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Comment by Ekaros | Hacker News Reader

I am against "speculation" on any sort of real estate. On other hand I am not against real estate investments. And I don't think single family housing deserves any kind of special treatment.

I see no reason why someone providing capital to build a building and then renting it out to cover cost of that capital, maintenance and building cost is unreasonable or bad thing.

Issue really is when market is manipulated to keep prices going up beyond inflation or normal changes in demand. That really ruins everything. Real estate shouldn't really appreciate at all over time beyond inflation.

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> I see no reason why someone providing capital to build a building and then renting it out to cover cost of that capital, maintenance and building cost is unreasonable or bad thing.

The problem is the scale of investment. For example, 3 companies own 19,000 houses, or 11% of the rental market, in the Atlanta, GA area[0]. The market is being "manipulated" in that investors with vast amounts of cash are outbidding folks trying to buy a primary residence, and by owning tens of thousands of homes, you exert a measure of control over the housing supply (i.e. "manipulation").

I don't believe that companies should have the ability to own so many houses, and the easiest way to curb this is to progressively tax investment property to the point that isn't financially feasible to own tens, let alone thousands, of homes.

0: https://news.gsu.edu/2024/02/26/researchers-find-three-compa...

Limiting what companies can own would lead to increased demand for rental properties thus increased rents. Making the renters who are unable or willing to buy to have to pay increasing amounts of money. I do not see how that would fix housing in anyway.

I think forcing people to buy home is worse than some party owning lot of homes.

No, the easiest way to curb this is to make it easier to build homes so that supply is closer to the level of demand, not create even more policies that will reduce supply.

Controlling 11% of the rental market is not enough to manipulate it, and that's one of the most concentrated markets in the US if I remember correctly. It's not an actual issue. If those 3 companies are in fact colluding, use the existing laws against that to prosecute them instead of inventing more counterproductive policies.

3 companies own 19,000 houses, or 11% of the rental market

11% of the single family rental market. There are 200k rental apartments in Atlanta too.

When you ban "speculation" on an asset class, you're just telling owners (including creators) of that asset class that they will make less money if and when they sell.

Setting aside the "I know it when I see it" definition of speculation used by most people that changes as needed during a discussion and all the negative side effects that come with that, is telling people who produce a scarce asset that they will make less money when they sell it a good idea, or a bad idea?

Why do you assume that prices increasing faster than inflation is manipulation, and what is the definition of "normal changes in demand"?

Real estate historically hasn't appreciated faster than inflation over time. Supply constraints, historically low interest rates, and a couple other factors have changed that in a number of areas in the last couple decades, but not all. The Rust Belt is a prime example, yet for some reason that isn't relevant in these discussions.

Lets say a transaction has 2 parties that want to extract value (builder, buyer) if there are 3 parties now everyone needs to make money. (builder, speculator, buyer) middle mans ALWAYS increase prices and add little to no value to the actual GDP of a country. They do offer financing, but a financing value of lets say 500k vs a construction value of 500k the construction value has more weight because it is fully finanical vlaue. the 500k investment might be part of a money multiplier which puts strain on the financial system. Speculators ALWAYS drive up prices. Just look at any field Private equity has touched.

I'm going to suggest that the "buy" case actually has far more interested parties trying to extract money.

In no particular order:

- Financing company

- Realtor x 2 (both seller and buyer)

- loan servicing company (may or may not be the financing company)

- Insurance companies (multiple, depending on how financing is achieved, everything from property itself, to title, to PMI)

- Appraisers

- Home inspectors

- Closing attorneys

- County tax office

- City tax office

Basically... there's a reason that renting is the right call if you're not buying to hold for at least 5 years, ideally 10.

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There absolutely is speculation in housing markets, but at least in the markets I'm familiar with - it's not really the landlords who are renting houses that are doing the speculation. It's the folks who buy up 100+ houses in depressed/low-income neighborhoods during recessions and then sit on empty property for years.

The difference is that all those parties serve a necessary function. We could debate the tax office - arguably the function of a transaction tax is precisely to deter speculation or sales for short-term use.

Some speculators serve a necessary function but many do not. In my area it's not uncommon to see homes listed where the last sale was ~6 months ago and it's clear they just slapped some paint on it, replaced appliances in ways that are not generally to my taste, and then doubled the asking price.

Yes, and those people aren't landlords renting the property.

So I'm not certain how to tie that back to the original discussion about not needing a special case to handle people accumulating multiple residential buildings.

Side note - I don't see this case pretty much anywhere (and I'm literally in the process of looking at homes). I do see cases where a home sold 6 months to a year ago and the new price is ~10% higher, and I do see cases where a home sold in 2021/2022 and now the price is 2x higher.

But what I don't see any of is doubled sales price in a 6 month window with just a new coat of paint.

So I'm not certain how this is relevant at all given it's non-existent in any of the markets I'm looking at.

"Speculators" are not built-in middlemen, they are competing on bids with the buyer. Perhaps there could be some policy put in place to level the playing field between an owner-occupant who will bring mortgage-related red tape and an institutional investor who can make an immediate cash purchase, waive inspections, etc.

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