[deleted] t1_j4plxmb wrote
Reply to comment by jeffwulf in New apartment buildings in low-income areas lead to lower rents in nearby housing units. This runs contrary to popular claims that new market-rate housing causes an uptick in rents and leads to the displacement of low-income people. by smurfyjenkins
I think there are more variables than that. for example, i think it also matters who provides that supply. we're seeing a lot of corporate real estate movement. if 1 entity controls the supply, I dont see an incentive to lower prices.
jeffwulf t1_j4qrehf wrote
It only matters who provides the supply if it's all highly concentrated in a single provider.
[deleted] t1_j4qsu1p wrote
yes. and if you've been paying attention to the news corporations & investment firms have been buying up housing
24% of all houses sold last year were bought by investors
The company Invitation Homes (owned by Blackstone) owns nearly 13,000 homes in Atlanta alone and 90% of the homes in some specific areas
jeffwulf t1_j4qupjg wrote
Most investors are mom and pop landlords. Institutional investors own less than 1% of housing.
[deleted] t1_j4qvhh4 wrote
right now, sure, but it's increasing. & it also depends on the area. housing supply in California doesn't help anyone in Georgia & like i said, some areas of Atlanta are 90% owned by 1 institutional investor
"In the Atlanta metro area, 42.8% of for-sale homes went to institutional investors in the third quarter of 2021"
jeffwulf t1_j4r3lk9 wrote
They own about 300k houses country wide versus housing stock over 100 million. They don't meaningfully effect prices and have no meaningful market power. However, we do know from their shareholder reports that the reason they're investing in single family homes is because they think that local homeowners have successfully put in policies that prevent new housing from being built so their profits will be protected and the largest risk to their portfolio is new housing supply being built.
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Your article even says as much.
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After all, investors are driven to rental-family homes because of existing demand and limited supply, while housing cost burdens among low-income people have been rising for decades.
“Private equity firms and other institutional investors benefit from tight housing supply, but they did not create the problem. Local governments across the U.S. have adopted policies that make it difficult to build more homes where people want to live,” Schuetz said. “Zoning rules that limit the construction of small, moderately priced homes are politically popular with existing homeowners and local elected officials.”
[deleted] t1_j4r47o0 wrote
the idea of entire areas owned 90% by 1 company doesn't set off any alarms for you?
when highrise apartment buildings are built it's not like there's that many millionaires to choose from who could possibly afford to build & own it.
jeffwulf t1_j4r7jhh wrote
Depends on how big an entire area is. It would have to be pretty sizable before it's meaningful.
There's like 30,000,000 millionaires in the US alone.
[deleted] t1_j4r8xv3 wrote
psh regular retirees are millionaires, that means nothing. especially if you'd have to liquidate every investment & property to get that $1mil.
an average, basic 100 unit apartment building would cost $37+ million to build. so an individual building an apartment building would probably have $100+ million net worth. high end apartments could cost $100 million to build & require someone with $250million.
and then they need to charge like it cost $370 million or they'll never make their money back
but in reality, that's rare, a billion dollar corporation is going to be the one building these apartments. similarly, if youve ever seen a new neighborhood built, every house is built by 1 company. the difference is that the houses are sold to individuals, creating diverse suppliers. where the apartments/rentals continue to be owned by the rich & who then have the opportunity to control the market since not many people can afford to compete with billionaires
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