I see a lot of expensive houses being built in my area. A LOT. And the weird thing is that they’re being bought pretty quickly. Are these people just making more money than me? If so, what are they doing for a living? Or are they just living house poor? How exactly are they affording these places?
Edit: For reference, my neighborhood is starting to become popular (because the other popular neighborhoods have priced most people out of affording places there). The normal price of newer homes here is $700k. My home, built in 1965, which is 2500sq ft on a quarter acre of land, is $500k.
All this talk of foreign investors. But the reality is they represent a small proportion of single family homes[1] and residential units. It’s easy to blame foreigners, but the real problem is domestic. It’s corporations. Corporations are buying all the housing[2]. And they don’t mind sitting on their invest, even vacant, for years. So yeah, y’all keep the bigotery going and blame foreing investors, you’re playing right into capitalism’s hand.
I feel like this article didn’t do a great job of answering the question. They didn’t really determine whether big corporations are buying homes, they determined that investors are buying homes. The actual text:
Those two statements are not equivalent. “Investor” could be a single individual buying a home with the intent of offering it as a vacation rental when not in use. It could be somebody who bought a duplex and rents the other unit out until their parents retire. It could be a house flipper who does 1 house at a time – each time registering an “investor purchase”.
Even “corporation” doesn’t really mean anything; a “corporation” could be an LLC with one employee, the owner.
And even when big corporations buy single-family homes, it’s not clear to me that this has a lasting economic impact. It sounds like a lot of these investment companies are renting the the homes or flipping them. Ultimately, demand is still demand. Somebody has to be there to buy or rent the home for these investments to make sense, so any price increase resulting from this investment activity is not an external, artificial pressure. It’s a real representation of economic value, it is a price that the next occupants are willing to pay.
I have a very specific viewpoint on this issue, as I live in a vacation destination. Various investors are buying up every property that comes up for sale in my community (large corporations, small companies, wealthy individuals looking for vacation homes, etc.)
Every single property that gets bought, gets renovated or otherwise improved to the point that there’s no chance in hell anyone living and working in the community full-time can afford to buy, unless they bought their first property before 2016. Since then, home ownership among my colleagues has become a pipe dream (and without giving away too many personal details, let me just say my colleagues and I are well-educated professionals making way above the median income for jobs in the area).
As I type this out, I’m listening to a million-dollar house being built in the lot behind me (which will almost certainly sit vacant >80% of the time), a shit rental being turned over next door (which charges $3k/mo for a 3/1.5), and two short-term vacation rentals partying across the street (which usually charge at least $300-$400/night).
Regardless of who it is, investors buying up housing is a huge problem for people that are trying to own their own home, especially first-time buyers.
Whether the investors are foreign or domestic, doesn’t matter, as long as governments allow living space to be gambled with, people like OP (I assume OP is working class) are very unlikely to ever own their house/apartment.
It matters because blaming foreign investors is a diversion used to avoid bringing forth actual solutions.
Buying as an investment, whether by foreigners, corporations or whatever, is a symptom not a cause of the housing shortage. The cause of the housing shortage is that we’re not building enough houses. That’s it. Supply and demand, same as it’s always been. The solution is to reduce demand or increase supply.
That doesn’t mean “is a symptom, not a cause.” If it’s actually supply and demand, then the investors buying the housing is part of the problem, not just a symptom. The investors are decreasing supply and increasing demand, so it’s really two sides of the same coin.
Personally, I think that just building more houses isn’t the answer, because the corporations can just keep buying them up. This will continue to artificially decrease supply and increase demand, which keeps them making a profit. And as long as corporations can make a profit with this model, they will (and people will continue to suffer).
Yes let me buy a house on someone else’s land I’m sure they won’t mind. And if there’s not enough land left in America, we just need to increase the supply of land.
the free market won’t fix this because it’s not a bug, it’s a feature.
That’s short sighted. Developers collude with each other and investors. There is serious conflict of interest since everyone on the supply side has lots to gain in ever rising house prices.
Ironically getting rid or severely limiting these developers to reduce supply is what’s needed to reduce prices. Not short term, but the long hard way until you take away the “investment “ side of real estate. Lower supply until it’s not profitable for these developers and investors.