44% of All Single-Family Home Purchases Were by Private Equity Firms in 2023(medium.com)
medium.com
44% of All Single-Family Home Purchases Were by Private Equity Firms in 2023
https://medium.com/@chrisjeffrieshomelessromantic/report-44-of-all-single-family-home-purchases-were-by-private-equity-firms-in-2023-0c0ff591a701
26 comments
He probably wrote the entire article based on a certain conception, and then pulled in statistics that supported it without looking too closely at where they came from.
I don't even need to dig into the article to know it's bullshit. SFH are not a good investment when you're trying lease them out at scale. You don't get economies of scale which an apartment has.
Also no homes cashflow, the cap-rates are absurdly low, no credible institutional investor will buy them to rent out, let alone 40% of sale volume levels of purchases.
OP is just promoting their blog spam with zero research.
Also no homes cashflow, the cap-rates are absurdly low, no credible institutional investor will buy them to rent out, let alone 40% of sale volume levels of purchases.
OP is just promoting their blog spam with zero research.
If housing is to remain a good investment, it will eventually become unaffordable. Today housing is made into a good investment by artificially restricting its supply.
You can never ever square this circle. PE has nothing to do with it; they are just looking for returns.
You can never ever square this circle. PE has nothing to do with it; they are just looking for returns.
> PE has nothing to do with it; they are just looking for returns.
If PE comprises 44% of purchased homes, they're increasing demand, and therefore prices. So they have plenty to do with the current housing market.
Don't let idealism and perfection be the enemy of good: PE is currently distorting the housing market. The government should take steps to prevent PE ownership of housing, either through taxation or blanket bans, because civilisation imperils itself if most people can't afford housing.
I'm sure other measures should be taken to prevent housing from ballooning in cost between generations, too -- we probably want to stabilise it to something resembling inflation (but probably not necessarily locked to that measure?). That's for economists to figure out.
All I know is that housing has skyrocketed in price in the last few years to the point where many will never be able to buy, and more and more are priced out of even renting. Kicking PE out of the market may be a bandaid on a bullethole, but it's better than doing nothing.
If PE comprises 44% of purchased homes, they're increasing demand, and therefore prices. So they have plenty to do with the current housing market.
Don't let idealism and perfection be the enemy of good: PE is currently distorting the housing market. The government should take steps to prevent PE ownership of housing, either through taxation or blanket bans, because civilisation imperils itself if most people can't afford housing.
I'm sure other measures should be taken to prevent housing from ballooning in cost between generations, too -- we probably want to stabilise it to something resembling inflation (but probably not necessarily locked to that measure?). That's for economists to figure out.
All I know is that housing has skyrocketed in price in the last few years to the point where many will never be able to buy, and more and more are priced out of even renting. Kicking PE out of the market may be a bandaid on a bullethole, but it's better than doing nothing.
Then why aren't rents cratering? You think PE isn't renting these homes out?
Supply and demand applies here. These equity firms rent those homes out. So as they amass more and more housing, rent should be going down as there are more rental units on the market.
Unless the problem isn’t the equity firms. If the problem is just that there just isn’t enough housing, then it doesnt matter if you’re looking to buy or rent, somebody is going to outbid you regardless. Which is what is happening.
I’m always confused why people go to such lengths to find anybody to blame rather than the people who actually govern building housing: municipalities.
Either that or somehow we've all collectively suffered brain-damage and no longer know how to build a shelter for less than a $million.
Supply and demand applies here. These equity firms rent those homes out. So as they amass more and more housing, rent should be going down as there are more rental units on the market.
Unless the problem isn’t the equity firms. If the problem is just that there just isn’t enough housing, then it doesnt matter if you’re looking to buy or rent, somebody is going to outbid you regardless. Which is what is happening.
I’m always confused why people go to such lengths to find anybody to blame rather than the people who actually govern building housing: municipalities.
Either that or somehow we've all collectively suffered brain-damage and no longer know how to build a shelter for less than a $million.
PE is buying those homes because they have a reasonable hunch that supply will continue to be restricted. That is why homes increase in value -- they are a limited thing, with a lot of demand, which is unable to be satisfied.
The thing that is distorting the housing market is local governments, who are preventing new housing construction. PE (and individuals who own a house!) are benefiting from a market distortion which appears because of restrictions in supply.
The measure that should be taken is excruciatingly simple: let people build houses. Let them build small houses, let them build large houses, let them build apartment buildings, let them build ADUs, let them build a second story. Let people build. that's it.
The thing that is distorting the housing market is local governments, who are preventing new housing construction. PE (and individuals who own a house!) are benefiting from a market distortion which appears because of restrictions in supply.
The measure that should be taken is excruciatingly simple: let people build houses. Let them build small houses, let them build large houses, let them build apartment buildings, let them build ADUs, let them build a second story. Let people build. that's it.
Why not just stop treating homes like an investment? I treat my home like a home and honestly would be delighted if the housing market crashed so I could stop paying so much property tax
>Today housing is made into a good investment by artificially restricting its supply.
How? Perhaps in San Francisco, but most places are building like crazy.
Zillow tried this same investment strategy a year or two ago and it bit them in the ass. I wonder how much high interest rates is fueling this, assuming the PE firms have cash to buy where most individuals/families would be hesitant to buy at such a high rate.
How? Perhaps in San Francisco, but most places are building like crazy.
Zillow tried this same investment strategy a year or two ago and it bit them in the ass. I wonder how much high interest rates is fueling this, assuming the PE firms have cash to buy where most individuals/families would be hesitant to buy at such a high rate.
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Here's 60 years of data on new housing starts:
https://fred.stlouisfed.org/series/HOUST
I don't see a boom. Especially when you adjust for US population over that time, which has ~doubled.
https://fred.stlouisfed.org/series/HOUST
I don't see a boom. Especially when you adjust for US population over that time, which has ~doubled.
How should we interpret "Thousands of Units, Seasonally Adjusted Annual Rate" in that data? If you download the file, and sum the column you get 1,114,912, which would be 1.1 billion if the units are truly "Thousands of Units".
Here is a definition of "housing start" from another site:
>"Housing starts is the name for a measurement of the total number of new private residences — single-family homes as well as condos, townhomes and apartments — that have broken ground."
https://www.bankrate.com/real-estate/real-estate-housing-sta...
So does the "Seasonally Adjusted Annual Rate", mean each is month is effectively showing the annual rate? So the January 1959 number of 1,657 means that if you extrapolated the month of January you'd get 1,657,000 houses in 1959? That probably makes the most sense(?). Then the average of 1,433 thousand units per year, over 64 years, yielding 91,715,126 total new units since 1959.
Here is a definition of "housing start" from another site:
>"Housing starts is the name for a measurement of the total number of new private residences — single-family homes as well as condos, townhomes and apartments — that have broken ground."
https://www.bankrate.com/real-estate/real-estate-housing-sta...
So does the "Seasonally Adjusted Annual Rate", mean each is month is effectively showing the annual rate? So the January 1959 number of 1,657 means that if you extrapolated the month of January you'd get 1,657,000 houses in 1959? That probably makes the most sense(?). Then the average of 1,433 thousand units per year, over 64 years, yielding 91,715,126 total new units since 1959.
> but most places are building like crazy.
false
false
exactly right. This would be like people getting mad at collectors of the 'Black Lotus' Magic the Gathering cards for being responsible for its exorbitant price, instead of getting mad at Wizards of the Coast for never printing more of them.
All the problems with housing would be fixed by just building more.
All the problems with housing would be fixed by just building more.
The linked to Atlantic article literally makes the opposite point; the subtitle there is "Blaming the housing crisis on hedge funds and private equity may be easy, but it’s dead wrong."
https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
https://www.theatlantic.com/ideas/archive/2023/01/housing-cr...
Contradicting statistic reported here: https://www.attomdata.com/news/market-trends/home-sales-pric....
Related:
Investors snagged 1 in 5 homes for sale in Boston area, worsening housing crisis
https://news.ycombinator.com/item?id=38520974
Investors snagged 1 in 5 homes for sale in Boston area, worsening housing crisis
https://news.ycombinator.com/item?id=38520974
The article cites a study by Business Insider, but the link actually links to a completely different article (from the Atlantic) that, ironically enough actually makes the exact opposite point of what this article is trying to make.
Business Insider has an article ( https://www.businessinsider.com/average-americans-beating-wa... ) from 5 days ago about home buying, but I don't see that 44% number anywhere.
Business Insider has an article ( https://www.businessinsider.com/average-americans-beating-wa... ) from 5 days ago about home buying, but I don't see that 44% number anywhere.
Ah, you beat me to it. Yeah, not only do the link sources not support the claim, they actively debunk it.
Wealth is too concentrated. Tax it.
Allowing PE to muck around in a resource scare, essential good is a recipe for disaster.
completely bullshit no way
Let capitalism eat the world!
:edit sarcastic. I wish capitalism died!
:edit sarcastic. I wish capitalism died!
these post titles that assume the world => the USA.
yawn
The article attributes the stat to "a study by Business Insider" but the reference links to an article in The Atlantic which: A) doesn't support the claim and B) is mostly dedicated to debunking it.