Is this really a good idea?
I mean it sounds like a good idea, right? Housing is too expensive and a middle class family can't even afford to have one unless both parents are working at least halfway decent jobs. With interest rates going up and nobody wanting to give up their low locked-in rate, something has to give.
This whole concept of hedge funds ruining the housing market is something I've talked about at length in previous posts, but after seeing news like this it gives me great pause. Now that hedge funds like Blackrock have already thrown in with Bitcoin I've made many predictions that housing as an investment and a store of value is already in a very tenuous position. A law like this could dropkick it over a cliff in record time.
Free Market Capitalism?
Obviously in a perfect world these regulations would never have to exist. Hedge funds would just regulate themselves and prevent the damage preemptively in the first place. However, the damage has already been done, and winding back those positions by force could potentially make the problem even worse. The last thing anyone wants is volatility and uncertainty within the housing market (one of the traditionally least volatile and least uncertain markets around).
Number go up; Number go down
It's very important to point out that everyone who owns a house wants the value of that house to go up, while everyone who doesn't own a house wants the value of property to decline so they can pick it up on the cheap. Like with any trade, one side is going to be unhappy if the market moves against them. A situation like this is never going to be a win/win no matter how the politicians are spinning it.
That being said I'm personally totally on board with collapsing the housing market. It's what I've been predicting would happen for a couple years now. If I'm being honest I'm surprised it's taking as long as it is. Spoiler alert: I don't own property and view it as more of a liability than an asset. My rent is cheap and I know what I'm getting.
Does this date back to 2008?
If we ask the interwebs it appears we get confirmation on this front.
Following the 2008 housing crisis, large private equity firms and hedge funds bought substantial portfolios of foreclosed homes as an investment opportunity. The federal government enabled this growth through bulk sales of federally backed mortgages and foreclosed properties.
Fun times
So some greedy little goblins were handing out housing loans that they shouldn't have been and big money came in to scoop up the broken pieces at the bottom. These things don't happen in a vacuum. It's all connected and can extend back in time decades past.
Demographics
Another issue of note is that we have a major demographics problem. Boomers are going to be retiring. They'll be moving into smaller homes, retirement facilities, or to the grave. That alone was going to cause a problem, so imagine what's going to happen when hedge funds are dumping such an illiquid asset onto the market as well... along with everyone else who panic sells during the frontrun. Not good optics!
Well maybe the law won't even pass?
Sure but does it even matter at this point? Simply floating the idea like this is going to set off alarm bells. Now with a Bitcoin ETF in play the thing that many have been predicting (including myself) could actually happen. Bitcoin could cannibalize the store of value narrative away from the housing market and leave anyone who owns property today with a smoldering pile of rubble worth 50% or even 75% less than it was when they bought it. Yikes!
You know who else talks about this at length?
@builderofcastles is constantly harping on this idea that in some places people won't even be able to give property away and houses will just lie vacant and gather dust. Do I believe it will get that bad? I'm not that conspiratorial, but the timing of this bill is so suspect I honestly have to wonder if this is all on purpose. Like, they know what they're doing, right? Right? But rather than go off the rails and engage in rampant speculation, let's see what the 'experts' have to say.
New Legislation Proposes to Take Wall Street Out of the Housing Market
The bill would require hedge funds, defined as corporations, partnerships or real estate investment trusts that manage funds pooled from investors, to sell off all the single-family homes they own over a 10-year period, and eventually prohibit such companies from owning any single-family homes at all.
Forced selling...
It feels so much like price fixing and blatant government overreach.
I mean stopping them from buying more is one thing, but forced selling?
That's wild.
Is ten years really enough time to unload?
Will many be incentivized to unload faster knowing that number won't go up?
Homeownership, long a cornerstone of generational wealth in the United States, is increasingly out of reach for Americans as home prices and interest rates soar.
With a divided Congress, the bills are unlikely to pass into law this session. But Mr. Smith said legislators needed to start a conversation.
In a pattern repeated in cities around the country, corporations focused on modestly priced houses, frequently in neighborhoods with large Black and Latino populations, and converted the properties to rentals.
Yep yep hedge funds are racist say no more say no more.
“Wealth has become concentrated in the hands of very few people,” Mr. Smith said in a telephone interview. “This is just another way to do that — to commoditize housing so that investors get all of the money.”
Can you imagine telling everyone that the key to decentralizing wealth and inequality is to collapse the housing market? I love these people.
Ah that feeling when you realize you could easily write this fluff and author New York Times articles. What a joke. Well that's one 'expert' down and my own post is already more nuanced. What else they got? How about Business insider?
Democrats want to kick hedge funds out of the the housing market to improve affordability
Some streets aren't for Wall Street. As the housing affordability crisis drags on, lawmakers are seeking to kick out hedge funds from the housing market.
lol, yes, very clever.
"The housing in our neighborhoods should be homes for people, not profit centers for Wall Street,"
Again this argument is all well and good, but completely ignores that it totally screws over anyone that already has a bunch of equity in a house... maybe already with piss poor interest rates. I have them in my family, and so do you.
At the other end of Capitol Hill, Democrats in the House proposed a separate bill that would discourage Wall Street's involvement in the housing market by charging investors who own more than 75 homes an annual fee of $10,000. The money would be pooled into a housing trust fund to be used to support families with down payments.
This is a separate bill being pushed at the same time. I'm not sure how discouraging it would be to get charged $10k a year for someone who owns over 75 properties, but I guess it's something? But honestly how many people actually own 75 properties? I feel like that must be a short list; is a tax like that even worth it?
According to CoreLogic, investors accounted for 26% of all single-family home purchases in June. That's up from pre-pandemic levels of less than 20%.
Meanwhile, the median home price is up 38% from 2019 to $431,000. And mortgage rates have shot up since early 2022, touching 8% in October. While they eased sharply this month, affordability remains a problem.
So...........
Property going up 10% a year is a problem?
I thought this was pretty standard stuff.
Expected even.
Another worthless article
Just as expected.
These people have nothing to say and give zero insight.
News is a joke.
Conclusion
Too little too late.
This idea that people can't afford a home for their family because the price of housing is too high is a distraction. The obvious reason people can't afford things is because they get paid terrible wages and every year more citizens get automated out of the production cycle. But why focus on the actual problem when we can just try to tinker with this one thing?
Ironically, the housing crisis in 2008 seeded this event and allowed big money to come scoop up everything on the cheap. Now people are pissed and want to force hedge funds to sell. So what's the solution? Oh I know let's create another collapse that'll work... wow I'm a genius. lol.
The problem with this logic is that over-regulating a market, especially a huge one like housing, is going to just spawn more problems down the road. Unfortunately most people don't think that far ahead. Funny enough they also don't think too far enough back in time in order to understand how this all happened in the first place. History is doomed to repeat, it seems.
All this being said I support the idea that we should force hedge funds to sell. Just rip the bandaid off already. This bill certainly won't pass into law this time around, but the fact that it's even being floated is pretty significant. Then again I'm hopelessly biased because I seem to have it in my head that one day soon (either this cycle or the next) I'll be able to buy a property with some silly amount of crypto like 0.1 BTC. Dream Big!
I think government needs to stay the hell out of the markets. They make things worse than they make better. Just my 2 sats on the subject.
That's my assessment as well but I actually want them to fuck it up this time.
Maybe crypto has made me far too comfortable with volatility.
Let’s sit back and watch it burn, 😂
From a camp on some street somewhere? Innawoods? We don't have a free market, particularly not in housing. We have a crony nepotism market with monopolies handed out by government, such as monopolies on financing housing created by the Dodd-Frank Act. Dropping corporate investment out of the housing market would only extricate government from that market, because corporations are government creations to begin with.
We need to get government out of the housing market, and this would be a great leap towards that, IMHO.
You can watch the revolution from anywhere you are!
It's much more enjoyable to watch from the comfort of my own home than from a cardboard shanty one bulldozer away from the cemetery.
Oh for sure. I will be watching from my homestead farm at the base of a mountain in the woods, lol.
I think out of everyone I know, you'd have to be the biggest liberal with the strongest anti-Democrat bias. I know lots of lefties who had Biden specifically, but I can't really recall you not sticking the boot in to the Democrat party whenever you have the chance.
I don't think Blackrock, etc own enough to collapse the economy, I think combined they own less than 2% of the total housing market, although they do concentrate in specific areas... but given that supply of housing is so low, I imagine those houses they'd sell would be snapped up pretty quickly.. and it'd probably stimulate those economies as people renovate and spend a lower percentage of their wage on housing.
Personally, since people need a place to live, I really don't think housing should actually be an investment... essentials shouldn't be investment vehicles.
Damn it's weird when it gets said out loud.
You know what they say: once you go far enough left you get your guns back.
Then again I've never owned a gun so hmmm!
While Blackrock can't crash the housing market "investors" in general certainly can.
It's very bad optics when over a quarter of all housing is speculative.
Just like a traffic jam can be created by adding 10% more cars:
so too can the housing market collapse by adding 10% more houses.
But if I'm being honest the demographics issue might dwarf this one.
Hahaha, that's the best part about having commenters, you get to hear all sorts of things about yourself.
Agreed, investors could certainly crash the housing market, but I do think there are so many people, particularly Gen Y & Gen Z that are totally priced out of the housing market, that might finally get an opportunity to own their own home... so, crash away I say. If anyone gets too worried about housing being too cheap, you just increase immigration and the problem gets solved real quick.
Yeah I mean when empty houses are x10 more common than homelessness something has got to give.
Maybe I should take a home equity loan out now and put it all into BTC so that I am ready to go when my wife and I are ready to move in a few years! Honestly, if I had bigger balls I probably would do that, but I just don't. We still owe about 75% on our house anyway.
Yeah I probably wouldn't do that either but it's hard to not at least think about it.
Democrats and Republicans both introduce bills that they know have no chance of becoming laws. Rile up your base and then raise money off of the bill’s failure to pass.
Wash, rinse, repeat.
lol too accurate
Last time, like 2006, they started giving money for "poor" people to get downpayments to buy into the housing market at almost the top. And we are seeing that same thing happening.
So, yes, i am conspiratorial.
Also, my house i lost in 2008 stayed off the market for over 7 years.
I had just fixed almost everything in the house, and it should have sold quick. Just not at 2007 prices. Who has money to just keep a house off the market?
Shades of that happening with Black rock
Yeah I def get shady vibes from this... even if it's just talk.
Good luck with that buddy.
Amen, brother!
I bet the Hedge Funds will sue for compensation or somehow find a compensation.
I would rather see a higher taxation for Hedge Funds or companies when they speculate with houses.
!DHEDGE
Well, the luck comes in with the cost of money being decided by the market.
The big firms not getting special loans almost directly from the Fed.
If this was the case, than the big firms couldn't monopolize anything, because when they tried, they would move the market against themeselves.
But, we really do not have anything close to a perfect capitalist economy.
Black rock gets special deals (yes, they were sold those devalued house assets under market value, and were given a sweetheart deal of a loan to buy them.)
I too believe that the black rocks will cry, and be given money, for doing what they set up in the first place.
I’m just seeing it like the government wants to make sure that they interfere in the market affairs and then maybe try to have an influence on it…
To make a lot of money from kickbacks and graft from it.
Cheers to that! 🍻
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I personally believe Americans need to buy the market capital back and dump the Hedges into bankruptcy and a footnote in the History books.
With what? Their wages? Maybe if we issued the inflationary money, and the banks were taxed with that inflation, we could do that. It's not happening in this market.
You give the elites more credit than they are worth. They taught people that they are too big to break, so the populace cowers. $1.00 a day, buying back the market capital, 300M Americans (and that's JUST... the Americans), in 365 days, reclaims about $110B in cash value capital each year.
The USG borrows ~$30T each year, which is more like ~$100k per American (including children). However, to me that merely highlights that money is being used as a weapon to strip actual wealth from humanity. I am convinced the solution to our economic woes is to let them have all the fiat or CBDCs. I primarily invest in goodwill, exchange my services in kind as goodwill, rather than fiat, today.
Government and corporations aren't interested in taxing that, unless I can pay in dollars.
What a horror show that would be. I won't bother to relate the anecdotes I've been regaled with by an administrator in the FHA dealing with pushing out loans to farmers, but racist only touches the tip of the iceberg when it comes to dem programs.
I agree. As traumatic as that would be for boomers, that have learned from the inflation of housing prices to own at almost any cost, with a home being priced at ~a decade of mean income, rather than a couple years as it used to be, it would prevent the worse disruption oncoming as investors bail from the housing market at the worst possible time, as bailing investors tend to do. Buy high, sell low. That is why some people whoop the market's arse, because FOMO FUD and capitulation go hand in hand, but most people should allow fund managers to handle their retirement assets so they don't panic sell everything away.
We need housing prices to be reasonable again, or we'll end up in kennels and warrens, as seems to be happening with 15 minute prisons full of tiny homes crammed with bunkbeds, and hordes of homeless on the streets.
Thanks!