City with world’s most expensive housing asks: what to with 40,000 empty units

I'm with USAA, they've always treated me well in my financial dealings... I roll with a Visa debit card too, since I don't believe in credit cards. Call me a conscientious objector, lol... those credit card agencies are always trying to give me cards too, but I refuse to even acknowledge their futile attempts. Seen too many folks mired in credit card debt, ya know? If I were an O/O and needed a fuel card, things might be different, but I'm not, so no worries...

 

You're trying to tell me that a falling-down shack that can be afforded by a single mother is worth over 600K?

 

Definitely possible in some places, California, New York, etc

 

Look at it this way - are mega companies good or bad for the trucking industry?

The answer is yes, no, both, and neither all at once. The megas push through regulations that make it hard for small outfits to compete, have an outsized influence on equipment prices and availability, yadda yadda yadda. On the plus side, they provide capacity and stability to larger shippers, provide entry level job opportunities, Yada yadda yadda.

Landlords/rentals are similar in nature. They fill a need in society and can be beneficial to all parties. They can also be abusive in nature and retard economic growth for the entire system.

Say you are selling your house and get two offers. One is cash with no contingencies and the other is contingent on finance and inspection. Which one are you taking? Cash talks, and they get the house - even if the offer is up to 5% less.

Once the investor has bought the house, they finance for 70% of the value, rent it out for $500-700 a month above PITI and move on to the next acquisition.

If investors are buying 20% of the available sfh (as they have the last 2 years), they are forcing a significant number of people to continue to rent and distorting the market.

I have nothing against real estate investment or landlords, particularly because I am one. I am against investors acquiring and renting single family homes. I am even more against developers getting government assistance in building "affordable housing" or "redeveloping blighted properties", then instead of selling those homes the developer rents them out at almost twice what the PITI would be on a 30 year fixed mortgage.

 

Again, that would be true only if there was no such thing as new housing starts and if existing houses weren't constantly being placed on the market. But as you just said, 80% of the available square footage is being bought by non-investors.

So all of your properies are and have always been multi-family, right?

Something we can agree upon.

 

The issue is how much of the available housing stock is owned by investors. Early 2000s it was about 5%, now its closer to 10%. If the trend continues it will artificially increase prices and intensify wealth concentration, which besides driving inflation stagnated growth.

And yes, none of my properties are sfh. Heck, I won't even buy duplexes.

 

If that were true then it would be counterintuitive for investors to keep buying properties because it would inflate their price of acquisition.

 

Just like it's counterintuitive to pay $150,000 for a 4 year old fleet truck with 700,000 miles on it, yet that's still happening over a year since rates started dropping.

Returns on rental properties are robust enough that even halving the profit margin its still a good return, plus they're "building equity". At a certain point, it does become untenable. Just like the megas can profitably move freight for $2 a mile, the economies of scale come into play and investors can still make money while over paying for the properties.