Plenty of people out there buy houses for cash, spruce them up, and sell them for profit to extract some of the equity inherent in real property. Over time, they collectively push up the perceived value by force, and occasionally, the people who are the ultimate source of that equity, the ones looking to buy a permanent home, will stop buying.
There’s been a chunk of time recently, a decade or maybe more, where those permanent home seekers, the true source of the equity, haven’t been buying property. COVID exasperated the issue, because the flippers went fucking crazy for a couple years and inflated the amount of non-homes. Now they want their equity back out, but nobody who wants an actual home is looking to buy one because there isn’t enough value for them.
So prices have to come down before the actual source of equity starts buying again. The bubble has to deflate some.
Again, the entirety of this statement is simply my personal opinion, so grain of salt, but this is what pure logic and critical thinking suggests is the true mechanism :)
The problem is that (at least in America) tons of banks and corporations are buying up HUGE swaths of housing - single family homes, condos, apartments, etc - and they’re building, or have already built, businesses models centered on permanently renting those residences. Here is an article, and here is an excerpt:
Real estate investors bought a record 18.4 percent of the homes that were sold in the United States in the fourth quarter of 2021, up from 12.6 percent a year earlier, according to the realty company Redfin.
And in some markets, especially in the relatively affordable Sun Belt metro areas, their share is far higher.
In Charlotte and Atlanta, investors purchased more than 30 percent of the homes sold in the fourth quarter of 2021, according to Redfin. In Jacksonville, Fla., Las Vegas, and Phoenix, they bought just under 30 percent.
For those in the back: two years ago, corporations bought around 30% of available homes, and particularly focused on markets where home prices were reasonable, thus further exacerbating the housing crisis and wealth disparity in the long term.
New law proposal: the only type of corporation allowed to own a house is a bank, and then only under the strictures of a mortgage held by a private individual (or, logically and necessarily, through default and foreclosure). Additionally, houses repossessed through default may not be rented, as long as the bank is the sole holder of the property.
I think investors figured out that the REAL money in real estate is in endless renting and not so much in flipping.
I know more than 1 person that owns several rental properties and they’re getting filthy rich from monthly rent while also building equity. But I get the impression from them that they’ll never sell. Buy low, then rent forever.
My opinion is that it’s investors.
Plenty of people out there buy houses for cash, spruce them up, and sell them for profit to extract some of the equity inherent in real property. Over time, they collectively push up the perceived value by force, and occasionally, the people who are the ultimate source of that equity, the ones looking to buy a permanent home, will stop buying.
There’s been a chunk of time recently, a decade or maybe more, where those permanent home seekers, the true source of the equity, haven’t been buying property. COVID exasperated the issue, because the flippers went fucking crazy for a couple years and inflated the amount of non-homes. Now they want their equity back out, but nobody who wants an actual home is looking to buy one because there isn’t enough value for them.
So prices have to come down before the actual source of equity starts buying again. The bubble has to deflate some.
Again, the entirety of this statement is simply my personal opinion, so grain of salt, but this is what pure logic and critical thinking suggests is the true mechanism :)
The problem is that (at least in America) tons of banks and corporations are buying up HUGE swaths of housing - single family homes, condos, apartments, etc - and they’re building, or have already built, businesses models centered on permanently renting those residences. Here is an article, and here is an excerpt:
For those in the back: two years ago, corporations bought around 30% of available homes, and particularly focused on markets where home prices were reasonable, thus further exacerbating the housing crisis and wealth disparity in the long term.
New law proposal: the only type of corporation allowed to own a house is a bank, and then only under the strictures of a mortgage held by a private individual (or, logically and necessarily, through default and foreclosure). Additionally, houses repossessed through default may not be rented, as long as the bank is the sole holder of the property.
I think investors figured out that the REAL money in real estate is in endless renting and not so much in flipping.
I know more than 1 person that owns several rental properties and they’re getting filthy rich from monthly rent while also building equity. But I get the impression from them that they’ll never sell. Buy low, then rent forever.