Same reason banks sell mortgages instead of buying homes and renting them. It’s not their business model to operate thousands of stores. Having many different people operate many different stores to their standard is.
Former real estate dude. There are a lot of reasons but I'll just run through a few:
A company like Open Door can monopolize a local market very quickly. Pick up 10 listings in a neighborhood, suddenly they control all the comparable properties which means they dictate the housing prices. Or maybe they want to buy up the remaining home inventory in the surrounding areas, and they'll use 10 of their own properties to explain why your home is now worth less.
Corporations can qualify for nearly interest free loans and offer up ridiculously high bids that most private individuals cannot hope to compete with. The effective buying power of a private individual vs a corporation is next to zero.
Corporations probably don't want to flip the home in the short term, they might want it to be a rental for the next 10 years while it appreciates on the books.
So in short, you have a system that can control the housing supply, control housing prices, force out real potential buyers, turn a lot of would be buyers into renters, all while increasing some billion dollar corporation's bottom line. Should absolutely be illegal.
And the people buying them also have profit incentives. Whether JPM is doing it to profit from rentals directly or with the expectation that some future buyer won’t make a difference.
But it’s illogical by any standard economic model that any supplier will not build more units if they see it can bring in more money. Either they build more or someone else does.
Definitely agree, though in Amsterdam they only bought rental units, no SFH, I don't know what their global strategy is in that regard. I'm not sure if there's a clear business case for buying single family homes and turning them into rentals. You're basically competing with the entire mortgage industry then, families have insane buying power when backed by mortgages. They also make decisions that make no financial sense, basically only tempered by governmental regulation and the risk appetite of mortgage lenders.
I don't think they buy all their property. In Boston they have four locations and are planning a fifth but they're all rented / leased from property mgmt firms.
I've never understood why they don't do this. I have to assume that the majority of their sales go to Chicago apartment/condo dwellers rather than suburban homes.
Why do you think the supermarket wants to tie up a bunch of assets in some real estate for 10 years?
They're in the supermarket business not the real estate business.
Also, who loses here? This is a voluntary transaction between capable companies out to make a profit. If they both think it's a good idea, who are we to say it isn't?
They are not market makers. They buy property and improve it's value and sell it. They are a normal business. They do not buy property just to hold it.
It's the way that consumer culture can grow, because you use your line of credit to buy a second or third car, nicer car, jet ski, boat, canoe, etc. Then when you have all of this stuff you have to buy a bigger property just so that you have space to store it. So that means selling your existing property to someone else to repeat the cycle.
It is certainly an efficient way to keep money moving.
Simple answer - they’re bought by investors and flipped for rent seeking and investment. We all know that people owning their own housing is economically inefficient.
They can’t buy “all” the housing and make money off that. You can simply defeat them by building more housing.
Same reason car companies sell you cars instead of keeping them for themselves. They naturally depreciate, except we intervene in the market to help boomers’ retirements.
Why bother when you can just have real estate instead?
I'm likely missing something here, but to me this minimises the problem to just a reduction in the number of properties you can move into (assuming some are lost and some of the others sold).
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