> These investment companies are now beginning to purchase newly-built communities of hundreds of single-family homes and turning them into rental-only communities. Removing homes from the sale market and locking them behind rentals.

I always see takes about how the only solution out of a housing crisis is "building more housing" and not any sort of control or regulation over the accumulation of housing stock. But yeah, when even new construction is immediately snapped up... I mean, is there anything to do but regulate the buying side?

Ironically, "building more housing" still solves this problem.

The corporations are buying and renting because it makes business sense. If we just keep building houses, the market values for rents and home prices will reach an inflection point. Investment companies aren't going to keep buying houses if they have a high vacancy on existing stock, they're going to start selling houses or lowering rent.

The fundamental problem is "too little supply". Regulating the demand side is at best a bandaid. The solution is to change regulations to allow faster, cheaper, easier building until the equilibrium market price of housing is something reasonable.

As long as cheaper lines of credit (or straight-up massive amounts of cash on hand) remain more available to RE corporations than regular people looking for their first home then no, building more housing will never solve the problem.

There are structural problems with the demand side that also need addressing.

> building more housing will never solve the problem.

It only seems that way because in many popular metros around the country, demand has far outstripped supply for decades.

The problem is "solved" in areas that aren't as popular, with zero regulation on who's allowed to purchase homes; ordinary people can buy ordinary homes on ordinary incomes. But aspirational young people don't tend to move to such areas.

> demand has far outstripped supply for decades

Why has this been the case in every area in our country? Because we have a policy at the national level that encourages speculation and hoarding. The problem is not just supply, we have a national aversion to shaping demand.

> The problem is "solved" in areas that aren't as popular,

The problem is absolutely not solved, in any place in our country[1]. You used to be able to maintain a minimum standard of living on a single wage earner's salary. That is not the case, literally anywhere in this nation any more.

1. https://www.vox.com/2015/5/28/8679889/minimum-wage-housing-m...

>> Ironically, "building more housing" still solves this problem.

Raising interest rates may help too. How many of those purchases are financed? I'm guessing a lot. The commercial side got screwed when they needed to refinance underperforming properties at higher interest rates.

Builders rely heavily on financing, so high interest rates hurts the supply side too.

The problem is the government. Have you not realized that all of the absurdly priced industries also happen to have the most government intervention? The government needs to sit back and just do the basics like preventing collusion and monopolies (which they absolutely fail at) and get rid of regulations that prevent more housing being built.

The policies preventing housing being built are immensely popular with the voters who already live there, so it's very much the government representing (some of) the people.

And then when private equity comes in and buys an entire new development to turn all the units into rentals, what do we do then? Nothing?

Private equity will only benefit if the supply of housing is artificially restricted or they are able to capture a substantial portion of the market. Both these problems can be solved by adjusting the local regulatory levers to make construction easy and collusion/anticompetitive behavior hard.

"Buying an entire development" is arguably anticompetitive behavior and can be prevented by the government.

Unfortunately, many communities and cities restrict home building to ensure that rents and values are artificially inflated.

My city's housing development department is run by the Chairman's (our version of a Mayor) nephew, the husband of a previous member, an owner of the largest property management company in the county, and an owner of a landscaping business. I attempted to join the housing development department but the positions are specifically appointed by the "Mayor". Our "Mayor" is also not elected via public voting, since they are a Chairman they have to be removed by the Board, and the Chairman has held this role since 1975.

Ultimately, until this Chairman passes or is (somehow) removed from their role, there is nothing that anyone in our city can do to rectify this. And I believe this is a common problem across many cities outside of Metro areas (where the housing supply issue is more apparent).

Sounds like a terrible local government. Have you considered moving away? Local governments compete with each other to attract taxpayers, and if enough people leave they'll be forced to change their political structure.

This town has the best school districts in my state, close proximity to interstates since I work in the core of our metro area, and (somewhat) affordable housing prices as it's not the "wealthy" community. Plus I've locked my rent in at pre-pandemic levels and moving away would cause my rent expenses to almost double due to the surging rent prices everywhere else.

It's a terrible local government, but right now I'm not in a position to move anywhere else without ending up driving 3hrs a day to go to work and paying way more than I can afford.

I love it when people blame the government for shit private equity is doing.

The government made housing an absurdly lucrative investment. So yes, I blame the government for making people want to buy houses as investments.

Let me make sure I'm getting this right, your position is that the government somehow forced or guided private institutions to throw every sane guideline for underwriting mortgages out the window and then lever their positions up to lets-tank-the-global-economy levels of exposure? If anything the government is guilty of grotesque inaction in this instance but I don't get the feeling that's what you meant.

Municipalities can require new builds to be own-only or place requirements on rentals. I live in a new development with such a stipulation. The land has a couple different developments, there's townhouses, a set of smaller lot houses, medium lot houses, and then some commercial zoning.

The medium and small lot houses have a no rental stipulation. I forget the exact terms but the houses have to go to individual owners and there's some residency requirements before you can offer it as a rental.

Investment firms have finite purchasing capability, and would certainly stop buying if they expect home prices to drop. In addition, if the houses are expensive to hold, they’ll either be rented out or sold.

Speculation is a symptom of price issues, not a cause.

The 2008 crisis would like a word...

The problem is that "investment firms have a finite purchasing capability" is only true over the long term. (like, "many decades" long) Investment firms have effectively unlimited purchasing capability in the medium term (like, for the next 5 years).

Which is why "just build more housing" isn't really working, because you can't just overbuild human demand (we already do that in lots of cities, especially in the midwest), you'd also have to also outbuild the entire public and private investment appetite for housing, which is effectively unlimited at the moment.

I don't have well-defined reasoning for this, so maybe somebody else can expand on it: But it feels fundamentally wrong that detached, single-family (zoning restricted) homes are allowed to be purchased by investment firms & exclusively used as rentals.

It's funny how that feels wrong for undefined reasons, but it doesn't feel wrong when that happens to apartment buildings, isn't it? We associate houses with property ownership and apartments with renting, even though owning an apartment or renting a house aren't in any way inherently less reasonable.

> But it feels fundamentally wrong that detached, single-family (zoning restricted) homes are allowed to be purchased by investment firms & exclusively used as rentals.

I know what you're saying, and I agree, but playing devil's advocate here, you could imagine a society where there are no owner occupied dwellings at all, everyone rents. In theory, it would actually be a great equaliser because anyone could invest in the property owning corporations for a return of that income, and you wouldn't have some people becoming stupidly rich for no reason other than sitting in a house that happens to increase massively in price.

(I am of course speaking of an imaginary world where tenants rights were at the top and they couldn't just be removed from a home at the whim of the landlord).

> an imaginary world where tenants rights were at the top and they couldn't just be removed from a home at the whim of the landlord

On the contrary, strong tenants' rights are correlated with higher rents and worse availability of rentals; or it is at least in the real world, where neither tenants nor landlords are angels.