The Problem with Real Estate Speculation

There is a housing crisis in America, and though large firms buying up suburban houses isn't the cause, it may be exacerbating it in ways that are only just now becoming clear...

sources:
Durham’s “COVID Land Grab”: How Real Estate Speculation Makes Our City Less Livable - DataWorks NC
Housing speculation and its economic consequences | VOX, CEPR Policy Portal
Housing Speculators Could Bring on Repeat Crash | by Texas McCombs | Big Ideas | Medium
Blame Regulation, Not Speculation, for High Housing Prices
Preparing for the Post-COVID-19 Land Grab
Tech and finance firms buying up homes doesn’t bode well for everyone else - The Washington Post
When Private Equity Becomes Your Landlord — ProPublica
Global investors profited from U.S. rental homes, foreclosure crisis - Washington Post
Investors bought up a record share of homes last year - Washington Post
The Big Short | Donald Mullen Jr. | Pretium Partners
Capital Gains Tax On Real Estate & Home Sales | Rocket Mortgage
Goldman Executive Who Made Millions on Housing Bust Now Wants to Make Millions on Housing Un-Bust

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[elvismark]

In spite of how everyone is frightened and calling the crash, there is already an excessive amount of demand waiting to absorb it, which is another reason it's less likely to happen that way. This forecast was not made in 2008, at least not by the general public, as I will explain below. The ownership rate peaked in 2004, according to the other statement. We reached a peak in the second quarter of 2020 and are currently at the median level. From 2008 to 2012, it fell by 3%, and in the second quarter of 2020, it dropped from 68 to 65.

[joeysmit]

Here in the netherlands we have this new rule in some big cities: "if you buy a home, you have to live in it yourself". This blocks out investors. To be honest, this should be applied everywhere until the housing crysis has been solved.

[davidavanderburgh]

Just sold my house here in Ohio. So glad I sold it to a nice family from Texas instead of a mega corporation!

[aleksandarjovanovic]

Why is renting not considered capital gains in the US? And how come offshore companies are allowed to own property and rent it on US land without paying tax? Neither of these is possible in my country...

[tonysoviet]

3 things: politicians in the US are well known to have investments in these private equity firms, heck, some even CAME FROM THE PRIVATE EQUITY SECTOR. That's the first conflict of interest. Second, the entire social security system, pension funds, ... are based on equity, so if housing crash, the entire system goes with it. Third, property tax is tied to housing value, local governments don't have any incentive to build more housing that could cause a drop in housing prices, hence lowering their revenues.

[adamchoi]

At first I asked myself who is this person without a mustache. But glad people are shedding light on this topic. I hope they make it illegal with corporations to buy residential properties.

[digzero]

Too bad rentals are becoming as expensive as paying a mortgage while building no equity.
The poverty trap has been set, and many will never escape.

[UlexiteTVStoneLexite]

We bought a house in 2013 and we are so glad we did. We bought at the bottom of the market. We could not comfortably buy it now.
All of this junk that is blocking people from being able to get a home is so wrong.
But what is stopping the speculators from just buying up all the new houses. If they buy up all the new ones they can still maintain the market

[jmlkinc]

Americans: YOU CAN'T FIX IT WITH REGULATION.
Other OECD Nations: We, uh, just put in laws that require you to actually live in your house if you're buying in a major city.

[sheryliris]

I'm interested in investing, but I'm not sure where to start. Do you have any advice or contacts who can help me out?

[heychrisfox]

All us younger folks chillin' out here hoping the bubble just bursts so we can actually buy a home.

[prettypic]

My grandfather was a teacher in the 1960s. He was able to buy the family home, earn master's degree, and retire debt free. My mother is a teacher now. She has a high 5 figure debt from just earning her credential. We were force to sell the family at a loss shortly after my grandfather's death, and the house flipper who bought it sold it for over a million dollars. The housing crisis is just a symptom of our broken system

[jaridkeen]

Why is there a housing Crisis in America? Because the average cities land is 20% car Infostructure

[Francisco-je]

There was a house needing repair selling for a lower price, and the bank refused to loan me because of that, a mofo with money then bought, repaired for cheap and now is selling it again.
Its too unfair of a game. I need cheap alternatives, not expensive ones.
Housing should be out of the profit game, like health and education.

[ragonia_]

The way I see it, housing cannot both be a good investment and affordable/accessible, unless wages rise in tandem. If real estate is the only option people have to realistically save for retirement, we will time and again get bigger and bigger booms and busts.

[Likeacannon]

You two are usually so measured and genteel, it's encouraging to see you be critical when judgment is deserved (and in Pretium's case it most certainly is).

[michaelnajera]

Amazing breakdown of the problem. Thank you

[blakebeaton]

Switzerland doesn't deal with this nonsense because their government is sensible. Housing is a place to live, not an investment to get rich on. Not mentioning Switzerland is another nail in the coffin of sensible American real estate.

[stephenadams]

28 and I surprised myself when I was able to buy my first home for my family and myself last year. I'm very lucky, but this economy sucks. My mortgage costs over half of my monthly income. I'm kind of happy, but I wish I had more money now. Although, I can't imagine Id be paying much less for rent where I live in the Colorado Springs area.

Love your videos! Thanks for all the advice.

[nataliefontane]

One thing you didn't mention that would deter investors from buying up rental properties left and right is if the 1031 exchange laws were less desirable than they are now. As it stands, someone who bought an investment property can defer the capital gains tax on the sale of that property when they purchase a new investment property with the proceeds of the sale of the first one.