Re:Berlin buys thousands of apartments from corporate landlords
by majormajor on Saturday September 18, 2021 @02:51PM
(#28578367)
They've still gotta live somewhere. Overall housing supply has not been increased.
I actually think this case is worse for the overall economy than the rental building scenario!
Perpetual rentership is more economically precarious and less stable than ownership. But here we have the folks with assets and income sufficient to purchase properties buying up additional ones to pull ownership further out of reach for more people. So yay, we've converted a property that someone might've otherwise purchased as an asset to yet another rental.
I also don't agree with your claim that in a free market this would cause (much more rapid) increased construction in most cities, given current attitudes about small-landlordship. You can't build there without tearing something else down first, and small landlords are not often going about replacing ten unit buildings with twenty unit buildings! That requires a different level of capital. In SoCal can see this in neighborhoods in places where the current zoning allows, say, 5 story buildings, but those new five story buildings are still sparsely scattered amongst old two-story buildings that are simply too attractive to keep (the dream people are pitched that makes them become small landlords isn't "sell everything eventually to a developer, it's "passive income".) Small landlords made a lot of fuss about earthquake retrofitting, a much smaller expense than "kick out all my current income-generating tenants and rebuild it all." It's been much easier for developers to convert old low-density commercial or industrial property, since the market is more fluid there (and often with much more slack in it, in large cities).
I similarly don't expect a high number of single family lots to turn into four-plexes in the next fifteen years now that CA has changed zoning on them. It's definitely different at four units than two - where duplexes aren't selling for any more than SFH currently, since the qualitative demand for a true single family home is just that much higher - but I don't think it's enough different for a significant number of people to want to cash out or try to play developer.
(NIMBY's exist everywhere, too - acting like they're unique to big expensive cities is self-defeating. The way lower-cost-of-living cities have maintained those costs is a combination of less demand and more land to expand into. If you can build your new mega apartment complex on empty land, you don't have to convince those small-time landlords or property owners to sell all their separate buildings! Dallas County didn't increase in population much more rapidly than SF County because of rapid increases in density - just look at the Dallas city population vs the burbs.)
I actually think this case is worse for the overall economy than the rental building scenario!
Perpetual rentership is more economically precarious and less stable than ownership. But here we have the folks with assets and income sufficient to purchase properties buying up additional ones to pull ownership further out of reach for more people. So yay, we've converted a property that someone might've otherwise purchased as an asset to yet another rental.
I also don't agree with your claim that in a free market this would cause (much more rapid) increased construction in most cities, given current attitudes about small-landlordship. You can't build there without tearing something else down first, and small landlords are not often going about replacing ten unit buildings with twenty unit buildings! That requires a different level of capital. In SoCal can see this in neighborhoods in places where the current zoning allows, say, 5 story buildings, but those new five story buildings are still sparsely scattered amongst old two-story buildings that are simply too attractive to keep (the dream people are pitched that makes them become small landlords isn't "sell everything eventually to a developer, it's "passive income".) Small landlords made a lot of fuss about earthquake retrofitting, a much smaller expense than "kick out all my current income-generating tenants and rebuild it all." It's been much easier for developers to convert old low-density commercial or industrial property, since the market is more fluid there (and often with much more slack in it, in large cities).
I similarly don't expect a high number of single family lots to turn into four-plexes in the next fifteen years now that CA has changed zoning on them. It's definitely different at four units than two - where duplexes aren't selling for any more than SFH currently, since the qualitative demand for a true single family home is just that much higher - but I don't think it's enough different for a significant number of people to want to cash out or try to play developer.
(NIMBY's exist everywhere, too - acting like they're unique to big expensive cities is self-defeating. The way lower-cost-of-living cities have maintained those costs is a combination of less demand and more land to expand into. If you can build your new mega apartment complex on empty land, you don't have to convince those small-time landlords or property owners to sell all their separate buildings! Dallas County didn't increase in population much more rapidly than SF County because of rapid increases in density - just look at the Dallas city population vs the burbs.)