What happens when private equity buys homes in your neighborhood

Glad to see the final section basically cover that this is not actually a problem. I sort of wish the headline was more of the "Why you shouldn't be worried about private equity buying your neighborhood."

Why and how did that ear worm infect so many people?

> Why and how did that ear worm infect so many people?

It's a story they want to believe.

The big bad out-of-town corporation is causing the housing crisis and not the complex web of dozens of factors: existing owners wanting to protect their largest asset, more people wanting to live in fewer places, inflation, tariffs on Canadian lumber, safety standards, etc.

Lumber is a tiny fraction of the cost of a house, the US produces a huge amount of lumber on its own. I don’t think there’s any real evidence to show that lumber tariffs have had a measurable impact on housing costs. Most housing is built with lumber from here.

Also the tariffs are new this year, housing costs have been a problem for much longer than just this year.

Here's a "kit" for a 1,400 sq ft house: https://www.menards.com/main/building-materials/books-buildi...

$90k for materials.

Around here a 1,400 square goes for $385k (half a house, but there you go).

So materials are somewhere around a quarter of the cost. Land + foundation + utilities is another quarter; the rest is labor and profit.

The land, foundation, and utilities (often in the form of impact fees) are largely fixed costs regardless of home size. The larger the home one builds the less impact they have on the final cost to build. This is why “starter homes” don’t get built anymore. The builder has every incentive to build that 3,000 sq ft home on a small lot instead of something more reasonable in size.

Also, other options that used to be more efficient to build multiple homes at once, like row houses or duplexes/triplexes, are generally directly or indirectly illegal to build in most US cities now. Row houses and brownstones were the cheap-and-fast housing option once upon a time; they're now rare and expensive because in most places nobody's allowed to put up a new one.