Mastodawn

Vicky Austin Jan 2, 2023

It’s good to see this issue is getting more attention. These private equity firms and hedge funds are destructive. They are turning themselves into multi-billionaires at everyone else’s expense. There is no practical regulation of this type of “business” but there should be.

Firms can just write off vacancies. Some don’t even need to collect rent to make a return on their investment. After owning a property for a year, the rent they collect is “long term capital gains” and can, in some instances be taxed at 0%.

The tax cuts that went into effect in 2018 helped caused this. Republicans gifted the industry with the lowest rates. So of course private equity is gobbling up housing supply and laughing all the way to the bank.

Private equity firms have become a scourge. They remove the competition and leave consumers with no choices. Just another example of why regulation is necessary.

Rising rents were a crisis for tenants. For Starwood, they were a gift-
https://wapo.st/3vsYz2p

Rising rents were a crisis for tenants. For landlord Starwood, they were a gift.

Private equity firms and private real estate trusts surged into the apartment market in the decade before the recent run-up in rent prices. As landlords, they imposed and benefited from the significant rent increases.

The Washington Post

toxtethogrady Jan 2, 2023

@TonyStark Attempts were made in the past to change the tax footing of hedge funds, by making "carried interest" more taxable. Guess who opposed it? Kyrsten Sinema...

Tony Stark Jan 2, 2023

@toxtethogrady I remember that. “Independent,” my ass.

Three Stars 🌟Jan 2, 2023

@TonyStark
Anywhere you see Sinema, look for the corporate cash grab. That's what she's using her seat for instead of representing Arizonans.
@toxtethogrady

Alex Ghenis Jan 2, 2023

@TonyStark there's more money to be made charging exorbitant rents than there is intentionally leaving units vacant. And we have a tight enough housing supply that landlords can easily charge exorbitant rents.

The article says nothing about intentional vacancies. I haven't seen evidence of widespread intentional vacancies, just statements by some housing activists. Yet the interviewed representative points to a tight housing market for why they can charge high rents.

Alex Ghenis Jan 2, 2023

@TonyStark The US housing market is 3.8 million units short of where it needs to be. People are crowding into smaller and smaller housing units, like the families in this article. Landlords can charge rents that squeeze the interviewees paycheck to paycheck because there aren't other options. And that's because we've underbuilt, not because landlords are keeping things vacant.

Incumbent landlords hate new housing. The best way to get at these guys is to build more.

DavidAH1958 Jan 2, 2023

@TonyStark this spotlights the insidious nature in housing, but PE is also a scourge in general business realm too. Repeatedly in the industry I carved a career of 40 years, PE has engulfed entrepreneurial family businesses, consolidating to the point of limited supply sources, limited competition. The workforce once considered the key “asset” by entrepreneurial leadership became an element to be evaluated by arcane performance metrics & subject to headcount reduction. #PEscourge

Tony Stark Jan 2, 2023

@DavidAH1958 Agreed. PE buys up housing, service, nursing homes, transit, and then they do whatever they want to increase short term profits. They don’t invest back into communities and other local businesses or employees. They own most of the options and people are stuck.

They run things into the ground and either close the business or sell it or just keep writing it off.

seedsinputinspocket Jan 2, 2023

@TonyStark 90% of rental properties in Canada, comprising of six units or more are owned by banks, hedge funds and corporations. And they charge more than your average landlord of a single unit.

Tony Stark Jan 2, 2023

@seedsinputinspocket I’m really sorry to hear that Canada is having so many of the US’s same issues. I’ve been hearing things like that a lot.

For an idea of what life will be like in 25 years, for anyone who hasn’t, simply read history books about tenancy in 19th century Ireland or the Patroon system in 18th century colonial NY and NJ.

The tenant/serf landlord model doesn’t work. We need strong safety nets and regulation.

seedsinputinspocket Jan 2, 2023

@TonyStark The rent is so high that my son took a job in Northern Ontario where the highway ends just because rent is so low ($300/m for govt workers) there and he can actually afford to repay his student loans and payments on his vehicle.

Tony Stark Jan 2, 2023

@seedsinputinspocket The last thing we need is workers who are tired out from long commutes that are forced by corporations profiting so much over a basic need like housing. I hope it works out for him as well as it can.

seedsinputinspocket Jan 2, 2023

@TonyStark luckily no long commutes for him in such a small town but at least he’s nearly finished paying off student loans.

Pam Rickel Jan 2, 2023

@TonyStark
If this continues individual homeownership will become a thing of the past. Due to investors driving up the housing prices rent has also become unaffordable. Individual homeowners have seen drastic increases in their property taxes. TX does not have a state income tax therefore the tax burden falls to property owners to fund roads, schools, etc. It is leading to gentrification in many communities where people have spent a lifetime paying off their mortgages. 1)

Pam Rickel Jan 2, 2023

@TonyStark
This article shows some of the effects of investment companies purchasing residential properties in large quantities.

https://communityimpact.com/houston/spring-klein/housing-real-estate/2022/07/19/investor-purchases-of-single-family-homes-contribute-to-rising-rental-listings-in-spring/

Investor purchases of single-family homes contribute to rising rental listings in Spring

Locally, NAR data showed 38% of single-family properties purchased in Harris County in 2021 were bought by institutional buyers. Property data from the Harris County Appraisal District shows nearly 1,300 homes in the nine ZIP codes that make up the Spring and Klein area are owned by five institutional buyers and their subsidiaries: American Homes 4 Rent, Progress Residential, FirstKey Homes, Invitation Homes and Tricon Residential.

impact

Some account down below thinks the solution is making these companies build more and more housing. That’s the way to make developers richer.

There have been an incredible amount of new buildings in NYC, LA, SF, Vancouver. Yet the prices keep going up and up (as does the homeless population). And they dare to keep saying that the we have to build more and more in highly populated cities that are struggling with the resources and infrastructure to support their current population.

Regulation and a good safety net are the only things that will help.

Danatheone Jan 3, 2023

@MJ @TonyStark In N California it has been unintended consequence of trying to throttle back sprawl, resistance to more vertical mid-rise buildings, all separate decisions resulting in current tight housing market. High prices, unhoused population have boomed. This is one of the prices paid to grow a state to 40 million, it costs money, requires compromise, and is complicated— Bay Area needs to more taller apartments, condos near light rail. There is no single simple solution

SocialistStan Jan 3, 2023

@MJ @TonyStark Regulation makes no difference to the unhoused, and a safety net is temporary. We need to confiscate empty properties and redistribute them.

Bob Koure Jan 2, 2023

@TonyStark Agreed 100%. There's more and more reason to curse the memory of Milton Friedman and his pushing the primacy of "shareholder value" over other corporate responsibilities. The were soul-less before that, but he turned them into monsters.
Even Jack Welch thought it was nonsense.

https://www.forbes.com/sites/stevedenning/2017/07/17/making-sense-of-shareholder-value-the-worlds-dumbest-idea/?sh=63a025ce2a7e

Making Sense Of Shareholder Value: 'The World's Dumbest Idea'

Shareholder value theory is financially, economically, socially and morally wrong

Forbes

Jimothiccc Jan 2, 2023

Hope Van Dyne Jan 2, 2023

Next Republican President will take care of the lack of affordable housing by bringing back poor farms, work houses, and debtors’ prisons. Let’s not have one of those.

Ç'thûłhů👾Rants! 🇺🇦 🇵🇸 🇨🇦Jan 3, 2023

@HopeVanDyne @TonyStark
Don't forget the occasional gulag or concentration camp.

Doreen32128 ready to rumble!Jan 3, 2023

@HopeVanDyne @TonyStark
I now live in FL (I’m old 🤣) and the affordable housing market is nonexistent. DeSantis focuses on banning books and drag shows instead. 😟😟

KrazyKat Jan 3, 2023

@Doreen32128 @HopeVanDyne @TonyStark Welcome to paradise.

Bellison22 Jan 3, 2023

@HopeVanDyne @TonyStark My suggestion would be do everything to prevent that.

We give republicans power every time we platform their hideousness instead of raising Democrats and Democracy.

Hope Van Dyne Jan 3, 2023

@Bellison22 @TonyStark You are so right. We give Democrats tiny majorities and not for very long. Nothing substantial will happen until we do better.