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Comment by Bukhmanizer | Hacker News Reader

No it won’t. This reads of straight fantasy. The idea that an extreme minority is going to panic the majority into selling at bargain basement prices is absurd. It’s far more likely that either

1. People simply choose not to sell their houses; as most people who own one or more homes have that option, or

2. The 64% of people buy the homes selling for cheap, and resell for a profit

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My (very limited, admittedly) observation is that people who own multiple properties do not panic-react to the market changes. A great example of that is London, where a vast number of houses and flats are unoccupied and that doesn't seem to bother the very affluent class owning the properties.

Agreed. Largely because they have the capital to hold on to the property, and also for as long has anyone has been alive, in most places owning a house has been either a safe or unbelievably lucrative investment.

The notion of lots of empty houses and flats in London is severely exaggerated. Sure, there are some tiny areas where lots of owners are people who have multiple homes, and so spends little time each place. But most of London haven't got that much empty space.

The London rental market is if anything completely overheating at the moment due to lack of supply.

Both West London and (surprisingly) East London had many unoccupied houses a few years back. Even in areas around Hackney road / Bethnal Green, which I would guess are not even really investment properties but more like long-term wealth assets.

Agreed on the overheated market. My argument was that these properties are completely off the market and the owners won't panic-sell them

London is generally nowhere near the top of the list of places with empty housing in the UK. It's "many" only because of the relative density.

As of April 2022, only about 34k properties were classed as long term vacant in London out of around 3.7m housing units, with Southwark, Newham and Barnet at the top of the lists, largely because of redevelopment projects that meant clearing out tenants first, as well as time to get people into new developments afterwards.

<1% empty housing is not unusually high for an area experiencing a lot of renewing and new builds.

I think the main difference is that, at least in the US, a lot of people that bought multiple homes in the last few years are fairly heavily leveraged. It's not "very affluent class owning the properties", but people that took out a another mortgage because they thought real estate was a sure bet.

The real issue in the US is going to come down to how many people can continue to afford multiple homes which is where rising interest rates and inflation both come into play. Anyone that bought a second home using an ARM may be forced into paying much more than they thought, and rising interest rates are going to put additional pressure on people with investment properties as they may need more liquidity sooner than originally expected to cover routine expenses.

The market needs inventory for prices to adjust. With the "high" interest rates (really more like historically normal), home owners with a 3% mortgage don't want to sell, since they'll be trading their 3% loan for a 7% loan. So even though there are not a lot of buyers, there are not a lot of sellers either, so there is no pressure to reduce prices. Perhaps the the air bnb owners selling will provide enough inventory to let the shortage of buyers drive down prices...

> People simply choose not to sell their houses; as most people who own one or more homes have that option, or

Except those who feel that prices will go down further and don't want to be left holding the bag. It's a classic prisoner's dilemma.

> The 64% of people buy the homes selling for cheap, and resell for a profit

With the current interests rates, this is straight up magical thinking.

> Except those who feel that prices will go down further and don't want to be left holding the bag. It's a classic prisoner's dilemma.

It’s not. The current mantra is that if prices go down, on a timescale of like 10-20 years they will eventually go back up. This is the way things have gone for at least the last century. AirBnB can go bankrupt tomorrow and wit will do exactly nothing to dispel this thought.

> With the current interests rates, this is straight up magical thinking.

Do you think that matters even the slightest bit? A nontrivial proportion of homeowners could afford to buy second homes outright at this point.

> It’s not. The current mantra is that if prices go down, on a timescale of like 10-20 years they will eventually go back up. This is the way things have gone for at least the last century. AirBnB can go bankrupt tomorrow and wit will do exactly nothing to dispel this thought.

If you are a hedge fund manager, and are considering pulling your money from a reit or not, I can assure you the "20 years" timeline is not anything you care about.

> Do you think that matters even the slightest bit? A nontrivial proportion of homeowners could afford to buy second homes outright at this point.

Doesn't mean they will be wanting to act as the greater fool with their savings.

You're going to sit on a distressed asset for 20 years hoping it recovers? Do you realize how financially debilitating that is?

> You're going to sit on a distressed asset for 20 years hoping it recovers? Do you realize how financially debilitating that is?

I’m saying they have the financial ability to do so if necessary. Approximately no one actually believes that the housing market is going to undergo a >20 year downturn because of AirBnB.

The trillion dollar question is what will actually make people believe the market is going to turn over for the long term. Because that’s literally the only way the markets are going to return to normalcy. And it’s not going to be because of some hotel app.

> This reads of straight fantasy.

Speaking of fantasies, the bottom of the page spruiks the author's latest e-book, "The Asian Heroine Who Seduced Me".

I noticed that too. I hope it’s not as bad as it sounds but if so, yuck.

"Her sun-burnished skin was smooth and healthy, her eyebrows were straight and fine, and her teak-colored eyes intelligent and quick. There’s an attractiveness unique to mixed blood and she had it, perhaps a quarter of this and the rest of that.

For our first meeting she’d chosen to wear a plain black halter blouse that showed her figure and bare shoulders to good effect and a peasant-style skirt of multi-colored, mixed- texture fabrics. Her dark cascade of hair was pinned up in a chignon, revealing her graceful neck. Her smile revealed even white teeth. She had the glow of the well-off and an unself- conscious confidence. She was poised, slightly shy and visibly curious about me.

In other words, she was stunning.

And needless to say, out of my league. "

>The idea that an extreme minority is going to panic the majority into selling at bargain basement prices is absurd

While I have no clue how the housing market is going to turn out, I'd point out that edge conditions control prices quite often. When demand is higher than supply prices can increase very quickly, and the converse is true also.

I don’t doubt that fact, but housing isn’t a typical market. It’s a market that for most people’s lives, has never gone down for a long period of time. It’s a market that the government will actively intervene in to prevent it from going down.

If you talk to a lot of older Americans, a non-trivial portion of whom are invested in the housing market, their faith in the continued growth of the housing sector is akin to their faith in God. They’d rather sell their kidney than their second homes at a loss.

You would have to do a lot to get them to believe that the housing market is over.

> 1. People simply choose not to sell their houses

There is a natural phenomena that forces people to vacate their houses.

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