For anyone who didn't click into the article, the headline may be misleading without the sub headline, which currently is "Relatively speaking, California is not a hot spot for housing investors". The map graphic shows that 19% is lower than other large states (e.g. 22% in Texas, 21% in Florida, 20% in New York). And lower than other west coast states generally (22% in Washington and Oregon, 25% in Nevada, and 23% in Arizona).
I think another metric that's probably just as important is what percentage of those investors are large institutional investors vs. "Mom and Pop" landlords with one house for rent.
I mention that because I remember reading during the pandemic that institutional investors generally make shittier landlords: they're quicker to evict, quicker to raise rents, less likely to work with a tenant on a payment plan, and they have fewer ties to the community. There was a concern that with all the eviction moratoriums during the pandemic that large landlords could wait it out, while smaller landlords got screwed and got out altogether in some cases, leaving their housing stock to be gobbled up by the shittier institutional landlords.
I have to confess I'm not sure. :( Searching for vacancy rate shows that is around 9%. I would expect these are owned by someone, though, such that I don't know why they would not be counted as investments?
Doing the same search for "owner occupied" shows only around 50%, though. I don't know where to get the data that teases apart housing units and standalone houses.
Where are you seeing 9% vacancy rate in California? According to FRED, the current rental vacancy rate in CA is below 5, and the current home vacancy rate is below 1.
Hmm... I thought I just took the basic google, but that seems to give a different result now. Maybe I just fat fingered copying into here, not sure.
I know that my main assertion there was it was a relatively lower number. Adding it to the 19 of this story would still leave owner occupied higher than 50ish. Such that I clearly need help to put a lot of this together.
California houses are not popular with professional “landlord” investors because the cap rates (net operating income / house value) are poor. Rents are limited to what potential renters are actually able to pay, while the prices are very high.
On the other hand, during the upswing in prices, house flipping in California was really popular with investors because the (then) low interest and likely capital gain made things easy.
Good point. Similar to how the share price of a company is meaningless, total capitalization is the only useful metric. Similarly, investors have gone to great expenses to commit their money into 19% of California's housing, greater expenses than any other state, even when considered on per-capita basis.
To understand the meaning of this, consider that supply/demand curves are naturally non-linear and even 5% increase in demand can double the prices.
And yet 20% of the market being captured by those who already have a home, while so many go without one, indicates a shortcoming in our society’s ability to distribute resources from those who don’t need them to those who do.
Renting a home out isn't "capturing" the house. Rental housing is a desirable product. Lots of people don't want to own, be locked into a particular house for years to offset transaction costs, and to own all the downside and maintenance risk of the property.
Consider soliciting the opinion of more renters. Plenty of us would happily purchase if prices were more reasonable. Renting out sfh should be rare, imho. The current situation needs many remedies and kicking out sfh as investment vehicles is a very low hanging fruit.
Spoken like someone who never lost their shirt on a house after discovering they had to move a couple years after buying. No, I'm pretty confident: lots of renters are renters on purpose. Ownership is not categorically better than renting.
Kicking out sfh as investment vehicles makes it harder to sell homes. This a) increases the risk to home buyers and b) makes owning inventory more expensive. Thats likely to make increasing supply untenable.
This low hanging “remedy” is likely to exacerbate the supply issue, not help it.
Demand would still outstrip supply, so by what mechanism would selling be difficult or risky? It would modestly reduce prices, making it less expensive for all regular home owners. That's a win for everyone but (sfh) investors.
Home builders are “investors” in sfh. So out of the gate you’ve got a problem with making the regulations more complicated to navigate. For the people creating supply.
Some of those homebuilders build because they can rent homes if they can’t be sold. Others build because they have large investors to sell to if necessary. All of them build with their financial models account for carry time, as carry costs are extremely important to their bottom line.
If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable.
> So out of the gate you’ve got a problem with making the regulations more complicated to navigate.
Assuming the policy to reduce non-primary home ownership is tax based, carve out tax exceptions for home builders. Personally I would carve out exceptions for home flippers too, but could see that being more contentious. Either way though, this part of the problem would be, IMHO, trivial to solve.
> If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable. Others build because they have large investors to sell to if necessary.
I think that's fair. But conversely carry time is also high because prices are high, and investors drive up prices; builders also do this to an extent, by e.g. buying down points to avoid lowering prices, to keep the perceived price elevated. I have no illusions this is a simple problem to solve. The right question here is probably figuring out whether the overall supply going up by X increased rate because of investors will be worth the cost of the total homeownership rate being controlled by a shrinking proportion of the population (I would guess no).
My personal proposed solution here would be to kick out investors (tax policy), and also directly incentivize home builders selling to first time owners (via tax credits, comparable to e.g. EV tax credits). The latter would be quite expensive, but if the overall homeownership rate increases and home prices drop, it would likely be popular.
Tax incentives for first-time home buyers are enormously regressive. You're operating from a presumption that everybody intends to buy a house (see upthread), but that's not true, and it gets less true as you go down the income ladder. Owning a home comes with huge downside risk, added expense, and loss of flexibility.
To spell it out, they seem to be completely ignoring that those rental properties are not vacant. Instead, they house people, just like they would if they were owner occupied.
20% of market capture does not cause homelessness, but there are many very valid arguments that treating housing as an investment isn't a stairway to ending homelessness.
Turbo Greed (acquire all the things) and lack of monopoly protection and enforcement.
If we're going to tackle homeless, we have to remove systems that incentivize the collection of homes as a financial asset. Make more homes by one person or entity less desirable or simply undoable.
Turbo greed isn't a thing. And if you think there's a monopoly in residential real estate ownership, you have an absurdly broad definition of the term.
Instead of trying to manipulate a market through yet another layer of regulation, you can just let builders build more.
If turbo Greed isn't a thing, why do the 830+ billionaires in the United States control more wealth than the bottom 50% of the population?
And, why did we just give them a YUGE tax break?
"Build more" is not an option, because the incentives don't align to solve the problem. The things getting built are built to capture margins and not to solve the housing problem.
The headline isn't misleading unless your only concern is placing California in relative position.
The headline is true and relevant if you are wondering how investors influence housing prices - with a 20% share, clearly investors influence prices a lot. Moreover, California is where the housing bubble began but it's quite logical it's no longer where the bubble is concentrated so again 20% doesn't imply investor ownership is unimportant.
From my cursory analysis, "# of new housing units authorized" is by far the strongest predictor of rent & home values decreasing: https://i.imgur.com/BMsPrKY.png (r^2 = 0.47, P-value 0.000)
Nothing else ("% of housing owned by investors"?) is even close.
edit: Yes, obviously I included a time lag (3 years).
Hypothesis: investors rent out their investment housing (to make a profit) so it doesn't really reduce housing supply, it just shifts supply from owned to rented.
Yeah, and it will depend a lot on the regulatory structure in the local environment, plus national things like interest rates. With prop 13 locking in below-market taxes, you'd have to be crazy to sell property in CA. With a different structure, you'd have to be crazy to keep it!
It reduces supply for people who exclusively want to own. I'm not going to tell people what is the better financial decision for them, but there is a segment of society that wants to own a home regardless of whether renting is more financially beneficial.
Really. If obsessive zoning and building regulations didn't artificially restrict the supply then there would be no reason for anyone to "invest" in houses.
100%. I'm a far left anticapitalist, but facts are facts. Zoning, restrictive building codes, and the death of much of the housing construction industry post 2007. All contribute to housing costs and homelessness.
I'd like to see zoning opened back up for increasing density wherever it's needed, but I would also like to see a strong social housing policy.
That doesn't strike me as true at all. Nationwide, housing has generally been a "good investment", regardless of whether we're talking about an area that restricts supply or one that does not.
The places where it's a good enough investment for investors to buy up real estate are in these high demand markets where housing supply has massively lagged demand. Homeowners may be satisfied that their home values have increased everywhere, but black Rock isn't buying houses in small towns in Idaho and ohio because the ROI isn't as high.
Rents and home prices have repeatedly fallen in places that have authorized large scale new building. In the past, those price pressures were probably offset by large-scale moves from the northeast and midwest into the Sun Belt, but those appear to have mostly equilibrated now.
An unregulated supply will still offer promising investment opportunities to those with enough money to buy them up. Look at crypto or private equity. These markets are lightly regulated. But prices are bid up by big money. Unfortunately just dumping regulation is unlikely to fix housing.
People say this but then never draw the rest of the owl. It costs money, substantial money, to hold on to a house. As soon as you propose that you're going to close that gap by renting the house out, you're competing in the market with everybody else letting out houses, and supply-and-demand kicks in.
Can you explain the mechanism by which accumulating vacant houses would provide the same reward structure as crypto speculation?
Professional property managers can scale the cost of ownership in a way individual owners can’t.
Besides that speculators can also withhold supply, artificially inflating prices. 2008 occurred due to speculation, independent of NIMBY regulation.
As for crypto, housing can actually be more profitable than crypto since investors see rentier income not just speculative appreciation.
Ultimately, this isn't just a supply-and-demand problem in an idealized market. It's a resource allocation issue where investors with significant capital can hoard housing, driving up costs, while many people struggle with homelessness. Simply greasing the market with deregulation won't solve this fundamental imbalance.
I'm sure they can do lots of things homeowners can't, but they can't defy gravity. Again: I'm looking for an explanation for how investors could come out ahead amassing houses they keep vacant in the face of increasing supply.
A portion of the investor class may divest through deregulation as the character of the housing market changes. But the fundamental issue is the presence of the investor class itself. Markets don’t redistribute wealth equitably; they concentrate it. This will continue even if markets acquire new character through deregulation. At best deregulation can change the membership of the investor class. It does not eliminate the investor class.
In other words you are looking at it from a supply side but ignoring the wealth distribution of buyers. Wealth has further concentrated among the richest buyers over the past few years, while the poorest have grown poor, leading to higher prices for everyone. That’s the cause, not NIMBYism, which has been around forever. It’s a wealth redistribution issue not a deregulation issue.
You're not answering the question I'm asking. I'm not looking for a treatise. I'm just asking how investors keeping vacant supply off the market could make money in the face of increasing supply. They have to pay to hold the houses. They're not earning income from the houses (they're vacant). Supply of the houses is increasing. Fill in the "???" before "profit".
If investors keep houses off the market that artificially reduces supply. All they need is for the increased prices to outweigh any price decline that comes from increased supply. This can happen with or without vacancies for example by having pricing power in the rental market.
House vacancies aren’t my central argument however - they are a symptom of the wealth distribution problem causing our housing crisis.
You didn't answer my question, you defined it away. Obviously, the premise of investors driving housing costs up is that they're artificially reducing supply. Allowing new housing construction increases supply. The question: assume steadily increasing supply --- how are investors making money on this scheme?
It's fine if you just don't have an answer. But then my point is: nobody seems to have an answer about how this is supposed to work.
Pretty sure I answered your question. As long as scarcity effects outpace price declines investors are incentivized to retain vacancies, and it’s not just vacancies but pricing control over rent. The real housing market isn’t effectively modeled by your simplistic abstraction. If you look at a YIMBY darling like Austin, for example, investor owned housing has actually grown, as well as homelessness, despite a modest decline in median price.
Your rebuttal here is a market in which prices declined.
You're clearly trying to route around the question and answer some broader question I didn't ask about how the overall housing market works. I'm not interested. I asked: how can investors make money on this? Your answer is: they don't; they lose money, but I guess do it anyways in order to twirl their mustaches.
The investor class increased as did homelessness in Austin. Not only that but mortgage payments on the median priced home have increased in Austin, comparing 2018-2019 . Houses are even less affordable.
Investors can make money on price fluctuations and rent. And supply increases are neither immediate nor endless, despite what a simplistic model would hold.
Sadly we need structural solutions not superficial answers to the housing crisis.
Suppliers can make money by withholding supply in an inelastic market. Supply and demand effects depend on elasticity to work. It’s not just NIMBYism which contributes to housing’s inelasticity. It is a basic need, with no substitute, and a long time horizon (for building and moving). Pricing power is a motivation for keeping houses off the market (besides just speculation). You seem to think NIMBYism is the only contributor to that.
And investors providing rentals contribute to supply also, sure. Yet pricing power among suppliers plays a role here as well.
My argument is not that increasing YIMBYism is bad, but that it is a meager half measure that can at best nudge housing prices, not fix the essential problem.
For example, even with
a completely efficient and housing supply, with housing selling at cost, people would still be homeless, as homeless people lack money to pay for housing at cost. By ignoring the wealth composition of buyers, we can at best make housing more elastic through YIMBYism, applying a bandaid rather than fundamentally addressing the housing problem itself.
I'm sure you're writing this in good faith, but it really seems like you're trying to slip out from under the question I asked at the top of this thread. "Suppliers can make money by withholding supply in an inelastic market" is an answer to some other question; my question is: stipulating that they can't rent their properties out, and that supply is consistently increasing, how do they make money? All your specific answers have attempted to define away one or both of the premises of that question.
Not entirely, the major factor is banks' credit creation. When any person can go and take a loan that was created from nothing (literal digits created by your bank), and sometimes based on another "speculated value" of a house you own, you will flood the market with an exponential rise of demand that will ALWAYS be higher than the supply. To solve the housing issue you have to follow the root cause, and always follow the money: first, halt credit creation, disincentivize it (ban interest), no speculation values. Second, make housing a depreciated asset, like cars, etc. Without these two, housing markets will never be solved. The thing is, the government knows that, but it's in its interest to keep the prices up, because that will mean more paid taxes! Which is why they fought WFH and created this hybrid model, to keep people around urban areas and keep prices up. I think Canada even admitted it later -I remember I read it somewhere. It's a multi-dimensional issue and the only losing party here is the average middle class person.
This is naive. The problem is that there are enough people with enough power who want house prices to keep going up. The solution must involve making them upset that they cannot get their way. Anything that doesn't have this shape is a stalling tactic in their favor.
I'm not an economist but if you listen to Gary Stevenson talk about this very issue he discusses it in depth. But, when it comes down to it if EVERYTHING is getting more expensive that looking at on variable in one market can't be the crux of the issue.
When you have large transfers of wealth and the wealth gap grows significantly the only thing for rich people to do is buy up assets. Assets are fixed, so the share of assets owned by rich people are drastically increasing. This is inline with the # of houses owned by private investors and #'s of assets owned by other investors will reveal the same thing.
> But, when it comes down to it if EVERYTHING is getting more expensive that looking at on variable in one market can't be the crux of the issue.
Everything isn't getting more expensive. For example, housing prices and rents have gone down in areas where restrictions on new residential construction have been reduced.
> When you have large transfers of wealth and the wealth gap grows significantly the only thing for rich people to do is buy up assets.
That's not the only thing for rich people to do, but it is something people who make smart financial decisions do.
> Assets are fixed, so the share of assets owned by rich people are drastically increasing.
They aren't fixed in any asset class, so there's no real reason to explore your point here.
> This is inline with the # of houses owned by private investors and #'s of assets owned by other investors will reveal the same thing.
CA actually has a lower than average percentage of homes owned by investors, and I haven't seen any evidence it's increasing by a meaningful amount.
Investors tend to invest where the ROI is good. Which tends to be where demand is outstripping supply, but I don't think investor percentages would track that perfectly. I'd expect there to be confounding variables.
Regulations block new supply. If this cannot be overcome, why not add another regulation that private equity cannot own houses? There's no reason they should not be subject to CAs extensive regulations too.
Private equity owns virtually none of the homes in the municipality I live in, just outside the city of Chicago, adjacent to redlined neighborhoods with abysmal schools full of families who would love a chance at the resources we have. Despite insanely high property taxes that depress housing values, our home prices set new records every year.
Homeowners here would just love to spend a year workshopping regulations to prevent investors from buying homes. They know that those regulations would do nothing at all to address the scarcity that drives their home prices, and wouldn't result in them having to adapt to large numbers of new neighbors.
It's the exact same reason they obsess over inclusionary zoning ordinances (IZOs). Affordability is so important! That's why we need new, toothier regulations to ensure that no new housing projects here can ever pencil out for the developers.
PE is a complete sideshow. The root cause of the housing crisis is exclusionary zoning.
Huh. So, like, maybe if rents were not spiking and people were not bleeding money to predatory landlords, maybe, hear me out, maybe they would instead pay someone to build them a house.
2021 called, it would like its performative talking points back.
Build more housing, and "predatory" landlords will have more competition. The endless restrictions on residential construction are the root cause, not your envy of wealthy individuals.
Side point: There are many people who are in no position to own a home or have one built for them. Where do they live if there aren't any landlords?
Seems like extremely important context that 91% of these investor-owned houses are owned by entities with 5 or fewer houses: in other words, these are mostly houses that normal mom-and-pop homeowners bought.
Among other things, it suggests that concerns about institutional investors distorting the market (at least in California) are misplaced; they're a microscopic component of California house ownership.
> it suggests that concerns about institutional investors distorting the market
Right but doesn't it merely change the target from institutional to non institutional investors? 1/5 to 1/4+ SFH homes being owned by non homeowners, and competing on prices, seems like the elephant in the room?
Put another way does the fact that they are non-institutional meaningfully change the narrative and if so how would that relate to policy? It would seem a policy disincentivizing non-primary homeownership could apply equally to institutional and non-institutional investors alike.
I don't really care what happens to mom-and-pop real estate speculators. I don't think targeting any kind of investor is going to do anything for housing affordability, but my real target in this subthread is the PE thing, because "target PE investors instead of rezoning" is a super common NIMBY argument.
As a matter of politics, we're not going to pass any legislation that disfavors mom-and-pop real estate speculators, so I don't really see what's to be gained in litigating. I think you'd be pretty surprised at the demographics of those small-time investors; a lot of them are decidedly middle class. They're not representative of the middle class; obviously, most middle-income earners don't own investment residential properties. But that's not the same thing as saying that middle-income earners aren't represented among real estate investors.
"Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses."
What I find odd is that definition of "investor" is not that clear. When you click through the links you get blocked at the data provider with no context. There's also a link to another post by the same news provider. When clicking through reference to the data source, the link doesn't work.
I’m interested in the methodology they use to identify investor-owned homes. Are they comparing known resident addresses to the names on property tax records? How does it work when multiple members of the same family have different last names? It seems fairly common for members of different generations of family (including in-laws) to live in a house that one person owns. How are you distinguishing an investment from a family living arrangement?
California has a homeowner-occupied tax exemption, and it is listed on the county assessor's website whether a given property is taking it (at least it is for a relative's property in CA I just checked). So I expect they're using that.
This might undercount (if owners don't file the form) or overcount (tax fraud or error), but there's financial incentives to get it right on both sides, so it's probably fairly accurate.
Easy first step is anything not listed as owned by individual people. Investors will have some type of business ownership arrangement in 99%+ of cases and individuals will rarely have an LLC or similar setup for their purchases.
On the scale of the housing market of a whole state people like yourself are probably a rounding error. There's a reason I said rarely in my original post.
* Multi-ownership can be easier. I.e. you can "hide" who owns the house and it disconnects ownership from property records.
* People think it adds liability protections.
* It might make transferring the house at death easier to control(i.e. LLC rules apply, not state real estate rules)
In the case of owning the house you live in under an LLC, the chances of it protecting you from most liability is 0%. The only thing I can think og it maybe protecting you from is debt obligations, if the person trying to collect from you didn't bother to find out why you don't own your house on property records. This probably has a very low chance of working anymore, but low is > 0 I guess.
In order to have LLC liability protections you have to separate the LLC from your personal life, i.e. you have to treat the LLC as a real business, no mixing bank accounts, etc
> Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
> Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
> The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses.
I’m one of those mom and pop owners. The decent ROI on renting out my starter home financed me adding an ADU to the lot, which I also rent out.
I’ve owned the house long enough that I’ve had several tenants churn out when they buy their own houses.
This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock.
Not everyone is at a point in their life where it makes sense to own a home. It feels weird making a judgement that these people should be required to live in apartments.
I don’t have a problem with it. I pointed it out because it seems to show Blackstone hasn’t bought up all the houses like people think.
People should rent what they can afford and need. Some people need the house with all its space, some only need an apartment.
The big thing is people shouldn’t be spending 50% of their monthly income on rent. It doesn’t help them, their family, or you. Likely, eventually, they’ll have trouble paying, you’ll have to evict them, their lives will be disrupted, their families lives will be disrupted, and you’ll have to spend time evicting them and
finding a new tenant else you’re not making money.
Agreed. I look for tenants that aren’t spending more than a third on rent. At $1300/month, that puts it right on median household income of $48k for the area (this is in rural northern CA).
I have no interest in ever evicting anyone, it sounds like a nightmare for everyone involved. I like my tenants, and my rents go up rarely and below market rate/inflation.
You're completely off the mark on this, and speaking like a landlord.
> This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock.
First, when you have a renter, your payment is the "mortgage + tax liability + chunk of profit usually 25-50%"
Nobody, except for IT can save in predatory environment like that, no matter how much you wish it so.
And you're double-dipping by having THEM pay your mortgage and handsome profit on top. And for what? A "let them eat cake" comment. Im sure someone paying 50% or more their income can 'save for a mortgage'.
Knowing this scam, by the time they save up 50k, the bank will demand 100k down. But landlords can just capitalize on existing equity. Its a scam, through and through, that punishes renters.
We do need residences. And they're simple to build. They're called "rent controlled apartments". But 'ewww socialism' rears its ugly head.
> your payment is the "mortgage + tax liability + chunk of profit usually 25-50%"
You would have to be yielding 10%+ on your rental to get anything near that. In my part of the world - rent is cheaper than the interest the mortgage would bear.
> "mortgage + tax liability + chunk of profit usually 25-50%"
25-50% is absurdly false.
We own a second home which we've rented out for years (wasn't the original intention, but anyway ...). The rent covers mortgage, taxes, and upkeep. Profit is minimal, less than 10%. Once you factor in eventual renovations, like replacing the roof, floors, etc., there is no profit at all, or very little.
Go read the briefs from the Realpage lawsuit, and maybe you won't consider me much the fool.
I keep getting anecdotes as some sort of glorious rebuttals. No matter. When the people are at their last end and the guillotines come, I will not shed a tear.
Please point me to the brief documenting that those landlords are making 25 - 50% profit.
And I see you showed your true colors with your second comment. I'm sure if the revolution you're praying for actually comes, you'll definitely be in the vanguard!
irrelevant fun fact: people think that the vast majority of those who were visited by Mme La Guillotine during the French Revolution were nobles. In fact, the vast majority, ~85%, were from the "third estate" (commoners, which also excluded clergy).
> First, when you have a renter, your payment is the "mortgage + tax liability + chunk of profit usually 25-50%"
You think landlords make 25 - 50% profit on a SFH rental unit? You're so comically wrong that there's no point in discussing the rest of this post (which is basically a list of every failed housing policy in existence).
Allow builders to build more units. It's that simple, which is part of the problem for some people.
Or in other words, small independent landlords (using that arbitrary 5-house cutoff) own 17.29% of Caliornia houses, and other landlords own 1.71% of California houses.
It would seem but as someone else pointed out it's likely just houses and not multifamily homes. It's not really clear from the web site but it seems like it's just single family homes.
Seeing Hawaii, Alaska, Vermont and Wyoming at the top makes me wonder if their definition of "investor-owned" is actually picking up vacation houses/second homes? Just those are all small states with significant vacation housing markets, wonder if that is driving things here.
The article does state they were included, but is it "obviously" true that they should be? Who is more of an "investor", someone who purchases a primary residence to build equity or someone who purchases a second home to vacation in, spending large amounts of money to maintain it and allowing it to sit empty for long periods of time?
It's a pretty weird statistic because it ignores the denser forms of housing that are also owned by investors. So while 45% of Californians live in homes they don't own, "only 19% of homes are owned by investors" (the article repeatedly mixes the terms "home" and "house")
High property tax rates means low ROI. You can be easily paying 2%+ market value in property tax in those northeastern states.
California incentivizes holding onto real estate with prop 13, which caps property tax increases to 2% per year for the entire time you or your beneficiaries own it. There are people paying less than $10k per year property tax on $3M+ properties, and they can rent for $7k+ per month.
Its crazy that the article is missing the point that on an ABSOLUTE basis, 1 out of 5 homes being owned by investors is ludicrous. California's relative "not hot spot" is not the central issue.
I mean someone has to rent, to renters right? Not everyone plans to live in the same place forever, and not everyone wants to put up the capital to buy a place. Some percentage of housing needs to be owned by investors to make that capacity available for short-term living. What's the delta between 19% and neutral?
California has a massive housing problem, which is just not building enough houses. Doesn't matter much to me who owns them.
I live in the (relatively affordable) part of the “hills” in LA, and there are a LOT of houses (single family and some multi-family, not apartments) sitting unoccupied, prices not moving. I’m talking 1+ year on the market. The managing real estate agents do some Zillow dance moves from what I can tell to obfuscate how slow the market is, and avoid lowering the prices significantly, even to 2021ish levels.
This indicates some broken market dynamics to me. Entities with more capital are having property sit unoccupied, decaying slowly, paying property taxes, because they are betting their self-interested reward for doing so outweighs the risk.
I realize this doesn’t generalize to the entire housing stock, but it sure seems vulgar to me.
Reminds me of the crisis Spain had not too many years ago where there'd be giant buildings never completed that banks apparently refused to devalue on their balance sheets. The buildings just sat empty, not being worked on because the money went dry.
Who owns them probably has an effect on whether new housing will be built. A city of mostly renters will vote to have rent controls. Your property taxes are a percentage of the assessed value of your house, usually 1-2%.
If your houses value is increasing but rent is capped, the landlord business isn't going to look very rosy. No new rentals will be built. Of course, I could be wrong.
This kind of cuts to the problem of conflating housing to houses. Most short term living is almost certainly better served by things other than stand alone houses. Is why colleges are dominated by dorms.
I don't think any middle aged person is looking for any communal living type experience.
Also, what do you mean by "short term"? Usually it only makes economic sense to buy a house if you plan on staying there for 5+ years otherwise closing costs and realtor fees eat away any savings you made from not renting. The period of our life where we are the most mobile and willing to change cities due to job changes (20-40yrs) is also the period in our life when people start families and have children.
Don't forget that apartments are a thing. And are far far cheaper than houses. Both in terms of direct rental costs, and in terms of upkeep. Heck, the plumbing and electric are probably magnitudes cheaper to maintain for an apartment block than for a subdivision.
Directly to your first, though, most people stay in dorms for college because that is the best that they can afford. New students moving to a city to go to school almost by definition can't afford a house. I don't imagine that would be easy to ever change.
That number needs to be broken down between institutional investors and "regular" landlords who own a second property which they rent out (and likely either just covers the mortgage/taxes/upkeep, or is an older already-paid-for property i.e., inherited). The former is a business, the latter is not.
And this is _less_ than the national average. In fact, below the median.
From the article:
> By this math, 19% of California houses were owned by investors, ranking No. 36 among the states and just below the 20% national norm. By county, tiny Sierra has the most (83%) and Ventura the least (14%).
Since only 40% of those "owner"-occupied homes have their mortgages paid off, that means the bank owns the other 60%.
Doing the math, this means only about 28% of people actually own the place in which they live. The other 72% is owned by banks, investors, landlords, etc.
That fully 20% of homes in California - intended to be owned by families or individuals as their primary residence - are instead served out as rentals, and this is a low percentage compared to other states, is a massive indicator of the one the key issues facing Americans:
We don't own anything. Not even our own homes. Not even our lives, which we sell to others at a discount as "labor".
When we don't own anything, we have no stability. When we have no stability, we live in a constant state of uncertainty, which is just another word for "fear". Fear makes us act desperately or angrily or selfishly.
And the people who run everything use that fear to manipulate us into agreeing to be exploited by them - to work for them, vote for them, worship with/for/on them, etc.
If you actually want peace and freedom and liberty and all those things Americans claim to care about, we need to start by building stability in our lives.
That starts by taking back ownership of those things that belong to us through our efforts. The mortgage companies provide zero value to homeowners - they simply gate who gets to live in a home vs. who must pay for a rental, which is even more unstable.
Replace hierarchies with cooperatives. Stop using money as the exclusive determining factor of whether someone is housed, fed, clothed, or cared for.
Desperate people make lousy workers - ask any power and money pervert who believes in this system how hard it is to find good indentured servants who will just obey without complaining.
Stable, cared for people make excellent workers - fear may be a motivator, but gratitude is an even greater motivator. When people are stable and able to relax, they are more often willing to contribute toward keeping that stability. You see this when people who have "free" time spend it volunteering for their community.
If that stability comes at the expense of others, however, it's inherently unethical and leads us back exactly to the situation where we are now - where some people gain stability by manipulating others into working for them and stealing from them a significant portion of the value they create.
California real estate is such a tragedy, as huge portions of the population are suffering from a housing shortage caused almost exclusively by not building enough homes.
A majority of people own real estate, so they're happy with the status quo. Why would you put up with even the slightest personal inconvenience from added housing, if all it got you was a reduced value of your property?
> California real estate is such a tragedy, as huge portions of the population are suffering from a housing shortage caused almost exclusively by not building enough homes.
The real issue with CA real estate is prop 13. It directly disincentivizes selling your home as you would be paying significantly higher taxes on the same house (same value etc) somewhere else.
So if you do own a home, you’re much better off keeping it and renting it out rather than putting it on the market. The only thing stopping one from doing that is needing the home value itself as the down payment for their next residence. But even that can be avoided by getting a line of credit on your original house.
If you want to fix CA real estate, scrap prop 13, force granny to sell and move to the boonies (to avoid the massively ratcheted property tax she will now be paying), and you’ll have a massive supply of homes for sale.
Prop 13 massively distorts the market and creates large disparities in what two neighbors may be paying. It essentially ensures that you cannot live where you were born, breaking up families and hurting communities.
> It essentially ensures that you cannot live where you were born, breaking up families and hurting communities.
Oh you can live where you were born if you never move out and eventually inherit your parents home. You just won’t be able to buy a place nearby (at least without some serious down payment assistance and two high paying jobs).
Do you have any hope that either what you are suggesting, or an increase in housing supply, will ever actually happen?
It's clearly interesting to speculate the ideal solution on the Internet, but after having been here 10+ years I worry that it's just never going to get better.
I wouldn’t even be interested in a house. Just give affordable cookie cutter apartments in a 50-floor building somewhere.
> No amount of tax adjustments can fix not having enough homes for the population.
If you raise property taxes then people will leave because it’s not affordable. Not just leave their homes, they will leave CA. That will both lower demand and raise supply.
> "We don't have to build enough homes for people if we just force the poorest people to leave the state"
That’s literally what every other state with property taxes assessed on the current value of the home are doing. It’s why retirees move out of their larger homes when they no longer have children occupying the other bed rooms. It’s why you have actual turnover of housing to (generally younger) people that not only want to live there, but are gainfully employed and can afford to do so.
It’s not some evil scheme to evict granny. It’s efficient allocation of a finite resource.
> If you want to fix CA real estate, scrap prop 13, force granny to sell and move to the boonies (to avoid the massively ratcheted property tax she will now be paying), and you’ll have a massive supply of homes for sale.
Sounds callous.
I would focus first on banning the use of homes as investment and permitting mixed-use, medium- to high- density construction (with something like 15 min city as a point of reference) before we reach for the big hammer and start coercing the poors out of their homes.
By "banning the use of homes as investment" I assume you mean renting them out.
You realize people live in those rental homes, correct?
Also, why is it desirable to force all renters to live in an apartment (assuming those are not banned, and people who are unwilling or unable to own their residence are not forced to wander the streets)?
A majority of banks & investors own real estate. You think people have the funds to pay cash at market rate? I've got an even better idea though to deal with people like this. About time we give renters the same rights as labor unions. If you think it is an inconvenience now, wait until it becomes legal for renters to go on strike & landlords are forced to negotiate in good faith.
Not the original poster, but I imagine one of the things that undocumented people have more trouble doing is getting a mortgage or signing a lease so having a landlord who will take cash definite benefit for that group of people.
There are also citizens who are undocumented because they are incapable of the legal work to reacquire valid ID for various reasons.
That line of logic you have to ask why California has such a low rate though!
How many generations does it take before someone counts as a "real american"? Or is your "foreign-born" designation hiding that it was always about skin color all along?
I think once they’re citizens, and id say generally foreign born retain the $origin-american but their kids don’t always. I don’t think you typing in “purely a matter of skin color” is writing angry posts into the void that have nothing to do with the OP.
My reference to number of generations centers around recent guidance from USCIS to de-naturalize citizens based on broadly defined criteria.
The current discourse in this country centers around suspending habeas corpus to mass-deport millions of people. How do you know who's "illegal" without going through judicial process? You look at their race. And in the end, that's always what it's been about.
I don’t agree in general that’s how the system works or how most Americans think. But again that has nothing to do with the OP. I thought you were asking about American culture and I wanted to clarify.
No, a majority of Americans don't think that way. But unfortunately mass deportation was the central platform of the Trump 2024 campaign, and race is now the defacto targeting criteria for ICE.
I mention that because I remember reading during the pandemic that institutional investors generally make shittier landlords: they're quicker to evict, quicker to raise rents, less likely to work with a tenant on a payment plan, and they have fewer ties to the community. There was a concern that with all the eviction moratoriums during the pandemic that large landlords could wait it out, while smaller landlords got screwed and got out altogether in some cases, leaving their housing stock to be gobbled up by the shittier institutional landlords.
Doing the same search for "owner occupied" shows only around 50%, though. I don't know where to get the data that teases apart housing units and standalone houses.
I know that my main assertion there was it was a relatively lower number. Adding it to the 19 of this story would still leave owner occupied higher than 50ish. Such that I clearly need help to put a lot of this together.
On the other hand, during the upswing in prices, house flipping in California was really popular with investors because the (then) low interest and likely capital gain made things easy.
To understand the meaning of this, consider that supply/demand curves are naturally non-linear and even 5% increase in demand can double the prices.
This low hanging “remedy” is likely to exacerbate the supply issue, not help it.
Some of those homebuilders build because they can rent homes if they can’t be sold. Others build because they have large investors to sell to if necessary. All of them build with their financial models account for carry time, as carry costs are extremely important to their bottom line.
If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable.
Assuming the policy to reduce non-primary home ownership is tax based, carve out tax exceptions for home builders. Personally I would carve out exceptions for home flippers too, but could see that being more contentious. Either way though, this part of the problem would be, IMHO, trivial to solve.
> If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable. Others build because they have large investors to sell to if necessary.
I think that's fair. But conversely carry time is also high because prices are high, and investors drive up prices; builders also do this to an extent, by e.g. buying down points to avoid lowering prices, to keep the perceived price elevated. I have no illusions this is a simple problem to solve. The right question here is probably figuring out whether the overall supply going up by X increased rate because of investors will be worth the cost of the total homeownership rate being controlled by a shrinking proportion of the population (I would guess no).
My personal proposed solution here would be to kick out investors (tax policy), and also directly incentivize home builders selling to first time owners (via tax credits, comparable to e.g. EV tax credits). The latter would be quite expensive, but if the overall homeownership rate increases and home prices drop, it would likely be popular.
Right, which is why trying to link the two is misleading at best.
> there are many valid arguments that treating housing as an investment isn't a stairway to ending homelessness
Such as? We seem to agree that the existence of rental units isn't a cause of homelessness.
If we're going to tackle homeless, we have to remove systems that incentivize the collection of homes as a financial asset. Make more homes by one person or entity less desirable or simply undoable.
Instead of trying to manipulate a market through yet another layer of regulation, you can just let builders build more.
And, why did we just give them a YUGE tax break?
"Build more" is not an option, because the incentives don't align to solve the problem. The things getting built are built to capture margins and not to solve the housing problem.
Need regulation.
The headline is true and relevant if you are wondering how investors influence housing prices - with a 20% share, clearly investors influence prices a lot. Moreover, California is where the housing bubble began but it's quite logical it's no longer where the bubble is concentrated so again 20% doesn't imply investor ownership is unimportant.
Nothing else ("% of housing owned by investors"?) is even close.
edit: Yes, obviously I included a time lag (3 years).
[1] https://constructioncoverage.com/research/cities-investing-m...
[2] eg, https://www.zillow.com/home-values/10221/austin-tx/#/
I'd like to see zoning opened back up for increasing density wherever it's needed, but I would also like to see a strong social housing policy.
Can you explain the mechanism by which accumulating vacant houses would provide the same reward structure as crypto speculation?
Besides that speculators can also withhold supply, artificially inflating prices. 2008 occurred due to speculation, independent of NIMBY regulation.
As for crypto, housing can actually be more profitable than crypto since investors see rentier income not just speculative appreciation.
Ultimately, this isn't just a supply-and-demand problem in an idealized market. It's a resource allocation issue where investors with significant capital can hoard housing, driving up costs, while many people struggle with homelessness. Simply greasing the market with deregulation won't solve this fundamental imbalance.
In other words you are looking at it from a supply side but ignoring the wealth distribution of buyers. Wealth has further concentrated among the richest buyers over the past few years, while the poorest have grown poor, leading to higher prices for everyone. That’s the cause, not NIMBYism, which has been around forever. It’s a wealth redistribution issue not a deregulation issue.
House vacancies aren’t my central argument however - they are a symptom of the wealth distribution problem causing our housing crisis.
It's fine if you just don't have an answer. But then my point is: nobody seems to have an answer about how this is supposed to work.
You're clearly trying to route around the question and answer some broader question I didn't ask about how the overall housing market works. I'm not interested. I asked: how can investors make money on this? Your answer is: they don't; they lose money, but I guess do it anyways in order to twirl their mustaches.
Investors can make money on price fluctuations and rent. And supply increases are neither immediate nor endless, despite what a simplistic model would hold.
Sadly we need structural solutions not superficial answers to the housing crisis.
And investors providing rentals contribute to supply also, sure. Yet pricing power among suppliers plays a role here as well.
My argument is not that increasing YIMBYism is bad, but that it is a meager half measure that can at best nudge housing prices, not fix the essential problem.
For example, even with a completely efficient and housing supply, with housing selling at cost, people would still be homeless, as homeless people lack money to pay for housing at cost. By ignoring the wealth composition of buyers, we can at best make housing more elastic through YIMBYism, applying a bandaid rather than fundamentally addressing the housing problem itself.
Or maybe I am misunderstanding what "issue" you're referring to?
When you have large transfers of wealth and the wealth gap grows significantly the only thing for rich people to do is buy up assets. Assets are fixed, so the share of assets owned by rich people are drastically increasing. This is inline with the # of houses owned by private investors and #'s of assets owned by other investors will reveal the same thing.
Everything isn't getting more expensive. For example, housing prices and rents have gone down in areas where restrictions on new residential construction have been reduced.
> When you have large transfers of wealth and the wealth gap grows significantly the only thing for rich people to do is buy up assets.
That's not the only thing for rich people to do, but it is something people who make smart financial decisions do.
> Assets are fixed, so the share of assets owned by rich people are drastically increasing.
They aren't fixed in any asset class, so there's no real reason to explore your point here.
> This is inline with the # of houses owned by private investors and #'s of assets owned by other investors will reveal the same thing.
CA actually has a lower than average percentage of homes owned by investors, and I haven't seen any evidence it's increasing by a meaningful amount.
Regulations block new supply. If this cannot be overcome, why not add another regulation that private equity cannot own houses? There's no reason they should not be subject to CAs extensive regulations too.
Homeowners here would just love to spend a year workshopping regulations to prevent investors from buying homes. They know that those regulations would do nothing at all to address the scarcity that drives their home prices, and wouldn't result in them having to adapt to large numbers of new neighbors.
It's the exact same reason they obsess over inclusionary zoning ordinances (IZOs). Affordability is so important! That's why we need new, toothier regulations to ensure that no new housing projects here can ever pencil out for the developers.
PE is a complete sideshow. The root cause of the housing crisis is exclusionary zoning.
On what land? With what planning permits?
Build more housing, and "predatory" landlords will have more competition. The endless restrictions on residential construction are the root cause, not your envy of wealthy individuals.
Side point: There are many people who are in no position to own a home or have one built for them. Where do they live if there aren't any landlords?
Right but doesn't it merely change the target from institutional to non institutional investors? 1/5 to 1/4+ SFH homes being owned by non homeowners, and competing on prices, seems like the elephant in the room?
Put another way does the fact that they are non-institutional meaningfully change the narrative and if so how would that relate to policy? It would seem a policy disincentivizing non-primary homeownership could apply equally to institutional and non-institutional investors alike.
As a matter of politics, we're not going to pass any legislation that disfavors mom-and-pop real estate speculators, so I don't really see what's to be gained in litigating. I think you'd be pretty surprised at the demographics of those small-time investors; a lot of them are decidedly middle class. They're not representative of the middle class; obviously, most middle-income earners don't own investment residential properties. But that's not the same thing as saying that middle-income earners aren't represented among real estate investors.
"Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses."
This might undercount (if owners don't file the form) or overcount (tax fraud or error), but there's financial incentives to get it right on both sides, so it's probably fairly accurate.
The link to the original source is paywalled.
* Multi-ownership can be easier. I.e. you can "hide" who owns the house and it disconnects ownership from property records.
* People think it adds liability protections.
* It might make transferring the house at death easier to control(i.e. LLC rules apply, not state real estate rules)
In the case of owning the house you live in under an LLC, the chances of it protecting you from most liability is 0%. The only thing I can think og it maybe protecting you from is debt obligations, if the person trying to collect from you didn't bother to find out why you don't own your house on property records. This probably has a very low chance of working anymore, but low is > 0 I guess.
In order to have LLC liability protections you have to separate the LLC from your personal life, i.e. you have to treat the LLC as a real business, no mixing bank accounts, etc
Simply looking for properties owned by corporations will get you really close.
> 19% of California houses were owned by investors, ranking No. 36 among the states and just below the 20% national norm.
States with the highest share of investor-owned houses:
> Hawaii at 40%, Alaska at 35%, Vermont at 31%, West Virginia at 30%, and Wyoming at 30%.
States with the lowest are all in the Mid-Atlantic and lower New England:
> Connecticut at 10%, Rhode Island and Massachusetts at 12%, and Delaware at 13%.
Why so low in California (again, I'm baffled that this is "low")?
> the sky-high price tag for single-family homes, the third-highest nationally at $866,100
> Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
> Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
> The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses.
I’ve owned the house long enough that I’ve had several tenants churn out when they buy their own houses.
This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock.
Not everyone is at a point in their life where it makes sense to own a home. It feels weird making a judgement that these people should be required to live in apartments.
People should rent what they can afford and need. Some people need the house with all its space, some only need an apartment.
The big thing is people shouldn’t be spending 50% of their monthly income on rent. It doesn’t help them, their family, or you. Likely, eventually, they’ll have trouble paying, you’ll have to evict them, their lives will be disrupted, their families lives will be disrupted, and you’ll have to spend time evicting them and finding a new tenant else you’re not making money.
I have no interest in ever evicting anyone, it sounds like a nightmare for everyone involved. I like my tenants, and my rents go up rarely and below market rate/inflation.
> This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock.
First, when you have a renter, your payment is the "mortgage + tax liability + chunk of profit usually 25-50%"
Nobody, except for IT can save in predatory environment like that, no matter how much you wish it so.
And you're double-dipping by having THEM pay your mortgage and handsome profit on top. And for what? A "let them eat cake" comment. Im sure someone paying 50% or more their income can 'save for a mortgage'.
Knowing this scam, by the time they save up 50k, the bank will demand 100k down. But landlords can just capitalize on existing equity. Its a scam, through and through, that punishes renters.
We do need residences. And they're simple to build. They're called "rent controlled apartments". But 'ewww socialism' rears its ugly head.
You would have to be yielding 10%+ on your rental to get anything near that. In my part of the world - rent is cheaper than the interest the mortgage would bear.
25-50% is absurdly false.
We own a second home which we've rented out for years (wasn't the original intention, but anyway ...). The rent covers mortgage, taxes, and upkeep. Profit is minimal, less than 10%. Once you factor in eventual renovations, like replacing the roof, floors, etc., there is no profit at all, or very little.
I keep getting anecdotes as some sort of glorious rebuttals. No matter. When the people are at their last end and the guillotines come, I will not shed a tear.
And I see you showed your true colors with your second comment. I'm sure if the revolution you're praying for actually comes, you'll definitely be in the vanguard!
irrelevant fun fact: people think that the vast majority of those who were visited by Mme La Guillotine during the French Revolution were nobles. In fact, the vast majority, ~85%, were from the "third estate" (commoners, which also excluded clergy).
You think landlords make 25 - 50% profit on a SFH rental unit? You're so comically wrong that there's no point in discussing the rest of this post (which is basically a list of every failed housing policy in existence).
Allow builders to build more units. It's that simple, which is part of the problem for some people.
Look at it in a historic or idealized context.
Personally I would say that is is a lot, and also too much - people tend to be less indifferent about things they own.
You are free to go and find some statistics if that is what you want to ground your beliefs in.
California incentivizes holding onto real estate with prop 13, which caps property tax increases to 2% per year for the entire time you or your beneficiaries own it. There are people paying less than $10k per year property tax on $3M+ properties, and they can rent for $7k+ per month.
Maybe stable white color employing businesses mixed with a constant out migration of younger people, more likely to be renters, to the coasts?
California has a massive housing problem, which is just not building enough houses. Doesn't matter much to me who owns them.
This indicates some broken market dynamics to me. Entities with more capital are having property sit unoccupied, decaying slowly, paying property taxes, because they are betting their self-interested reward for doing so outweighs the risk.
I realize this doesn’t generalize to the entire housing stock, but it sure seems vulgar to me.
If your houses value is increasing but rent is capped, the landlord business isn't going to look very rosy. No new rentals will be built. Of course, I could be wrong.
Interested in counter arguments
I don't think any middle aged person is looking for any communal living type experience.
Also, what do you mean by "short term"? Usually it only makes economic sense to buy a house if you plan on staying there for 5+ years otherwise closing costs and realtor fees eat away any savings you made from not renting. The period of our life where we are the most mobile and willing to change cities due to job changes (20-40yrs) is also the period in our life when people start families and have children.
I think most people prefer houses
Directly to your first, though, most people stay in dorms for college because that is the best that they can afford. New students moving to a city to go to school almost by definition can't afford a house. I don't imagine that would be easy to ever change.
From the article:
> By this math, 19% of California houses were owned by investors, ranking No. 36 among the states and just below the 20% national norm. By county, tiny Sierra has the most (83%) and Ventura the least (14%).
Various stats put the ratio of owner-occupied residences to renter-occupied residences at roughly 70% to 30% (https://www.apartmentlist.com/research/rent-statistics)
Since only 40% of those "owner"-occupied homes have their mortgages paid off, that means the bank owns the other 60%.
Doing the math, this means only about 28% of people actually own the place in which they live. The other 72% is owned by banks, investors, landlords, etc.
That fully 20% of homes in California - intended to be owned by families or individuals as their primary residence - are instead served out as rentals, and this is a low percentage compared to other states, is a massive indicator of the one the key issues facing Americans:
We don't own anything. Not even our own homes. Not even our lives, which we sell to others at a discount as "labor".
When we don't own anything, we have no stability. When we have no stability, we live in a constant state of uncertainty, which is just another word for "fear". Fear makes us act desperately or angrily or selfishly.
And the people who run everything use that fear to manipulate us into agreeing to be exploited by them - to work for them, vote for them, worship with/for/on them, etc.
If you actually want peace and freedom and liberty and all those things Americans claim to care about, we need to start by building stability in our lives.
That starts by taking back ownership of those things that belong to us through our efforts. The mortgage companies provide zero value to homeowners - they simply gate who gets to live in a home vs. who must pay for a rental, which is even more unstable.
Replace hierarchies with cooperatives. Stop using money as the exclusive determining factor of whether someone is housed, fed, clothed, or cared for.
Desperate people make lousy workers - ask any power and money pervert who believes in this system how hard it is to find good indentured servants who will just obey without complaining.
Stable, cared for people make excellent workers - fear may be a motivator, but gratitude is an even greater motivator. When people are stable and able to relax, they are more often willing to contribute toward keeping that stability. You see this when people who have "free" time spend it volunteering for their community.
If that stability comes at the expense of others, however, it's inherently unethical and leads us back exactly to the situation where we are now - where some people gain stability by manipulating others into working for them and stealing from them a significant portion of the value they create.
A majority of people own real estate, so they're happy with the status quo. Why would you put up with even the slightest personal inconvenience from added housing, if all it got you was a reduced value of your property?
The real issue with CA real estate is prop 13. It directly disincentivizes selling your home as you would be paying significantly higher taxes on the same house (same value etc) somewhere else.
So if you do own a home, you’re much better off keeping it and renting it out rather than putting it on the market. The only thing stopping one from doing that is needing the home value itself as the down payment for their next residence. But even that can be avoided by getting a line of credit on your original house.
If you want to fix CA real estate, scrap prop 13, force granny to sell and move to the boonies (to avoid the massively ratcheted property tax she will now be paying), and you’ll have a massive supply of homes for sale.
Prop 13 massively distorts the market and creates large disparities in what two neighbors may be paying. It essentially ensures that you cannot live where you were born, breaking up families and hurting communities.
Oh you can live where you were born if you never move out and eventually inherit your parents home. You just won’t be able to buy a place nearby (at least without some serious down payment assistance and two high paying jobs).
It's clearly interesting to speculate the ideal solution on the Internet, but after having been here 10+ years I worry that it's just never going to get better.
I wouldn’t even be interested in a house. Just give affordable cookie cutter apartments in a 50-floor building somewhere.
If you raise property taxes then people will leave because it’s not affordable. Not just leave their homes, they will leave CA. That will both lower demand and raise supply.
Yikes
That’s literally what every other state with property taxes assessed on the current value of the home are doing. It’s why retirees move out of their larger homes when they no longer have children occupying the other bed rooms. It’s why you have actual turnover of housing to (generally younger) people that not only want to live there, but are gainfully employed and can afford to do so.
It’s not some evil scheme to evict granny. It’s efficient allocation of a finite resource.
Why not just build more homes so she can live close to family?
I don't want to be forced out of my home because the neighbors paid too much for theirs raising my "property value" and tax assessment.
Sounds callous.
I would focus first on banning the use of homes as investment and permitting mixed-use, medium- to high- density construction (with something like 15 min city as a point of reference) before we reach for the big hammer and start coercing the poors out of their homes.
You realize people live in those rental homes, correct?
Also, why is it desirable to force all renters to live in an apartment (assuming those are not banned, and people who are unwilling or unable to own their residence are not forced to wander the streets)?
There are also citizens who are undocumented because they are incapable of the legal work to reacquire valid ID for various reasons.
That line of logic you have to ask why California has such a low rate though!
The current discourse in this country centers around suspending habeas corpus to mass-deport millions of people. How do you know who's "illegal" without going through judicial process? You look at their race. And in the end, that's always what it's been about.
How is that statistic relevant to anything?