What makes rents go down and neighborhood diversity go up? Corporate landlords. But they also make it harder to own for yourself.
Daniel Erb became a corporate landlord kind of by accident. It started in 2020, when he received his first bonus as an investment banker. It was more money than he was used to. He wanted to invest in real estate, so he called his cousin, a research analyst at BlackRock, for advice.
As they talked over options, his cousin showed him a striking chart of the number of "housing starts" in the U.S. since 1950 (basically the number of new houses and apartments built each year). It showed that the last 10 years had the fewest starts since the 1960s, even though the U.S. population was now much larger.
It was a full decade of underinvestment. They focused on single-family homes — the classic house with a yard, often in the suburbs.
"I'm a millennial," says Erb. "I've always envisioned having a home." But none of his friends had bought a house yet. Neither had he. Contemplating this lack of new houses and rising demand from millennials like him, he saw "a big opportunity … something that I was willing to spend my career on."
So Erb and his cousin raised money from investors, bought homes in places like the Chatham-Arch neighborhood in Indianapolis (which was affordable, had a growing population and was benefiting from redevelopment), and rented them out — presumably to people who wanted a house with a yard but couldn't afford to buy one. Erb says it was a profitable business.
He was not the first New York finance person to profit from single-family rentals across the United States. The private equity firm Blackstone (commonly confused with BlackRock) more or less invented this buy-to-rent strategy in 2012, under the moniker Invitation Homes. It's now a public company valued at more than $18 billion.
The response to this development — of Wall Street buying Main Street, or at least some of its cul-de-sacs — has been bipartisan, populist and patriotic condemnation. Both JD Vance and Kamala Harris called for bans on these corporate landlords. Since houses tend to rise in value over time, homeownership has been a primary way that middle-class families build wealth. But now private equity was outbidding aspiring homeowners, making it more expensive to buy a home and pocketing the appreciation in home values.
Even some of Erb's friends told him they thought he was making homes unaffordable. "Nothing that has stuck with me or made me second-guess what I'm doing," he says. He wasn't responsible for the decade of underinvestment; he felt they were giving young couples the option to live in a house without breaking their bank account. "But, yeah, very emotional conversations."
Now that these institutional investors have been buying and renting out houses for more than a decade, researchers have had time to study their impact. And they've found a surprising nuance.
These investors can and do make homeownership harder to attain, just as their critics claim. But by providing rentals, they also make neighborhoods more affordable and more diverse. They are diversifying the suburbs.
The big bang of buy-to-rent
When institutional investors first started buying single-family homes, the U.S. government laid out the welcome mat.
Before the Great Recession, major investors hadn't had much interest in the suburbs. In the early 2000s, a firm called Redbrick Partners tried buy-to-rent. It ultimately abandoned the effort. Unlike in an apartment building, its leadership noted, where corporate management is common, fixing faucets and other maintenance were much less efficient when dealing with geographically dispersed homes.
But during the Great Recession — just before the decline of new starts in Erb's chart — the U.S. had a glut of single-family homes in foreclosure. Many were auctioned off en masse, including by the federal government, which organized auctions for investors like Blackstone and even provided a $1 billion loan guarantee to encourage Blackstone to buy.
This allowed private equity firms (which raise money from wealthy families, pension funds and other organizations to seek out profits, often by buying private companies) and real estate investors to efficiently and cheaply buy, say, a dozen similar homes located in the same Phoenix suburb.
This solved two big problems for these institutional investors. It reduced the "search costs" of finding suitable homes (often starter homes with three bedrooms), and it allowed them to buy similar homes clustered in one area (which ameliorated the dispersed-faucets problem).
Blackstone then introduced a financial product that supercharged the buy-to-rent sector: the rent-backed security. It was a bond, or IOU. Investors bought them, providing Blackstone with more money to buy and renovate homes. In exchange, investors were entitled to a cut of future rent payments.
Wall Street could now buy homes by paying with the rent they would collect in the future. Per the Federal Reserve Bank of Philadelphia, the number of homes owned by Blackstone and similar firms increased from almost nothing in 2010 to around 400,000 by 2021.
This is around when Erb and his cousin started buying homes. The batch auctions were long gone. But Erb says new technology allows companies like his to have a geographically dispersed portfolio of homes. The universality of listing platforms such as Redfin and Zillow keeps search costs down. Products like Ring cameras allow potential tenants to tour properties without being shown around by an agent. And software like Zoom has made it easier for them, like other executives, to manage a remote workforce.
In 2012, many government officials had welcomed firms like Blackstone into the housing market because they worried about abandoned houses and saw rental conversions as a win. Today, though, institutional investors compete with middle-class families for starter homes. Is that why homeownership has gotten more expensive?
The trade-off
As Kamala Harris and JD Vance were calling for bans on corporate landlords, Konhee Chang was a Ph.D. student in economics. Born in Korea, Chang had always rented while living in the U.S. but never the "quintessential house that I think of when I think about an American house," with a front yard and a backyard. He wanted to know why there were so few rentals in the suburbs and who would live there if renting was an option.
Chang realized these investors' buy-to-rent strategy provided an ideal case study of what happens when more rentals are available. If someone had built new homes to rent out, that would increase the supply of homes, changing the neighborhood. But since they converted homes into rentals, only one variable had changed, like in an experiment.
So Chang assembled and analyzed data on neighborhoods before and after corporate landlords showed up, including demographic data on the residents. His biggest finding? Institutional investors were reducing segregation. When private equity rented out homes, the new tenants tended to be lower income than the prior owners and more likely to be young and nonwhite.
"I think I was most surprised by the fact that the effect was so sharp and immediate," says Chang, who has since earned his Ph.D. from UC Berkeley. He took it as a sign that these families really wanted to live in these areas but were prevented by the lack of rentals and their inability to get a mortgage.
This is particularly notable because one of the most important economics findings of the past decade is the impact on children's development and career prospects of their hometown and neighborhood. (You can listen to a Planet Money episode on moving to opportunity here.) Suburban neighborhoods are not inherently better than rural or urban areas. But another study, for example, showed that single-family rentals in North Carolina served "as a pathway for access to high-performing public schools" for economically disadvantaged children.
These results did not turn Chang into a cheerleader for private equity. He's too careful a scholar, and his results hold for rentals in general, regardless of whether the landlord is Invitation Homes or a couple down the street. Plus, he did not investigate other criticisms of corporate ownership.
(For example, a Bloomberg investigation in 2013 found that Magnetar Capital LLC became the largest landlord in Huber Heights, Ohio, and then pushed for lower assessments of its properties' value. If it had succeeded, it would have been the largest property tax cut in county history, reducing the school district's budget by $800,000 a year.)
Most of all, Chang found that the buy-to-rent strategy was hurting the middle class. Creating rentals aided lower-income families and nudged rents down. But reducing the supply of homes available for sale also pushed home prices up, hurting families on the cusp of homeownership.
Erb says he feels good about the rental service they provide. (In 2024, he and his cousin teamed up with a veteran real estate investor to co-found a larger investment firm, Strand Capital.) But he agrees this trade-off exists.
"There's always gonna be a cost and a benefit," he says. But the bigger problem for housing affordability, he adds, is that "we just haven't built enough [homes] to keep up with the population growth and household formation."
The boogeyman
"People get really riled up about this idea of private equity coming in and buying the block," says Daryl Fairweather. "I think they are kind of the boogeyman though."
That's because institutional investors own a very small slice of single-family homes in the United States. As the chief economist at the real estate platform Redfin, Fairweather says investors purchase about 17% of homes. But most of those purchases are by mom-and-pop investors, not big firms like Blackstone. Institutional investors just don't own enough homes to be the main culprit for high home prices.
- The U.S. homeownership rate is around 65%.
- As of December 2022, the five largest investors owned about 300,000 homes — just under 2% of single-family rental homes nationally.
- Institutional investors own roughly 2% to 25% of single-family rentals in major markets.
In fact, Fairweather sees some societal benefits of institutional investors. Unlike with mom-and-pop landlords, it's easier to regulate large corporate landlords and check whether they are, say, following the Fair Housing Act. Plus, in places like Silicon Valley, where politicians are trying to address housing crises by encouraging the development of duplexes and triplexes, profit-driven institutional investors are a potential boon, since they're more likely to turn suburban homes into duplexes.
And in areas with more open land, like the suburbs near Denver, institutional investors are building new housing specifically to rent out. Think cookie-cutter homes, perhaps with a dog park or pool.
"I think that we should embrace investors who want to make those kinds of investments," Fairweather says.
Still, she thinks middle-class families are right to worry about private equity displacing them from the housing market. She worries about fewer families achieving homeownership and gaining control over this intimate part of their lives, which has also been the dominant path to building wealth in America.
But a ban? As an economist, she hates bans. If politicians succeed in banning corporate landlords, perhaps by making it illegal to own more than 300 homes, she suspects we'd see lots of 300-home companies replacing Blackstone — without doing anything to increase homeownership among the middle class.
Instead, she advocates for policies that will incentivize and allow developers to build more housing. The trade-off caused by single-family rentals — that they benefit some low-income renters but hurt some aspiring homebuyers — is "because we are restricting the number of homes that can be built in neighborhoods."
Many desirable neighborhoods are zoned so that it's impossible to build the duplexes or apartment buildings that would make them accessible to low-income families. Many prosperous towns block the building of new single-family homes, often at the behest of current homeowners who don't want to deal with construction or who want to restrict supply and boost their home's value. The best way to stick it to Blackstone and private equity, to prevent Wall Street firms from profiting off the housing crisis, is to make it easier to build more homes.
As for Daniel Erb, even though he has spent his career responding to the dearth of suburban homes, betting on our collective underinvestment in American dream properties, he might appreciate that too. He says he doesn't own a home, in part because he often travels to the towns where his company buys homes. And he says he's not buying for himself at today's prices.
Alex Mayyasi is the author of The Planet Money Book, due to be published in April 2026. Sign up here to get notified, when presales start, about special offers and presale gifts.
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> But the bigger problem for housing affordability, he adds, is that "we just haven't built enough [homes] to keep up with the population growth and household formation."
The circular incentive here is left unsaid. If a house is an investment, you and every other homeowner has an incentive to keep supply low and demand high. This ultimately drives votes, lobbying, and policies that prevent houses being built. Otherwise you end up with falling rents and stagnating property prices, like in Austin.
https://www.apartmentlist.com/research/cooling-rent-growth-d...
"Housing as investment" is such a terrible idea, embedding it in culture should be avoided at all costs. Not only does it drive up housing costs, but it has people dumping loads of money into a single investment. Of course people don't want home prices to go down when, for many, it's their primary investment vehicle.
I hope we can get to a point where this idea eventually dies. I'm shocked that 2008 didn't wake people up in this regard, but I guess the supply shortage made real estate a pretty rational place to invest for a while.
"Housing is an investment" is just a sales tactic that took over and went insane.
It's only really used to justify the humungous loan payments you're willing to take on.
I'd happily take a $1 house if it was guaranteed to never change in value; but it also served my needs.
It's moderately fun to try to figure out what a "healthy" home market would look like - probably something similar to cars; "used" houses should sell for significantly and noticeably less than "new" ones (all things considered). But location and constraints often invert this - the new houses are so far away that they sell for less than the old ones in more favorable locations.
The scary thing is that ONCE you are metrically fuckton in debt, you become exceptionally concerned with the valuations, because once it trends to level or goes under, you're stuck!
By bluGill 2025-09-0919:23 Healthy means the value of a house is the value of the land, plus the value of building a new house exactly like it minus depreciation (meaning if you replace something the value goes up). Builders of course need a reasonable profit so that is factored into the value.
The reason why the bay is unhealthy is they don't allow you to put something on the land that matches the value of that land. People who want to spend millions on a house should be getting a mansion not a small house. People who buy a small house should get it on a lot not worth much money. I'm not sure of a good number, but something like only 1/3rd of the value should be the lot, 2/3rd the structure. This is right for most people, but there is nothing wrong with wanting a mansion in an area of tiny houses, or a tiny house on a massive lot if that is how you want to live (if a farm lets count the house separate from the rest of the farm buildings - not that this is possible but ...)
By crooked-v 2025-09-0920:23 The market you're describing is pretty similar to the Japanese one, where the land keeps its value but the home itself depreciates over time, and old-enough houses are assumed to be teardowns unless proven otherwise.
By jameslk 2025-09-0919:05 It probably looks somewhat like this: https://psmag.com/economics/inside-japans-disposable-home-ma...
By 6510 2025-09-0919:56 I live in the Netherlands. In the 80's we use to have giant stores owned by couples living above or behind it. They owned 100% of the building, they owned everything inside it.
One particularly memorable instance to me was an old couple, the store had a ceiling two floors high with an 8 shaped cast iron balustrade wrapped around it. I want to say they sold puzzles, postcards and mostly wooden toys but technically that was what they had in stock, they didn't sell much of anything. If they sold 3 postcards and 2 puzzles per day it was enough to buy food. Food was really cheap.
The store was empty most of the day, if customers arrived they switched some of the lights on from behind the counter. If a wave of tourists arrived the place lit up brightly like a xmas tree. They sold the single key chain and one post card and went back to their living room on the other side of the door behind the counter. It was a magical place with many items aged into antiques on the shelve.
The old couple eventually died and the place was sold for many millions, stripped down and modernized for millions followed by a parade of over priced tourist traps that went bankrupt one by one.
Everyone working there has to pay for housing too! The rare place to live that becomes available would also be far away enough that you need a car, a long drive 2x per day and places to park it. Then you need to work hard, there need to be at least two shifts, you need to sell lots of things with very large margins.
The difference is much larger than people imagine. A bad day use to be one post card for some potatoes. Today's postcard is 1/100 the production cost, sold for 6 times more but the revenue isn't enough for one employee to park their car.
For just 6 employees at 1500 pp plus say 6000 for the store you end up with 15 000 just for housing everyone (not counting the 80 year olds such store has no use for)
Housing is only 'an investment' of the kind people expect to get fast returns on because of the shortage of housing. Everyone who benefits from that is effectively extracting wealth from the people who are stuck outside of the housing market because of those shortages.
When the line goes up, everyone hopes it keeps going up, and tries to figure out a way to profit from that.
One way to stop that, is ensuring the line doesn’t go up. That has some pretty nasty side effects in other ways though.
When the line stops or starts to go down, then bad things happen. People can’t sell and move without losing a ton of money. People go bankrupt, etc, etc.
> When the line stops or starts to go down, then bad things happen
Only because many millions bought risky investments since they were told it was basically risk free. Normally things getting cheaper is a good thing, but we tricked people into thinking that housing being expensive is good for them.
By lazide 2025-09-0919:06 This is true literally everywhere, in every country (and under every gov’t) I’ve ever seen. And I’ve seen a lot. If you think US property prices are nuts, look in Europe, Asia (especially East Asia), etc.
Most people take crazy risks to buy the most/nicest house they can get a loan for because where you live is a huge factor for a number of other things in people’s lives.
If people will give them loans for more than they can afford, many people will still do it. So easy credit? Housing market goes up. Tough credit? Housing market goes down. All things considered anyway. Eventually.
Owners have a very, very strong incentive to stop it from going down, so unless they have to move, the market can stay locked up for a long time.
'Abolish rent' is a good read.
One thing we can do to drive down property prices without driving people out of their homes is to tax the ever-loving-bejebus out of second (or more) Single family homes, for individuals and corporations. Make it progressively worse the more SFM's corporations hold.
An example would be to tax a second home and onward at (land tax)^(10nn) where n is the number of total homes you have. The point is to make it financially absurd to own a second home, let alone 20.
This is only one particular point on a multi-prong approach.
Removing the ability of Private equity to eat up all the local contractors to make a little mini-monopoly is also something that 100% needs to be done.
The fastest way to remove 'your home is an investment to be reaped later' mentality is to limit the total sale price based on the last sale price (IE: only increasing the price of actually investment into the property, and legally allowing any sale price far below the estimated property value) which mostly removes all of the incentive of buying a house 'for investment'. That's extreme and would have downstream consequences, we still want to (financially) incentive people to improve their living conditions.
It's also extremely hard to build a home! Regulations and zoning laws aside, America lost a fair bit of knowledge after we practically stopped building homes after the 2008 collapse. There's no silver bullet solutions. No company is going to solve the immensely complicated task of building a home in a warehouse to reduce production costs via automation: that's a pipe dream sold to venture capitalists.
Any real solution would have consequences that would hurt some folks. Still: doing nothing hurts everyone (except for an extremely small subset of already wealthy individuals and corps) far more.
Homes should be for 'living in': not to 'make a living from'.
That is a bad idea. It assumes the buying a house is something everybody must do. For some buying is a good idea, for some it is not. You have forced people who should rent to buy anyway, or pay massive rent to cover that taxes the investor who owns their house must charge.
> Removing the ability of Private equity to eat up all the local contractors to make a little mini-monopoly is also something that 100% needs to be done.
There is no need because private equity has not done that, and there is not current reason to think they will. If they ever to get a monopoly then we need to do something about it, but right now there is no sign they are. Plenty of little builders exist who are competitive with the large builders in both price and quality. There are also enough large builders to be competitive even without the small builders.
Not everyone needs a home, no, that is not the assumption.
It does make the assumption that it's bad to buy twenty houses and live in only one while also opposing more housing contraction.
'Abolish rent' is still a good read.
As far as private equity... look closer: it is happening.
https://fieldrocket.us/private-equity-companies-are-buying-t...
https://www.marketplace.org/story/2024/10/24/private-equity-...
There is EVERY reason to think that they would do this, besides the data showing that they are. The MO is to find an area, buy up all the local tiny contractors, and set prices higher and higher until those contractors finally fail, then sell off any and all assets for a profit.
I am also making the assumption that you haven't tried or researched building a home in the last few years, based on your comment.
> There is EVERY reason to think that they would do this, besides the data showing that they are. The MO is to find an area, buy up all the local tiny contractors, and set prices higher and higher until those contractors finally fail, then sell off any and all assets for a profit.
That is a goal that makes sense. However that goal has been around for a long time and nobody has been successful, and it is unlikely this current round will be. They can't buy up enough small players to make it work.
Anybody can write a book that sounds good. I've read enough to not trust them. I need more authority than just someone wrote a book that ignores any factor that isn't convenient to their opinion. Note that I have not read that book, and yet I'm 100% confident that they did that - it is a pattern repeated far too often.
By altruios 2025-09-0922:58 > They can't buy up enough small players to make it work.
We just don't have the data to track that. KKR, Blackstone, and Bain Capital, all buy up small time contractors, as well as real estate. They absolutely have the money to bully their way using that strategy. We don't know for sure if that's what they are doing or not... but as you agree: That goal makes sense.
> Anybody can write a book that sounds good.
Not everyone can write a book both sound and logical, agreed. That is to say, a well researched book is rare indeed.
It is biased, yes: it is very anti-landlord. It views a landlord as inherently extractive, and makes the case for that viewpoint.
To say that the book is not worth reading is also incorrect. It has some fantastic insights unrelated to its anti-landlord bias and it is an interesting read.
And yes: you shouldn't just trust what you read. Ever.
Regardless of it's flaws, I still recommend it as a read.
By stego-tech 2025-09-0919:232 reply This cannot be said enough. If we were remotely serious about addressing the lack of supply, we have multitudes of hard/heavy levers to yank on:
* Taxing non-owner-occupied single-family residences at higher rates (incentivizes sales)
* Removing or barring the traditional zoning/approvals boards beyond a rubber-stamp for developments that meet safety codes (incentivizes building)
* Taxing the capital gains of home sales without ability to roll over (disincentivizes housing as an investment strategy)
* Mandating housing as a human right (myriad of knock-on effects for decades after)
* Barring no-fault evictions of tenants (helps renters save to buy a home)
* National rent control (helps renters save, incentivizes construction since growth must now be achieved through volume, not price hikes)
* Public Housing (a la Singapore’s model, where we can place a down payment on a home or condo with a gov-backed loan to the developer, but with restrictions on sales/residency requirements)
* Prohibition of algorithmic pricing (flattens rent increases)
* Mandating longer leases (to help renters predict housing costs for longer periods)
* Allowing renters to “buy” their apartments and convert into a condo (reduces apartment vacancies, allows more renters to build equity and control housing costs)
* Price controls on rent increases or sale prices, especially for First-Time Buyers (e.g., 20% margin on a home’s cost for sale by builder but with a gov-backed loan, or restricting rent increases to local COLA or a 20% margin, whichever is lesser)
We have so many more options, and nobody wants to try anything because it’ll tank housing values across the board. The longer we wait to pop this metaphorical bubble, the worse it’s going to hurt, for longer.
By crooked-v 2025-09-0920:27 > National rent control
Rent control is a deeply counterproductive policy that reduces housing supply and lowers housing quality, with the benefits accruing overwhelmingly to already-wealthy households that can make the most of rent control regulations. https://www.nmhc.org/news/articles/the-high-cost-of-rent-con...
By bluGill 2025-09-0920:00 > Taxing non-owner-occupied single-family residences at higher rates (incentivizes sales)
We already do that in the form of homestead tax credit. This just discourages renters though and so I oppose it. If you come up with a way to ensure that if the house is rented the renters pay the lower rate (get a tax rebate?) I'm for it.
> Mandating housing as a human right (myriad of knock-on effects for decades after)
I have no idea how you do that in practice. There are many choices, but everything I've seen as serious unintended consequences that end up being worse.
> National rent control (helps renters save, incentivizes construction since growth must now be achieved through volume, not price hikes)
Unintended consequences get you. Every rent control I've seen disincentivizes construction since you can't be sure of a profit.
By like_any_other 2025-09-0919:46 That's why the "Century Initiative", lobbying to increase Canada's population to 100 million by 2100, is funded by real-estate investors:
https://en.wikipedia.org/wiki/Century_Initiative#Connections...
By bluGill 2025-09-0919:07 Most people are investing in houses wrong. If you want to invest as most people think of investments you really need several houses and rent them out. Owning your own home as well makes sense, but your own house is not an investment in the same terms even though it is one of the houses you own!
A house falling in value is still a great investment for many, but it is a very different type of investment from what most people mean by investment. By owning a house you have a place to live for the same price even as inflation increases you income. By owning a house you have a place to live after it is paid for when you are retired and have a much smaller income (even if you have more money you have more time to enjoy/spend that money when you are not working 40 hours per week) - retirement savings are limited and houses are a great place to store money that doesn't falling into traditional accounts. These are great things to have long term, but none of them are about the increase in value. The house you live in is an investment in future rent, but you should only think of the value in terms of paying for your nursing home if/when you need one (even then you should have long term care insurance despite all the fraud and near-fraud in this area)
The idea that rents fall and property values stagnate is short term thinking. Over any 5 year period is can be true, but over 10+ years inflation tends to catch up. Unless you are buying in a very rural area nobody wants to live in - Austin doesn't qualify. Sure prices will fall, but builders have a lot of fixed costs and so that limits supply and in turn ensures prices will need to go up as population expands, or just the old houses start wearing out (houses last for a long time with maintenance, but eventually)
I'm not blindly advocating everybody buy a house. Buying vs renting is a complex question, and many people have proven they can do well in life with both. You need to make your own decisions based on your life situation. If you buy be careful not to think of your house in terms of any other investments you make - it needs very different accounting.
> you and every other homeowner has an incentive to keep supply low and demand high.
Do you really believe everyone thinks this way? No one I know who owns a home bought it for investment. They bought it so their family has a place to live that is theirs.
By alexjplant 2025-09-0919:29 I don't have hard numbers but anecdotally it's a lot of people. If you listen carefully you'll hear a lot of things like "Renting is throwing money away", "I want to get on the property ladder", "buy land because they aren't making any more of it", etc.
The American Dream™ centers heavily around home ownership and the government subsidizes it by allowing mortgage interest deductions and underwriting zero-down loans. Getting a mortgage and building equity is the only feasible path to wealth for working-class people who don't have money lying around to invest or the financial literacy to start doing so [1]. Contrast this with reality: in the market I live in it's actually around 20% cheaper to rent on average (presumably because California caps property tax increases). For 30 year mortgages in a sideways market you generally have to make payments for 5 years before you can break even when you sell. On top of that houses are non-fungible, illiquid assets that require maintenance and are subject to black swan events like termites, natural disasters, and destructive tenants that might not be covered by insurance. On a rational basis they are mediocre investments but our culture has conditioned people to think this way because it's their only hope for a nest egg. One might also recall what happened circa 2008 when banks encouraged the house-poor to leverage themselves to the hilt via various home equity loans to the delight of sports car and big screen TV manufacturers.
I don't think this is a healthy state of affairs but these are the breaks.
[1] I didn't gain a solid understanding of personal finance until after I'd already bought a house with nothing more than several thousand dollars in my checking account - stumbling across Bogleheads via the web saved me.
By bluGill 2025-09-0919:28 Enough of them think that way as to matter to politicians. Even if that is a tiny minority, the rest of not given any reason to think they care otherwise and so that "squeaky wheel" gets the power.
By jameslk 2025-09-0919:22 No, I don't think every homeowner thinks that way. But that doesn't change that the incentive is there for every individual, company, and trust that owns homes to keep prices from falling
By 01HNNWZ0MV43FF 2025-09-0919:10 So they wouldn't mind if the resale value drops because other houses get built?
By beepbopboopp 2025-09-0922:07 It seems like the only solution is going to be an FDR style president that sort of runs up against traditional liberties in order to to build. I do wonder if an interesting quirk of the current president essentially consolidated executive power for questionable reasons, leads to a candidate that uses some of those changes to bulldoze these types of projects back into America.
If you're planning on upsizing in future, you still benefit from falling prices.
By immibis 2025-09-107:35 If your home's price fell too much, you likely aren't allowed to sell it because that would force you to repay the difference in your mortgage all at once.
By youniverse 2025-09-0919:032 reply I would imagine most of the housing being newly built is also on the higher end. This new supply doesn't exactly help affordability!
By criddell 2025-09-0919:11 I don't think that's the case. The article specifically mentions multi-family units:
> Austin, TX presents the clearest example of this trend. From 2021 to 2023, an average of 9.9 multifamily units were permitted for every 1,000 existing residents in the Austin metro, by far the highest rate among the nation’s 50 largest metros. As these new units have gradually reached completion, the median rent in the Austin metro has fallen by 7.3 percent over the past year, which also ranks first among the top 50 metros.
By bluGill 2025-09-0919:33 That depends. Builders build what there is profitable demand for. If there is a lot of demand that means the high priced high end homes are in demand and builders won't build anything else. (unless forced) However there is only finite demand for such things so and as you build eventually someone says "can you make it cheaper" and some builder - having no other customers is forced to build something lower end just to get any work.
Now builders won't accept a loss (in general), so that does limit how low end they can go. However the other half of this is that most people moving to something high end just freed up something lower end for someone who can't afford luxury. (most people cannot afford a second home and even those who could afford it want to spend their money on something else. There are also a small number of junk houses that are so worthless they end up destroyed, but this isn't common)
By bluGill 2025-09-0919:39 People who are not investing need to vote usefully. Renters typically do not vote in large numbers and so this group that isn't getting anything from the investment isn't getting their needs represented. When renters do vote it is often for things that increase rental costs indirectly.
Even those who do own a house are often helped by things that lower value in some way. Many have a kid they want to move out and be successful in life and this means they gain more from lower values then raising values (which is paper money anyway since they would have to sell to see it - most are not). Many want to put an addition on the house and the same laws that prevent building also prevent their addition.
By jameslk 2025-09-0919:18 I don't have an answer to that (I'm sure others do) but I do feel this is a problem that can only make itself worse
The more prices go up, the larger % of net worth for an individual a home consumes. If your entire net worth is wound up in your home because your home costs so much, your incentives are much higher to keep the price of your home from falling than if it was just a fraction of your net worth. Worse yet if you're in debt and you have to sell
The longer this problem goes on, it seems the harder it will be to rectify
Glad to see the final section basically cover that this is not actually a problem. I sort of wish the headline was more of the "Why you shouldn't be worried about private equity buying your neighborhood."
Why and how did that ear worm infect so many people?
> Why and how did that ear worm infect so many people?
It's a story they want to believe.
The big bad out-of-town corporation is causing the housing crisis and not the complex web of dozens of factors: existing owners wanting to protect their largest asset, more people wanting to live in fewer places, inflation, tariffs on Canadian lumber, safety standards, etc.
Ultimately it's not really that complex to explain: there just literally aren't enough physical housing units of whatever kind in major US cities to meet demand (https://www.fanniemae.com/research-and-insights/perspectives...), so prices keep going up.
Unfortunately, there are a ton of people who will deny that that factual, well-studied shortage exists, and will try to blame its effects on anything and everything else even tangentially related.
There are ~ 15 million unoccupied houses in the US [https://www.realtor.com/news/trends/states-with-most-vacant-...]. That we know about.
A desirable location will never have enough capacity. Regardless of how much building occurs. If you don’t believe me, look at NYC, Paris, etc, etc.
People move as close to a desirable location as they can afford. And often more.
Don’t get me wrong, rules set where and how bad the line is, but there is no realistic situation where everyone who wants to live in SF can, and can afford to, and it is anything like SF.
Well the problem with SF is less density and more than half of it is single-family home neighborhoods with zero amenities.
Anti-growth people will point to neighborhoods like Glen Park, NoPa and Noe as "SF" while forgetting most of the surface area of the city is empty neighborhoods like Parkside, Mt Davidson Manor, etc.
It’s a matter of degree, not difference. If you fit 2x the number of people in them - you’d still have the same general problem. Just 2x the number of people now.
And because larger cities tend to also be more attractive (Tokyo is still growing, for instance), you’ll never have enough density to be ‘enough’ - aka where it’s cheap enough for everyone to live where they want.
You will have more people though.
It's a false premise, cities do not grow endlessly. If you look at other cities they're actually losing population – NYC for example.
By lazide 2025-09-0922:04 NYC is not losing population. [https://www.nyc.gov/assets/planning/downloads/pdf/our-work/r...]
There were two years during the pandemic when people moved out- because jobs let them - but people moved back and it has more than made up for it since.
Every major city in the world has seen significant population increases as mechanized farm work and fertilizers have removed the need for many farm workers, and economy activity has concentrated.
It’s been a consistent trend for almost 100 years.
And yet, with the Tokyo example, the combination of lots of housing and good public transit means that you can get small but liveable apartments that are a 20-minute walk from central downtown Tokyo (and under a 10-minute walk to multiple train stations with access to the rest of the metro area) for under $1500/month. Here's one right here: https://www.realestate-tokyo.com/rent/B0021114/park-flats-gi...
By lazide 2025-09-0922:07 The tiny salaries in Japan make that even more expensive (comparatively than SF) - last I checked. But yes, the Japanese are significantly more socially coherent eh?
This is a real "you'll never make it perfect, so don't bother even trying to make it better" argument.
Paris is cheaper than SF, even in the middle of downtown along the river, because they actually have consistent housing density throughout the city. Look at the arrondissements that are even 20 minutes out from downtown by subway and you can find apartments that people in SF and NYC would kill to have at that price. Paris will never be free to live in, but it's extremely obvious that they have avoided the worst of the US housing crisis by just actually building lots of housing.
> There are ~ 15 million unoccupied houses in the US
Unoccupied houses across the entire country don't matter. What matters is housing in the places that people live.
Places that people want to live. Which are often aspirational. Plenty of people live in places that would be 2nd, 5th, or even 10th on their list if money were not a concern, eh? And that’s normal. And almost everyone could live in those out of the way places too.
Which is why comparing against the rest of the country is valid. Just like comparing SF to Vacaville. Or South SF. Or Oakland.
There are definitely parts of Paris that your typical Parisian (or even atypical French citizen!) cannot afford to live, yes? And many, many live in Paris’s equivalent to Oakland. (Or NYC’s Harlem)
It could be better - but people also have this weird mental block where the only place they ‘can live’ is also the same place everyone else wants too, but they can’t afford it, and somehow it is everyone else’s problem to fix that for them.
The studies on this subject look at entire metro areas (https://www.fanniemae.com/research-and-insights/perspectives...), which include places like Oakland and Vacaville, not just city downtowns. "Want to live" here isn't just 'aspirational', it's covering basic elements like 'are there actually enough jobs there'. "Oh, there are fifteen million empty houses" means absolutely nothing because most of those houses are in places where there's no way for any substantial number of people to actually make a living.
By lazide 2025-09-0922:04 ding ding ding the housing prices have nothing to do with some vague notion of ‘I want to live there’, but are rather a proxy for the expected economic value of a place * people’s ability to leverage it.
Give businesses a reason to spread out a bit and not concentrate in these urban centers, and voila - all those ‘undesirable houses’ are all the sudden more desirable, and all those crazy zoning issues and nimby’s are not such an issue anymore. And the housing crisis mostly evaporates.
But since availability is also a proxy for competition for those jobs, it’s not like folks have too much incentive to make it easy eh?
Lumber is a tiny fraction of the cost of a house, the US produces a huge amount of lumber on its own. I don’t think there’s any real evidence to show that lumber tariffs have had a measurable impact on housing costs. Most housing is built with lumber from here.
Also the tariffs are new this year, housing costs have been a problem for much longer than just this year.
Here's a "kit" for a 1,400 sq ft house: https://www.menards.com/main/building-materials/books-buildi...
$90k for materials.
Around here a 1,400 square goes for $385k (half a house, but there you go).
So materials are somewhere around a quarter of the cost. Land + foundation + utilities is another quarter; the rest is labor and profit.
The land, foundation, and utilities (often in the form of impact fees) are largely fixed costs regardless of home size. The larger the home one builds the less impact they have on the final cost to build. This is why “starter homes” don’t get built anymore. The builder has every incentive to build that 3,000 sq ft home on a small lot instead of something more reasonable in size.
Also, other options that used to be more efficient to build multiple homes at once, like row houses or duplexes/triplexes, are generally directly or indirectly illegal to build in most US cities now. Row houses and brownstones were the cheap-and-fast housing option once upon a time; they're now rare and expensive because in most places nobody's allowed to put up a new one.
By bombcar 2025-09-0921:14 I've seen sixplexes around here, but unless they're apartment buildings (which have better designs anyway) they're relatively undesirable.
A duplex saves you some coin, but each additional house you stick on the side saves you less, and the desirability goes down. People don't like duplex/triplex/sixplex living.
By Dig1t 2025-09-0919:14 Yes very true, and lumber is a sub-category inside materials and it is not very expensive compared to the other materials like concrete, siding (fiber cement, stucco), roof material (metal, asphalt, tile), drywall, paint, plumbing, electrical. Of all those things lumber is a cheap line item.
By chrisweekly 2025-09-0918:431 reply to be fair, xnx said "dozens of factors" and mentioned lumber and tariffs as among them... maybe better examples would've made their point stronger though.
By Dig1t 2025-09-0919:17 Yes that’s true, I think he’s right on all the other points.
I just built a house by myself, from the ground up, so I couldn’t let that lumber thing slide though as I literally just paid for all the materials myself and I know how little lumber costs compared to everything else.
By ben7799 2025-09-0919:07 It's the left wing gaslighting everyone over all the issues caused by making it harder and harder to build anything. You blame landlords and PE when in actuality the government has stopped construction in it's tracks. This then feeds into the ultra-left agenda which tends towards socialism and "make landlords and private property illegal."
This is largely what the Abundance agenda and YIMBY is all about... getting the left to stop throwing up NIMBY road blocks.
The problems with not enough investment in new houses are not limited strictly to blue states but blue states seem to have the largest problem with it. Democrats love regulation so much that states like MA and CA have erected so many zoning and building regulations that new homes have become incredibly difficult and slow to build.
We struggle to even build apartment size condos in suburban MA that cost less than $1.1-1.5M per unit. We are rapidly heading towards new houses being $2M+ in lots of parts of the state. By the time a developer manages to buy a lot and go through all the red tape, possibly tear down an old house, go through environmental review, etc.. they can't make any money unless they build a $2M+ house. Any lot that doesn't have an old house on it in the eastern part of the state will have a long list of environmental gotchas a developer will have to fight through, possibly for years before they can even start building anything.
Housing construction is so far behind the demand that who owns the existing houses has little to do with it.
PE and Corporate landlords own more property in left leaning markets because Blue policies have made it more profitable to do so. The more new construction is slowed, the more valuable the rental properties become. Some of these companies won't want to go near red states where construction is easy. The property values and rents are just not high enough.
By agavava 2025-09-1614:20 I would love to think about my own house already, but prices for everything are so high that it’s not possible yet. I rent an apartment, but I was lucky with the owners, who don’t even mind a renovation, and we decided to split the costs in half. Basically, I already gave them a rough estimate I made here https://www.myhomequote.com/bathroom/cost-calculator for what I plan to update. And we also agreed that specialists will handle everything so the quality will be good.
