Nope, they’ll just sell them off to large investment firms that are flush with funds after the long period of low interests rates. They intend to keep everyone renting forever so that the whole scheme can be packaged and sold as an asset class.
They will probably be sold to rental management companies (of which there will be a whole bunch) or like liquid-property-investment startups like https://bricklane.com/
everything is paid by the renters, and if the price is not high enough (to turn a risk-weighted profit) it will be removed from the market.
(if there's a high enough vacancy tax and/or security costs against squatting, then eventually it will be sold. which is a one time boon for the market, but it ends up crowding out new developments for a while, and altogether this just leads to crazy waitlists and the usual discrimination.)
Or institutional buyers will just continue absorbing housing stock as it goes on the market, and converting it into rental units. Squeezing more people out of ownership and into permanent rental.
Wouldn’t it mostly discourage people from buying properties for the only purpose of renting them? I think the long-term effects will be interesting. Hopefully, a bunch of rental properties will hit the market.
I suspect the current property owning class will keep buying it up as investments and land banking, and bidding up the price as they go. The only way they could be as high as they are is as ‘investments’ where the purchaser either had capital or is anticipating selling before their loan reverts from interest only.
No, in short term people hoarding apartments will be happy to buy whatever amount of new property built. Probably it will hit people 2, 3 apartments, but not ones with 20+ ones.
Sadly, the owning class could just transfer their housing assets into a corporation which will rent it out in perpetuity and pay the profits to their heirs. As such, there's no guarantee that the housing market recovers when the current house owners die.
And what's more likely, that they do that or that they leave a bunch more dead real estate for at least several years while they hold out for more money?
As long as corporations can make a profit (low enough interest rate, high enough rent), they will continue buying the properties. It may be difficult to build fast enough to overwhelm their ability to buy, and in a large number of areas, the market isn't anywhere near saturated.
With them holding the property, they push prices up for buying, which forces people into renting. It's a vicious cycle that just encourages them to buy more property. At some point the whole market may collapse, but hell, they may get a bailout.
There is a point when you run out of people who are willing to spend millions on the empty investment vehicles so I'm hoping even those properties will help with supply when the tide eventually do go out. Unfortunately it could take a very long time before this happens.
In theory, but what's happening is that they're all being bought by foreign investment and remaining empty. That's what happens when housing becomes an investment vehicle.
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.
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