Comment by theptip | Hacker News Reader

Comment by theptip | Hacker News Reader

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So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?

While I can see how the delta in this metric is suggestive, it is not clear how it affects the available housing stock (rent+buy).

What I think people actually care about is unoccupied investment properties, where someone buys and leaves it vacant. Apparently a lot of Chinese capital is parked in this way due to their capital controls preventing cash from being freely moved out of the country, though to be clear it’s not unique to China.

Or if these properties are being flipped, perhaps that has a short-term negative impact on available housing stock as properties are taken off the market while being renovated. (If the marginal second bidder would have moved in to the house as-is, then the winning bid renovating and selling is reducing supply / increasing demand for housing.)

As you note, a whole other kettle of fish around REITs that won’t use mortgages. In the US, REITs are a major contributor to new construction for example.

Yes, you are an investor. You do not live in the home you purchased. You rent it to earn money, i.e., an investment.

This creates a huge problem. Rental properties have different regulations in different places. My brother-in-law was not given a lease renewal amnd was forced to move (within 30 days) while, where I live, that is illegal unless there is cause for eviction. It creates instability. Also, my rent increased $550/month in just two years. Who can afford that? This creates a tenuous housing issue. Thankfully, I was able to move and buy a very small condo so I have a set monthly payment and no longer need to worry about losing my home every year when my lease ends.

There is a huge difference in how I can plan for the future knowing I am not going to be, potentially, homeless every year.

Housing would be (much) more difficult if nobody could rent and everyone had to own the homes they lived in, not easier.

There are more options beyond "own a house" and "pay someone else's mortgage without getting any equity"

Could you give some examples?

Within capitalism, we could have some kind of system to provide equity to tenants. They are effectively already paying a mortgage (just not their own).

Outside of capitalism? Many more possibilities.

> we could have some kind of system to provide equity to tenants

This sounds interesting. Is this hypothetical? How does that equity get transferred/slowly leaked to the next tenant? How does one liquify it?

I don't know how such a system would work exactly, but I know it would require that we stop treating houses like speculative assets and start treating them like a basic need (shelter).

It would work better if people were forbidden from living in homes they also owned, or at least taxed extra for doing so.

Could you, please, give more details. This seems very unintuitive, to me.

In Switzerland they tax imputed rent. If you buy a house and live in it, you are paying extra taxes for the privilege. For strongly related reasons the rate of living in a home you also own is only about 35% in that country.

If no one ever bought houses to use as investment properties then demand would be a lot lower, making houses cheaper and thus more affordable to families. There are plenty of places in cities in Canada where the cost of renting a house today exceeds what it would have cost for a mortgage just a few years ago. Investors buying houses for rental income (and appreciation returns) compete with family home-buyers to drive up prices in desirable areas, especially near schools.

How does an investor who is renting drive up the cost of housing? Barring certain oddities (e.g. college towns tend to have higher rental costs than purchase due to the transient nature of the populace) rents and mortgages should obtain parity very quickly, especially for families looking to stay longer than the transaction cost of the loan.

Because real estate prices are highly location-specific. People looking to buy a home in a nice, safe neighbourhood with a school in walking distance are forced to compete with investors buying houses and turning them into Airbnbs. As the article says, 30 per cent of home buyers are investors looking to grow their portfolio, not people looking for a place to live and raise a family. If those investors put their money into the stock market instead then that would free up the limited resource of homes near schools, causing prices to fall and making it more affordable to start a family.

Imagine what life would be like if we let billionaires buy up all the lakes, rivers, and other freshwater reservoirs. Water prices would shoot through the roof and we'd all be forced to pay the "water barons" whatever they decide to charge. It would be a dystopian nightmare and absolutely toxic to society. If you're curious, this is the premise of the classic sci-fi book Dune.

AirBnB is not the same thing as long-term rental, it’s a major oversimplification to bucket all types of rental properties together.

I spoke to the owners of the last 3 Airbnbs I stayed in. All of them were converted from long-term rentals. The landlords in all 3 cite much higher profits from Airbnb as the reason for conversion.

That's fine, but isn't evidence that short-term rentals dominate the rental housing market. They don't. Short-term rentals make up less than 1% of the housing stock.

Obviously, the housing that short-term rentals use has to come from the housing stock somehow, so it's not interesting to point out that Airbnb's cannibalize the long-term rental market.

(Over the medium-long term this is a problem that'll be solved by a combination of more construction, which is desperately needed anyways, and ordinances regulating Airbnbs, like NYC just passed.)

If there were absolutely zero investment homes, then the price of a typical small home right now would be 150k.

Can you show your working on this assertion?

Far less demand.

> ‘So this includes all landlords too? If I buy a second house, do it up, and rent it, I am an “investor”?’

Of course. The second house is purely an investment to you.

I don’t imagine anybody particularly loves being a landlord. It’s sometimes messy compared to owning a stock. If you could get a better return with less risk from some other investment, you’d put your money in that instead. But residential real estate in cities happens to have an appealing risk/return profile that’s not directly correlated with stocks, so there are good reasons why both small and large investors buy housing.

> If I buy a second house, do it up, and rent it, I am an “investor”?

Clearly yes.

Under-occupation is a separate issue; it's tempting to argue for an unoccupied homes tax, and politically attractive, but it has to be fairly small otherwise at the margin some houses in poor condition get demolished so the land can sit empty and accumulate value.

It doesn't have to be small for that reason. Tax that land just as hard.

Yes of course. That is an investment property; the sole reason for ownership is generating a financial return.

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