate Memphis in all our propaganda billboards, and make sure to feature the world's whitest-looking black people in our promotional material to show how much we care.
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The winners of that are pretty powerful now. Eventually there will be an Amazon left standing among all the failures.
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Which winners are you referring to? eToys, Pets.com, Webvan, or Boo.com?
Amazon started in 1994, not 2000, and wound up slowly over time.
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Maybe my dates are off, but there are various companies such as Amazon that survived on venture capital for a long time. Today there are companies like Uber still doing it.
Get Ready to Watch America Implode and Die (Score:5, Insightful)
With the size of our military (Score:2)
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With the size of our military
we're going to take the rest of the world with us....
You and what army? \s
Re: With the size of our military (Score:2)
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How's Afghanistan going? You really fucked over the peasants there.
Taliban set to seize power again within a matter of weeks, what was 20 years of occupation worth exactly?
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It was worth trillions to the defense contractors. Who in turn, make "campaign contributions" and pay "speaking fees". Funny how you never hear anyone saying "How are we gonna pay for that??"
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I agree this will not end well but I’m hard pressed to say what exactly will happen. Arguably, flippers are better than hedge fund landlords.
I just know that the quote I got to remodel my condo was double what I had been expecting. Might end up being one of those things where I try to figure out how much I can do myself (without pissing off my wife).
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Arguably, flippers are better than hedge fund landlords.
No, they are not. While not quite equal, flippers reduce inventory and raise the cost of buying a home in the same way hedge fund landlords do. Even worse, their shoddy practices hurt homeowners through extra expenses which generally show up a year or so later. Yes, yes, buyer beware and all that.
The first thing I do is look at the history of a home. If it was sold three months ago and is back on the market, it's a flipper home and I I don't look at
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There are different kinds of flips though. I can think of a few places that had problems I wasn’t willing to deal with, and somebody flipped it after addressing them. I wouldn’t necessarily consider a flipped water damage repair, and I would be careful with flipped plumbing repairs, but a lot of the paint and patch, update the tiles types of projects are fine.
For me, the “not ending well” part of it is that the flippers get burned. Housing prices are spiking too much, and somebody
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For me, the “not ending well” part of it is that the flippers get burned.
Let's hope so. That will mean more houses for people looking to own a home.
Housing prices are spiking too much, and somebody is going to be left holding the bag.
If that means they go out of business, the more the merrier. And yes, I said the same thing during the Bush recession of 2007-2009. All those banks and Wall Street firms should have been let to fail. They got themselves into that situation, they should have been
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For me, the “not ending well” part of it is that the flippers get burned. Housing prices are spiking too much, and somebody is going to be left holding the bag.
I know someone who that happened to. He now lives in the house he was trying to flip.
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Me too many people. It was always an exit plan planned or not. Small scale it is lower risk, but when you do it at an industrial scale that is not an option.
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While I'm sure you are right some of the time, my own purchasing experience counters what you say. My home was bought by a flipper prior to me buying it. Before that, it had one owner. The lady had been there since 72' and died around 2010. A fire had caught and burned up all the kitchen cabinets and had birds that got out all the time. Destroyed the place.
This flipper bought the unit for around 78k, invested around 20k into it and then I bought it for 118.5. It was redone nicely but obviously on the cheap
Re:Get Ready to Watch America Implode and Die (Score:5, Insightful)
I wish that were true; at least if America imploded we'd learn something. But this will be just like 2008; an entire class of people will never be able to buy a home in their lifetime, and a few people will get rich, and the rest will end up much, much poorer.
My house has "doubled" in value in the past 2 years, and I've seriously thought of selling, because I could make a handsome profit. But I know where this will end. When I moved into my neighborhood, it was mixed, and working class people could afford a house here. Now, only the wealthiest of people can afford to buy the new houses going up, and I'm starting to worry that we might soon have an outbreak of minority-eradicating affluenza.
Re:Get Ready to Watch America Implode and Die (Score:4, Insightful)
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Builders learned, temporarily, that a business model that depends on constant growth and will fall apart if there is an interruption in that for even a week. For the most part they've scaled back velocity. The recent
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We already have a generation that can't buy a home - they are spending the first ten years after college trying to pay off their student debt. When coffee shop barista, book store clerks, and Uber Eats drivers all have college degrees and can't find a better job it sorta reveals the lie that "everyone should go to college" is.
Now we talk in serious voices about simply paying off tens of thousands of dollars in student loan debt so that these people can go out and buy a home.
How long before Democrats discove
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There was nothing secret about going to an out-of-state college and partying for 4+ years to get a degree in communications and a 120k bill. No one tricked them. If anything, we need to prevent people from being approved for these kind of loans in the first place.
they can't jail 1000's of squatters or if they did (Score:2)
they can't jail 1000's of squatters or if they did the taxes on the empty houses will be very high to cover the local jail bills.
Yepp. I agree. (Score:2)
Politicians should get ready for another Capitol Hill fiasco but with a more politically balanced angry mob.
Yes, this, pretty much.
What I thought when the Trumpists were storming the Capitol was this: Yeah, they're Trumpists and they aren't all that smart. But the concept of storming the Capitol in itself is pretty much spot on with what the US bascially needs: A bottom-up redo of some fundamental aspects of its constitution.
Re:Yepp. I agree. (Score:5, Insightful)
I'm curious as to what, exactly, you think needs to be redone in the Constitution.
IMHO, arguably the amendment process needs to be made more difficult, and maybe go back to Senators chosen by State Legislators (originally, the assumption was the House represented the People, and the Senate represented the State(s))...
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Privacy was suppose to be covered by the 4th but our corrupt governments have allowed security forces to end run around that. The problem with the Constitution is it only applies to the government. So government just lets private corporations do all the things it can't and then hands over the data. See, all good. No law broken....
That's why we need a revolution. We've clearly succumbed to corruption and greed. It's staring us in the face and we refuse to do anything about it.
To stay on topic, why the fuck s
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This will end in either America being some sort of sad class stratified country
Just like today.
or a class war
Just like today. The elites are winning.
and some sort of revolution
Yeah, a 360 degree revolution. The wheel turns, and those around the outside are drowned and broken.
Public transportation ! (Score:5, Interesting)
The two biggest expenses the average people tend to have in his life are housing and mobility. If we invest in improven the public transportation system you solve both. You can live on a cheaper place farther from the expensive zip codes and move back and forth cheaply, easely and fast. We just need to make public transportation the biggest priority that will solve housing and mobility.
Re: Public transportation ! (Score:2)
True, and what market force keeps those stars from aligning? Surely it could not be people with wealth wrapped up in real estate trying to create artificial scarcity to raise the value of their investments...
Not great for prices (Score:5, Interesting)
This sort of thing drives housing prices up by definition - the original seller made whatever profit they were hoping to make, then the flipper adds a margin and sells it at a higher rate. Should this become widespread, your housing prices will go up notably.
Here in Denmark, we have a significant tax on well, everything actually, but in this case I’m referring to the tax on house sales if they were never your primary residence. As long as you’ve lived there (and in Europe, you register your address with the local municipality such that all bills go there, etc., so the government knows quite clearly where you live), then there’s no tax when you sell the house. If you didn’t, then the tax is ungodly - I forget the number, but 50% of the price difference? In any way, very painful, with the specific goal of stabilizing the housing market and preventing speculation.
Not a perfect system, and in the last year housing prices have gone way up (great for me as a homeowner) anyway, but it reduces one artificial driver at least.
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Problem is . . . you can make a good profit selling your house right now, but then you still gotta come up with another place to live - at these inflated prices.
Re:Not great for prices (Score:5, Informative)
Depends.
So one source of friction for house buying/selling is the commission charged to the seller for both the selling agent and buying agent of 5-6%. When a house is 150-200k, that's $7.5k-$12k that comes out of the sale price that gets paid as commissions. If a house is 1M, then that's 50-60k, per transaction, in commissions.
If you're trying to flip it (and if you're not planning on at least living in it for a couple of years, you're flipping it) then you need to either increase the sale value over the cost of commission (hence crappy "flip" remodels), reduce commission costs, or both. While in the meantime they're just on a buying binge, it sounds like their ultimate goal is to allow you to buy and sell houses like merchandise on eBay.
To the extent that they are adding to existing buying pressure in the short term, then yes, they're propping up prices or driving them up higher. To the extent that they are replacing existing buying/selling through a broker/agent (at some point, I have to assume they need to sell their inventory to actually make money), then that's where they might actually tamp down the ratcheting up of prices due to commissions.
The US has a similar tax exemption, up to $250k when you sell your house, if you can demonstrate that you lived in the house for at least 2 years in the last 5 (does not need to be consecutive.) If you are married, it goes up to $500k. The remainder gets taxed at capital gains rates, which for now, are relatively low compared to say, income tax.
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There's also the question of whether a company can hold a lot of inventory on the books at a loss if the market has a sustained crash for some reason. Private equity might be able to pull it off, but a public company might have problems with shareholders.
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House flippers don't use retail real estate brokers, they get a real estate license.
Re: Not great for prices (Score:2)
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The problem is self limiting. Once people can't afford it, prices will crash.
The damage that gets done during the "limiting" phase of that proposal is almost all external to the "investors." It will be paid in the form of unreachable home-ownership from the bottom of the economy (the poorest and most fragile) on up. It will also be paid by all renters, who can't afford the capital investment to buy (almost by definition) and are locked in to higher and higher rents driven by property values because they have to live somewhere. Then a burgeoning class of homeless at the very botto
Re: Not great for prices (Score:2)
It is paid by the under valuation of currency. The US government will just print money and distribute to its ~donors and military~ hard working high energy highly efficient extremely smart individuals who represent the American dream. It will continue to hang on the shoulders of USA government's ability to keep military supremacy and its ability to interfere in rising powers all around the world through "funding of democracy" like insurgents or ngos and "saving human rights".
I heard Biden has just funded in
Cory Doctorow explores possible outcomes of this (Score:3)
Re:Cory Doctorow explores possible outcomes of thi (Score:4, Insightful)
They will realize that just as soon as capitalists realize they don't have a right to anyone else's labor, nor to profit at the expense of the environment or at the expense of everything else. So: index the minimum wage to actual inflation, starting at $20 per hour and watch all the communism disappear overnight.
Hint: it's called "inflation" as in: you don't get to endlessly inflate prices (cost of living) while simultaneously suppressing wages (lowering everyone else's living standards). The problem with that kind of capitalism is, eventually other people run out of money, and then they get pissed. And have a revolution.
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The problem with that kind of capitalism is, eventually other people run out of money, and then they get pissed. And have a revolution.
Let's hope that the American experiment pans out like it's supposed to and the revolution is peaceful, in the ballot box.
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"A human right"
When will the communists realize that human "rights" cannot include the "right" to someone else's property? You cannot expect someone else to take care if you, even by enacting a law.
Of course we can. That's the very definition of society (whose broad shoulders you stood on when you bought a house). You can only cover so much ground with your six shooter and whilst your guarding your house we'll take your car. Whilst you're at work, we'll take your house.
Of course that's fantasy, just like your sophomore libertarian cowboy garbage.
You don't have the right to my house. You don't have the right to my money. You don't have the right to anything that I worked for.
Neither do you. Rights are not immutable physical laws - they are created by groups of people called societies. They are made up by agreement. To put it anoth
This is just wrong (Score:2)
Re:This is just wrong (Score:4, Insightful)
He got a lot wrong, but Karl Marx did predict the top rich would own almost everything and the rest would become de-facto slaves to them.
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Worth mentioning that Marx wrote a lot, often as an editorialist, so it would be very surprising if he didn't get at least some things wrong. He wrote about things like archeology, for outside his realm of expertise. He built a lot of his economics theory on the state-of-the-art economics of the time. If he were writing today, he would write his ideas based on the economics of today. The important part isn't the economics aspect, the important part is building a society where all are equal.
He shouldn't have
Re:This is just wrong (Score:4, Insightful)
These fucking companies should not be allowed to push prices up like they're going to do. The average Joe is just fucked with this crap happening.
The "average Joe" voter is the problem. NIMBY voters prevent the construction of affordable housing in their area, then prices go up, attracting speculators.
Banning buyers is idiotic and does nothing to address the root problem.
The obvious solution is to allow more housing to be built: Supply and demand, Economics 101.
Re: This is just wrong (Score:2)
The obvious solution is to allow more housing to be built Built where? Land clearing and high density housing are causing all sorts of shit. Being Bubble o Bill, you won't need me to spell it out.
We're in the end game now (Score:2)
Another sad story of scavengers squabbling over the corpse of Uncle Sam...brought down by corporate parasites and complaisant mass media.
I take no joy in this. There was a time when, if you were willing to work hard, you could put a roof over the head of your non-working wife and a couple of kids, and food on the table, and a decent annual holiday. Where are we now?
Re: We're in the end game now (Score:2)
Re:We're in the end game now (Score:5, Insightful)
There was a time when, if you were willing to work hard, you could put a roof over the head of your non-working wife
Houses today are twice the size they were in the 1950s while families are smaller. The average floor area per person has tripled.
Most households today own one vehicle per adult. In the 1950s, an entire family shared one car.
If you want to live a 1950s lifestyle, you can still do it on a single median salary.
Also, that 1950s lifestyle was only for white people. Everyone else lives way better today.
Re:We're in the end game now (Score:5, Insightful)
Real (i.e. inflation adjusted) per capita GDP in the USA has increased from $15k to $60k since the 1950s (source) [stlouisfed.org]. If you assume the worst case situation that no wives were working in the 1950s and all of them work now (i.e the workforce doubled), then there is still a doubling of per capita output during that time due to productivity growth. So based on your logic we should now expect a family with a single worker to be able to afford two cars and a house double the size of their grandparents.
If you include the contribution from the spouse working, the average family should easily be able to pay for a nice home, couple of cars and lots of other luxuries. This is clearly not the case, so while your argument has merit, it does not explain away the current state of precarity and declining living standards most of us are seeing.
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Thank you for that. I was just running the numbers to respond to Bill's comment when I saw yours. No point in getting myself declared "Redundant".
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In the 50s we didn’t have cell phones, video games, high def TVs, generally no A/C, etc. so some of that increase has gone towards better stuff, not just more stuff.
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Real (i.e. inflation adjusted) per capita GDP in the USA has increased from $15k to $60k since the 1950s (source) [stlouisfed.org]. If you assume the worst case situation that no wives were working in the 1950s and all of them work now (i.e the workforce doubled), then there is still a doubling of per capita output during that time due to productivity growth. So based on your logic we should now expect a family with a single worker to be able to afford two cars and a house double the size of their grandparents.
You are implying that your source means something other than it does. You should look at this set of charts [stlouisfed.org] to get a better understanding of the difference between per-capita and per-household. Same data sources, but showing that per-household income has remained relatively flat, which is extremely interesting as so many households have two or more earners. They do note that employment benefits have increased (health care, etc) however the true story still remains that both spouses have to work, on average,
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To take the just example of cars, the difference in a car from the 50's and a modern car is so vast such they are practically not comparable. A typical 50's car had no A/C, a three speed manual transmission, at best an AM radio, manual steering, drum brakes, and probably about 65 horsepower at the rear wheels. Due to the lack of safety equipment the death rate per mile traveled was far higher back then. And cars last far longer than they used to. Much of that GDP increase since then has gone into capabilit
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Back in the 80s I was working in a job with a very respectable, upper-middle-class income for the time. On the income side, I was the only one generating cash. But my wife, who was at home, was also generating income in the form of decreasing expenses.
People always focus on cash, and ignore expenses. This is a financial anti-pattern. As Elon Musk put it (in a different context), "the biggest mistake an engineer can make is to optimize something that didn't need to exist." Mapping this to family finances, th
Tech firms? (Score:5, Interesting)
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Yeah. Now keep in mind that you can still get scalability in the physical world, just less of it.
Amazon, when they install a new rack of hardware in AWS, does have to pay for all the computers in that rack, which they are renting for a lot more than they paid for them. But the reason they can charge such high rates is partly because of all the software you mentioned, that makes AWS somewhat reliable and somewhat scalable. (and partly because being so big, if you host your business on AWS it is less likel
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"the sheer scalability of technology....your capital expenditures remain nearly the same whether you have 1000 or 1000000 customers."
By this definition, a semiconductor manufacturer isn't a tech company.
I mean, fuck! (Score:2)
Not so mcu (Score:2)
"Zillow is doing a $450 million bond deal to get the money it needs."
Well, around here that would buy about 450 houses or so, give or take. They're not exactly taking over the world at that rate, lol.
And yes, I get offers from brokers daily- always too low, always looking to score a "deal" that they can flip or cash in on.
I always tell them the same thing: "Of course we would sell our place. We'd sell it today for the right price. Make me an offer and we'll talk."
And their offers are always well below marke
No, very much not (Score:5, Insightful)
This needs to be banned. Right now. I don't care if you already own a home or not. They will come for you. They'll wait until you get sick and use our medical system to push you into bankruptcy, then you'll mortgage your home and they'll take it. And if you're healthy they'll wait for a family member you can't live without to get sick.
There's coming for us all. For every scrap of property we have. And they won't be satisfied until we have nothing.
Re: No, very much not (Score:4)
You're mistaken (Score:4, Insightful)
You won't be able to squirrel away any money to buy property in the crash because they will just outbid you during the next crash. The super wealthy have so much money that they can spend stupid amounts of cash to outbid you and it's worth doing because once they own everything everyone will have to go to them if they want a place to live. The only alternatives will be to either stop them from doing this now or to resort to violence after they've done it. The problem with violence is that it always ends with a brutal dictatorship because the kind of people who are good at violence are people like Joseph Stalin and chairman Mao. So the time to stop this is now.
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"Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Fla., to bring down the consumer, the rest of the economy and the entire stock market."
Larry Kudlow, 2005
Re:No, very much not (Score:5, Insightful)
They're sitting there buying houses, trying to redo them on the cheap, then upsell them. Renting means long term commitments and taxes and shit. They don't want that. They want to do what "house flippers" did already on an industrial scale with "algorithms" and shit. Why exactly they went crazy suddenly is anyone's guess. Could be a hole they're digging themselves into, cheap houses for everyone after they go bankrupt in a year or two.
They're not selling them (Score:2)
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There are a lot of different business models. I interviewed with a bunch of startups doing this two years back. Some are looking for high-end hip renters, some are looking for house flipping, some are looking for both at the same time; all are confident that their business plan will work.
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I hear ads in the SF Bay Area about lenders offering stated-income loans [investopedia.com]
Stated income loans have been illegal since 2010. No lender is advertising them.
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Landlords deduct expenses, owner/occupants do not.
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Re: No, very much not (Score:2)
Homeowners used to have deductions, that all changed with the recent tax changed the Republicans put though. Now we are using the standard deduction, especially if you live in a high tax blue state like California.
Funny thing is, as much as they complained about it, the Democrats don't seem to be in too much of a hurry to repeal it.
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No, they're jacking up prices. Do we need to post the story of the goats for you?
Re: This is a good thing (Score:2)
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The market for houses will dry up if it gets too high.
No, it won't. If prices get too high and people don't buy, these leeches will lower their prices a bit to get the house to sell. They're still selling far above what they paid for the place and will make their money, just not as much. The buyer gets stuck with the bill.
We have new apartment buildings up on almost every street with space here.
I'm glad you live in Colorado or Montana or Idaho or Nebraska or pretty much any place out west where you have hu
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but.. they can and are. Please take an economics 101 class and get back to us. This is jacking prices that should be falling
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Lol, yeah house prices should be falling.. according to what insane metric? You can only "jack" prices so high. Eventually the market (meaning we, all the people in the US) work around it. People simply can't pay $1m for a house that was $300k two years before. This is basic market economics.
People will rent, get roommates, apartment buildings will go up, and house prices will crash. Especially and doubly so when interest rates creep back up.
This is just silly doom and gloom and tech hate. If anything you s
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So you agree that there will be price collapse eventually with these companies holding the bag, very funny you can't see the other truth, that right now they are jacking prices. You thus have no ability to talk about markets.
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Self-Inserting-Middlemen are the new gold rush, middlemen just getting in the way, they have inserted themselves into food delivery, taxi services, shopping, housing, and anything else where they really don't belong. I don't see any area where prices for those such services has stayed the same or dropped. If you say an area dropped it was because the middlemen employed don't even
Re:This is a good thing (Score:4, Insightful)
A house should not be the primary way to accumulate wealth in any country.
Says who?
House prices should go up with inflation not double inflation.
Especially at our current inflation rate!
Using houses as a store of wealth becomes a wealth transfer between generations.
Always has been, what's wrong with that?
People under 30 are paying for the retirements of people over 65.
Have you never heard of Social Security? They literally take money out of everyone's paycheck to send it to people over 65.
Re:This is a good thing (Score:5, Insightful)
Everyone's entitled to an opinion. I myself tend to agree that housing being seen more as an investment than a place to reside isn't a healthy situation. We've seen that happen in the UK where house prices used to increase broadly in line with wages, but since the mid-90s the ratio has doubled. In itself it wouldn't be a terrible thing, but the issue with housing being seen as an investment and being so highly valued is that everyone who owns becomes obsessed with ensuring their house price doesn't fall. They fight any local development because they fear it may affect house prices, then moan their kids can't afford to buy near them. People keep bolting extensions onto properties so you end up with cramped 4-5 bed houses that used to be 2-3 beds because the cost of the work is lower than the increase in value, and the increase is because so few new houses are being built and the taxes on buying a house mean you can often build the extension for less than the tax on buying a new house and moving.
Remember that the OP wasn't saying houses shouldn't have value, or be a way to accumulate wealth, just that it shouldn't be the primary way. I don't think it's that controversial to suggest that earning a salary, running a business, or investing should be major ways of accumulating wealth and that speculating on a single asset class probably shouldn't be.
Re: (Score:2)
Well said. I'd mod you up if I hadn't already commented, but I at least had to commend you on a well written argument.
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Additionally, the banks are all more or less insolvent because they are run by greedy morons without any independent regulation. To keep the book value of the company (remember: banks are just private companies) positive, the central banks (which are in charge of looking after the banking industry, not normal people or even other companies) have done everything they can to keep the value of the mortgages held by the banks up, by pushing house prices up and up. Low interest rates, infinite QE, first time buy
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Says math. Housing can't both be a good investment and be affordable. [cityobservatory.org] It's mathematically impossible.
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"People under 30 are paying for the retirements of people over 65."
No shit, Sherlock. That's the way it works.
It's called "Social Security", maybe you've heard of it.
Re: (Score:2)
Buyers don't want to compete financially to afford the home they desire in the hood they desire. The solution has always been to adapt your life to reality.
I don't want to compete with mutual funds and "tech" companies with VC-cash coming out their ass.
Just like I don't care if SPY costs $400 of $500, as long as it keeps growing, they don't care if the housing they're buying costs $1m or $2m as long as they think it'll keep growing. And it'll keep growing for a while because people will go in more and more debt to reach their american dream.