How private equity is changing housing

Everyone wants to finger someone to blame rather than (before trying to) fix the fucking problem.

Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property.

Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing.

Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems.

EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of.

Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.

Also stop fucking arresting people for living in unapproved locations or building structures that don't cost enough money, as long as they're not actually in the way of anyone.

Like, don't arrest people for sleeping under bridges unless they are sleeping in the middle of a footpath under a bridge. And don't go building footpaths under all the bridges to prevent them, either. Also tear down all the hostile architecture or at least don't arrest people for taking to it with angle grinders.

The free market is supposed to work by everyone solving all their own problems and then exchanging solutions with each other. If you claim to have a market but then arrest people for solving problems, no wonder you get a dysfunctional society.

Not saying that people living in tents on public land is a good long-term solution, but it's a step up from being completely shelterless, and since price changes happen at the margins, if it's even remotely viable, it may cause a market crash.

Literally this. Someone has to “lose” to fix this problem, and that loser has to be those with the most to gain from keeping the status quo as-is (developers, landlords, private equity, current homeowners, extortive townships/governments, etc).

Many valid reasons for a property to be vacant. It may need renovations or repair and that can take a lot longer than 30 days. But maybe there's some time frame that makes sense.

I'm not convinced that commercial ownership is the problem. Or if it is, it's not a new problem. Slumlords have been around forever.

The main problem is we just don't have enough housing supply. Investor-owners can only hold units vacant to support higher rents up to a point. If there are enough vacant units available and enough supply that property values are not appreciating like crazy, someone will crack and cut the rent or sell out so they can get a better return on their money.

I refuse to buy that argument of availability alone (or hell, any standalone argument) when we have continued reporting of landlords and PE leveraging services like RealPage that are designed to maximize rents and revenue, including by keeping units vacant. Every time I’m driving through a dark city at night, residences and condos devoid of furniture (or using an interior design motif with no signs of life), I’m reminded how many of these are investments by a vacant owner designed to capitalize on lax regulation and lack of supply in in-demand areas. I drive by huge corporate plazas clustered together on high-value land because companies demanded everyone live in the same areas rather than spread out to reduce costs, driving up demand further.

I am unbelievably sick of seeing the symptoms go unaddressed while commenters and armchair economists bicker and debate who is the sole source of blame that must foot the bill. We need action, and we need to be brave enough to be willing to admit this isn’t working for the masses anymore.

I’m unbelievably tired of this cowardly pussy-footing by people who can’t or won’t envision a better future that also doesn’t involve number go up on property forever without further investment.

> If there are enough vacant units available and enough supply that property values are not appreciating like crazy, someone will crack and cut the rent or sell out so they can get a better return on their money.

Your thesis here is disproven in large cities like the one I live in, Miami. Many investors / property owners here don't give a damn on getting a return on their investment so long as it doesn't go to $0 - they buy real estate sight unseen because it's a good way for the well-to-do in LatAm and Russia to get their money out of developing/regressing economies and into the USA. Half the units in the building I live in are vacant - they are owned by Brazilians, Argentines, Venezuelans, etc who want a safe haven for their money (and for Brazilians, as a base to buy loads of Apple products that they can turn around and sell back in Brazil for a 2-3x markup).

Why would they buy properties and not assets that are even easier to buy and sell such as stocks, ETFs, mutual funds, bonds, etc.

That said, I would probably not be opposed to restricting foreign ownership of residential real estate, if indeed it is that big an issue.

The idea is that tracking it is effectively impossible for a foreign government...and we've made that whole infrastructure incredibly easy via making it legal for LLCs to purchase homes. We don't prevent foreigners from forming LLCs, and often times there are brokers that make their vig on doing just that for wealthy foreigners - they set up a myriad of LLCs to protect the identity of a buyer, who then drops $1mm+ on a property that they will never actually use in a country they will likely never visit.

Plus, to buy stocks or ETFs or bonds or whatever, you have to register with a broker, who has to legally report each sale and transaction to the government. The point isn't the liquidity. The point is that a family can drop 200k-500k in a pretty stable asset in an incredibly less volatile environment and effectively not report it. That is worth it in the age of hyperinflation in LatAm economies. Plus, if the unit in question is in a decent location, they can escape at the first sign of trouble.

You mean you refuse to believe hard data on vacancy rates over sensationalized opinion pieces or outright misinformation that sounds more appealing to you?

Your proposed "action" is comically obtuse and will be ineffective at best. So no one can renovate a home for more than 30 days?

Number go up on property forever is what the masses want and what works for them, because the majority of people live in a home owned by that household. So you're misinformed about that as well.

That LLC is going to have to pay property taxes or the sheriff will seize and auction off the property. And there won't be a mortgage or homestead exemption so they will be at the top tax rate. They'll probably want insurance on that property, which is more expensive for an investment property especially if it's sitting vacant, and they'll need to have electric and gas hooked up and paid so it can be temperature controlled. It will need lawn and landscaping care during the summer, and snow removal during the winter. If it's a condo then they'll need to pay association dues instead. All together that's easily well into 5 figures a year, every year, on a 200k-500k house.

They can offset this and maybe even get some cash flow by hiring a management company to rent it out, but then it's not sitting vacant, which was the original complaint.

In the case of vacant South Florida condos, sure, the LLC pays a small tax. Sure, they pay some insurance, but most of that if managed properly is absolved by the HOA (idea is that the building HOA if managed well basically mitigate a lot of longterm risk of property damage - this is the case in my building), they won't need electric or gas hooked up past what came with the unit when it was finished....most of the time the floor isn't even finished in these units.

They can offset this, as did my previous landlord who was based in China and had 5 units in the building. However, a small 10k to a family worth millions is nothing especially if it means they can escape a despotic regime at any point, and have somewhere to go, and if they need money, they can liquidate a condo VERY quickly.