But why can't you out build them? If there is demand of ten people who need houses and you build ten and a rich person buys all of them so they can rent them out, build ten more. Now the rich person has to buy those if they want to preserve the rental value of the original ten, so you've doubled their costs. They may not be willing to do this. If they are, build ten more...
At some point the rich person decides it's not worth buying 100 houses so they can collect rent on ten, and then they take a bath when they want to unload the first 90 properties which they can't rent for what they paid, to the benefit of everyone else. And when it's repeatedly demonstrated that it's possible to do this, rich people holding property they're not using will start unloading it and bring prices down without even building anything more.
I think if this was the case, wealthier people would swoop in and buy them up by the dozen, then rent them out for triple their mortgage. They would all be sold in bulk before the builder broke ground. Capitalism is very kind to those who already have capital.
If they could buy 10K on-rental-market units at an average price enough under $100K each to leave room to build luxury housing there, it would make a hell of a lot more sense to just continue to rent them.
So sell or rent out one of the houses. Having a large non-income generating asset that you don't make full use of is a luxury the non-rich can't afford.
Sure, but with so many potential buyers, even without the people who'd be renting it out, wouldn't it still be perfectly possible to build houses profitably?
The other part is that as the value of your properties increase, you can leverage this to buy more properties, capturing even more wealth.
My old landlord was a civil engineer who went into business buying multi-family homes in Los Angeles with his brother-in-law maybe 30 years ago. They now own close to 30 buildings, maybe around 120 units total.
I'm not unhappy that he's been successful. What's annoying is that this success is not replicatable by other generations. There's no way two people who make less than $100,000 are going to buy a single multi-million dollar residence, let along leverage that process 20 times over.
If the corporation is making that much money from its renting monopoly then the developer should just keep the property it builds and rent it out. If five developers do this, you'll start to see price competition and prices will go down. The rich hoarders and speculators will get screwed badly. As they should be.
Except... they will beg the government to do something, tell some heart-rending narrative about those nasty rich developers, the government will do something, and they'll get to stay rich.
So what? It is business as any other. If someone owns many hundreds properties, there is probably investor money behind that.
There is not a human right to get assigned a dream house. You have to purchase, build or otherwise procure it. People make different choices with their money, some people save/get mortgage and then get a house, other people will spend their money in other ways.
That makes zero sense. Do you think those rental units disappear off the market? There isnone unified housing market, rent and buy. People can still rent if they can’t buy.
Building more will inevitably fix the housing market, even if one investor owns every single new house.
Imagine you are a property developer. You borrow money to buy land and want to build as many housing units on that land as you are allowed to and sell them for as much as you can. Buying granite counter tops in bulk and selling the housing units as luxury is going to make you a lot more than trying to cater to the bottom of the market, so nobody does, unless forced.
I’d claim it’s more complicated as large groups could purchase said housing, and by intentionally introducing a certain amount of vacancy create enough of a shortage such that the rest of the portfolio becomes more expensive and “profitable”
I'm fascinated by how widespread this weird idea is.
Even if we buy the exotic premise that investors would buy houses and leave them empty - generating zero rental income for these greed driven people - as an investment, we still have to explain why they would only do this with new housing stock.
Why can't you do the same trick with existing housing?
...But any real Capitalist would then see the opportunity to stop investing in real estate, leverage his real estate as collateral, and build more houses. Thereby increasing supply, and creating even more wealth by offering his new houses to the other players.
Of course this would pressure the house hoarder into building hotels... Except each other player gets a set of dice, and on rolling anything higher than a 4, his hotel construction is thwarted by decree of the community's zoning board. UNLESS he's making deals under the table, increasing number he has to roll under to get approval from the zoning board.
Exactly, you can even rent seek by buying a plot of land and intentionally keeping the number of units below what demand would suggest. E.g. you have a plot with enough demand to house 20 people but you only build a single family house for 4 people (2 parents 2 children) denying 16 people the possibility to live there. The land is still priced as if it could support 20 people and you make your money off of the sale of the land. This is what people buy into when they buy their house as an "investment". They bank on population growth and increasing demand. If upzoning is impossible then you gain nothing from selling because you have to pay taxes and then buy another property that costs the same amount (which you cant afford because of the taxes), turning the real estate wealth into paper wealth that has to be paid (your mortgage) for but is difficult to draw from except via reverse mortgages.
While this is fair, you forget that real-estate is an investment opportunity. Between flipping houses becoming cool and rental properties being a good investment, if you have an extra couple hundred thousand you can make a strong investment right now. So yes, if this is an investment strategy and you have enough capital, they can just buy up all the houses.
At some point the rich person decides it's not worth buying 100 houses so they can collect rent on ten, and then they take a bath when they want to unload the first 90 properties which they can't rent for what they paid, to the benefit of everyone else. And when it's repeatedly demonstrated that it's possible to do this, rich people holding property they're not using will start unloading it and bring prices down without even building anything more.
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