Is Wall Street REALLY Buying Up All the Homes?
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- čas přidán 7. 12. 2023
- Previous BlackRock video: • Addressing the Blackro...
Once again, we're tackling some popular conspiracies about BlackRock buying up all the homes in America.
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DISCLAIMER:
Richard does not have a position in Blackrock or Vanguard.
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).
I really hate that it takes 8x the effort to debunk a lie than to start one
Or it might take no effort at all if you just ignore it, if its a lie it will reveal itself eventually, I like this youtuber and love this video but there's no point in trying to clean these people names when there's a possibility they might be involved but not the way the mass media is telling us.
@@robymaru03 what you're saying doesn't work. It amounts to "keep yourself in the dark so that you don't see the lies". Whatever these companies are up to, everyone needs reliable information.
Not in this case, the lie is so bad that it dont take any effort to debunk.. the problem is people dont listen.
exactly this and people will still argue that the facts and numbers are fabricated to cover up the real evil corpos
@robymaru03 you go through life with this logic? Couldn't imagine real people keeping you around as a friend or family member.
I'm not surprised individuals are a huge problem, every idiot with money in the 2010s suddenly thought they were a pro real estate mogul. Buy a home, refresh it with the cheapest paint and furniture possible, then try to sell it for a huge markup or rent it for obscene amounts. Unfortunately the pandemic helped them actually make a profit...
Greater fool theory
Record low interest rates, remote work, and a population boom too.
They didn't even have money in many cases, they had credit. So they borrowed and let a renter pay for it.
You missed the point, the problem is the lack of new homes being built... Individuals buying homes because they appreciate in value is a direct consequence of new homes not being built
I bought two rentals during the financial crisis and I can tell you that I was NOT renting them at obscene rents - that didn't happen until a decade later. My HELOC was frozen, and there were times that I was doing repairs on my own because I didn't have the money to pay anyone. Now I'm seeing rent in my area go down, which is fine. I would agree that things have been totally whacky and unnatural these last few years.
The shady music suddenly popping up cracked me up every time.
Hilarious😂
I think Blackrock and Blackstone get the flack because their names just line up so well with a corporate dystopian naming theme.
And Blackwater has a lot controversies surrounding it's mercenaries..... if you were to combine all 3 it would be an extremely scary company
Having massive institutions buy nearly a million homes in the past few years WHILE overbidding WHILE there is a housing shortage is absolutely a big deal. Downplaying all that RELATIVE volume and that over bidding is just ignorant. It absolutely made a dent and had a huge hand in helping home prices get so inflated. Homes are priced by looking at other recent home sales. There's a reason why they over bid, its not because they're dumb or bad with money. You dont need a massive amount of an asset in order to inflate the price of it when its in a liquidity shortage.
Oh god the bitcoin bots attacked-
@LaureanoSantander The wisest thing was to invest during the crash. The second wisest thing is to DCA :)
They obviously should rebrand to African-AmericanRock and African-AmericanStone to be more palatable for 2023.
I wonder how much Air BnB has encouraged landlord ownership of single family homes. The last time I stayed in a short-term rental, it seemed pretty clear that the owners were not a family out of town for a while, but a real estate management company that was probably renting it our year-round.
There is not infinite demand for airbnb location, it is unlikely airbnb had so much of an effect on the market.
@@arofhoof BULL SHIT, read a book, wtf. AirBnB fucked up the entire housing market in so many countries, the data is extremely clear on this.
@@arofhoofReally dependd on the location. A city that enforced air bnb ban saw their average long term rental decrease by ~7% if I recall correctly
I work at a bank in commercial lending, community bank so we also finance rental properties for customers. From what I’ve seen in DFW, Air BnB’s aren’t a big portion of new investors purchases. We may just not see it at the bank I work at, but it’s not huge. Some cities are passing bans on Air BnBs too, so that plays a role.
"A city that enforced air bnb ban saw their average long term rental decrease by ~7% if I recall correctly"@@_--9286
Do you have a link?
Blackstone used to own 3000 apartments in Amsterdam, they recently sold most of it due to regulations cutting profits. We have the exact same situation over here in the Netherlands.
fantastisch om te horen
Good, housing should belong to the people! Not corporations
@@thechikage1091you do realize corporations use their funds to build homes, right? While the idea is nice, there are negative unintended consequences to such government regulation.
Such regulation addresses an effect rather than the cause of the supply issue. Corporations seek to buy SFHs because SFH supply has not kept up with demand. The reason for this is because of excess zoning regulations (at least in the U.S.), which substantially increase the time and cost of building SFHs!
@@SenorJoeBiden I'm not disagreeing with any of that, they're all definitely factors- especially zoning laws. SFH's are incredibly expensive in terms of land use and also infrastructure costs. More space between buildings = more time and materials spent on electricity lines, gas/water pipes, fibre cables...
Not to mention the social consequences of only allowing SFHs to be built-in which the grand majority of residential zoning is solely coded for. I definitely recommend checking out Eco Gecko for some really eye-opening information on that perspective too. It's pretty dry in terms of delivery but it's really good in the studies it pulls from.
Housing prices increased by roughly 40% in the backwater shithole my mom lives in (somewhere in south holland), no institutional investors involved. Real estate prices are more driven by interest rates and money printing than some boogeyman 👻
Have you ever looked at your local zoning codes. It would be illegal to build a modern 1950s home because it doesn't meet minimum lot requirements. R1 zoning, parking requirements, etc. have been making it so we can only build the most inefficient types of housing. New grads in Kanata (Ottawa) literally have to rent houses if they don't want to commute in from downtown.
Yep so true, biggest problem with suburbs is zero rental housing imo
Ottawa is changing their zoning laws to allow higher apartment buildings, more housing units per lot, less parking spots, mixed zoning, and more focus on 15-minute cities, but none of the changes come into effect until 2025. (And who knows how much the new laws will be neutered before then)
@@jessip8654Unfortunate that NIMBYism will squash any real significant step to solve the housing crisis in Ottawa but lets hope for the best
People live there to avoid renters.@@codethemonkey
and yall keep voting for liberals and democrats smdh...
Small, multiple home buyers can’t be overlooked. I can only speak to my area, but people whose net worth is between 500k-5mil often own multiple properties. They are on their 4th house and rent out all of them. It’s a good portion of the population where I live. They don’t just own locally either.
The vast majoraty of the people you are talking about are of retirment age and at one time or another lived in every house that they now rent out. They bought it to live in then when they moved instead of losing 10% of its value to real-estate agent commissions, closing costs, and other fees they just rented it out buying a new house where they moved to.
I'm sure many of them would love to sell the houses if it did not mean losing 10% of its value in selling costs.
Yes. We are looking for a starter home and went to a showing in a small town of about 3,000 people. When we remarked that we liked the town, the seller's agent happily told us it *was* a nice town and she owns 9 homes there! I don't know why she thought we would be enthralled by that. It must be great having this portfolio of single family homes; but wwith inventory so low, we're just looking for *one.* It would be great if my kid didn't have grow up in impersonal, cramped apartments. I also wondered if the only reason she hadn't snatched up the one we were seeing was because it was about to fall down.😒
Yup, people like doctors, lawyers, executives of "small businesses" (up to 500 employees by US definition), big tech engineers, celebrities (Dave Chappele, Stephen Curry). To me, it's because real estate is easy to understand for them and they can take out a loan and have people pay for their mortgage so they also don't need existing cash to invest like stocks. These are the type of people that will organize a protest over a development because any new development poses a threat to their rent check sizes. Imagine if people went around buying up farms only to use like a quarter of it so that food becomes scarce, so they can charge $50/pound for corn. Didn't that happen during Julius Caesar's time? And they go around being disingenuous using misformation or scare mongering tactics (whining about traffic, crime, they pretend every $3000/month apartment is a crack den in the making).
When people brag about someone else paying their mortgage, it's not very funny when you really think about it..@@sor3999
My father owned 5 rental properties at one point, it was his entire retirement tied up in real estate, he sold all but 1 in '04-'07 (retired in '08). He regrets it now after realizing that if he had invested all that money in an all market index fund he would have retired with twice as much. Renting out property when you aren't scalping people is just not a good deal. Tenants can cause a lot of damage very quickly if the relationship sours due to late or missed payments (even when he is charging you 10% below market they still miss payments) and its expensive to take people to court to get a judgement against them for damages not covered in the security deposit. I think only 1 of his properties really made him any money beside paying down the mortgage, all the rest where a wash or net cost due to the repair and maintenance. Its maybe his fault for charging below market and ending up with relatively poorer people, nothing against being poor but some people are poor because they are irresponsible and that tends to extend to all areas of their lives unfortunately. Anyway just saying that not all individuals who rent are making bank (even if they have multiple houses), and if you are thinking about renting, maybe think twice and just put your money in an index fund.
Someone call the police Larry Fink is in my home
But he owns the police
But it's not your home
@@junfour And he isn't you larry fink
How could you do this to Larry
Larry is gonna Fink all over your place! Show em Larry! 🔥
I want to thank you for your, clear level headed approach to explaining investments and helping bringing insight to how scamers,movies,tiktokker,news articles,politicians etc are not the go to source for understanding. I like also thank you for taking the time and helping everyday people get basic understanding of this information you are blessing my guy.
Richard, you're such a breath of fresh air. I've been following you since you were small-ish, we even interacted here and there and it's great to see that you're still going at it with the same vigor. In the age of misinformation and skewed perspectives, it's good to hear educated opinions and facts. Thank you!
I'd love to see the stats on flippers. In my area, most homes that could be affordable, or are "affordable" because of their condition are quickly purchased and flipped. They go back on the market 3-6 months later for $40-70k more than they were listed at with new counter tops, fresh carpet, and a bad coat of paint over 1970's wallpaper. It was extremely hard to find our home competing with that.
It is frustrating but it will slow down when the demand for homes at their target selling price disappears due to unaffordability. The flippers will be forced to sell at minimal profit or even a loss and then get out the business. Its basic supply and demand, they are providing a service (refreshing houses) for the wealthier strata of society and once that strata is not interested in buying any more homes they will languish on the market until the price comes down. Then the more affordable houses will stop being snapped up by flippers because they know it won't sell at the price they need to make the flip worthwhile. Flipping is very popular till the market cools and you end up stuck a house you can't sell and are forced to rent for cashflow reasons with all the headaches renting entails. Its a fad, we are in a bubble, give it 2 years and it will be better.
@@lexpox329I mostly just get frustrated by the greed. I almost pulled the trigger on an affordable home a year ago but flippers grabbed it, probably only put $25k max in renovations and listed it for $150k more.
I've already seen at least one flipper go out of business in my area and in the past few years, they were paying more for these junk properties than I was willing to pay. But my strategy is different - I buy for the long haul. I actually really enjoy being a landlord despite all the horror stories you hear. I have great renters and that makes all the difference.
@@mikeg2491it may appear to be greedy, but at the end of the day, we all want to provide for our families. Most house flippers are just regular mom and pop types. I personally don't flip houses, but I can tell you that it's one of the riskiest ways to make a buck I've ever seen. I don't know why house flipping gets all the attention and has TV shows about it.
100% of flippers are grown by aquatic animals
I’m opening up an investment firm, calling it BlackBoulder, and jumping in on the action!
I'll start a smaller firm, call it BlackPebble, only by 1 bedroom homes...my niche!
I got StoneRock, I hope to get product placement in future Flintstones reboots.
The problem is people think a home as only as an investment and a get rich quick scheme. A house is also a place to live and its value should be just match inflation. But also our restrictive housing zoning codes can't help build more homes. And NIMBY's saying no to more building mix-use and denser neighborhoods
100% agree. You can have affordable housing or you can have home values appreciate by 2-3x inflation, but you can’t have both.
People cling to blaming “corporations” because the truth is that the solution to housing affordability will inconvenience them.
@brianbelgard5988
It’s old people and their desire to make 2x, while minorities snd young people have to go without.
Blame Grant Cardone, Meet Kevin, and Graham Stephen for pushing rental property investments onto normal people. That and Airbnb incentivizing the same.
Most people never heard of them, blame the 2007-2008 crash, when houses were going for half of what they did before, it didn't take a genius to see there was an opportunity there.
Rental properties are absolutely fine, you still have the same amount of people occupying the property if not more on average. The problem is low-density zoning and NIMBYism and saying pretending otherwise is delusional.
Ughhh, Graham Stephan actually stopped investing and said so himself since like. 2020? 2021?
And updated his community as to why. (Lots of evidence to prove it's the peak for the market is nearing)
It's all of these together that are a problem. When housing is treated like an investment opportunity instead of you know... Housing
@@jorayjoseph6442 housing as an investment is fine. Land as an investment is not. LVT and relaxed zoning would solve everything.
Remember the "Get Rich in Real Estate" infomercials from the 1980's? Buy 6 rentals and retire early. it is not new.
Wasn't it in the 80s when this started to become a problem?
I remember the "skip the latte and use your rising home equity as your retirement" early 2000s advice...
For some reason that advice disappeared circa 2007-2008...wonder why...
But prior to 2011, hedge fund companies didn’t own more than 1,000 homes each. Now what is the number?
Every Minority Mindset video is buy rental properties.
U only have rich dad poor dad to blame
The most important stat is how many residential houses that have come to market have been bought by investors (of any type). 25% is a massive amount of homes taken away from owner/buyers
Yap, especially in a market with so little slack resources as the real estate market.
I'd introduce a second aspect: Future incentives. Real people tend to sell their house sooner or later. Corporations don't. Also, real people live in their houses. Corporations on the other hand can just leave them vacant for a bit when they don't find someone willing to pay whatever they are asking for, thereby forcing up prices rapidly.
Exactly but I'm halfway through the video and the most important detail seems to be whether the company in question is called Blackrock or Blackstone...technicalities for regular people, come on...
@@AA-iy4gm How is it a technicality to get basic facts wrong? One (BlackRock) is deeply invested in public traded equities and the other (Blackstone) is involved in private equity and alternative assets (which is where "real estate" as a category falls under).
You may argue that "regular people" wouldn't understand this distinction and I agree - I think he needed to boil down that section into even simpler terms. Nonetheless, as he showed, Blackstone has minimal participation in the US housing sector (BlackRock even less so).
@@devilex121 Whether someone is being robbed blind by Peter or Paul is very much a technicality with little bearing on the "being robbed" outcome. It's not like the details don't matter, but they still make a poor focal point for anyone not directly combating the situation and a _terrible_ one to throw back at the victims (regular people).
25% sounds pretty low considering how real estate is such a common investment type. Not saying it's a good thing, just saying it's not surprising at all.
God bless this Canadian
Hate to break it to you but your god does not exist
He's the type of people that say trust the science 😂
I think he is Australian
@@Sataka23clips I consider that a compliment
@@dr.vanhellsing Nope, he lives in Ottawa, Ontario, Canada
12:24 "It's easy to blame a massive faceless Wallstreet institution"... Disagree there - they can't even find out which faceless institution to blame! Let alone hold them accountable. Appreciated your nuanced take, as always.
Hmm I wonder where all the supply went… oh yeah people have been told that what you should do is buy a starter home, then buy a second home with the equity you build, move into that one and then rent out your original home. Rinse and repeat. What happens when 10 percent of the population does this? There goes 10 percent of your supple every round. I know many people that have done this 3-7 times already
Yup. This issue is not institutional investors. It's ALL investors. They need to be stopped.
But they also include politicians. Corruption will prevent anything meaningful from happening in this regard.
You would think that would then drive down rental prices, but we’re seeing both rising. Small investors cannot afford to sit on an empty house while waiting for someone to pay their top dollar rent, they are subject to market forces like everyone else.
@@msmith3395 The continued rising prices are not due to market forces. Real estate and housing in the US is not a free market. It's a heavily manipulated market.
The reason why prices aren't coming down is price collusion.
I think its important to remember that homes *arent* a traditional investment. There may be 100~ million homes in the US but the vast vast majority of them have people living in them with no immediate plans to move, therefore they arent really fair to be considered when talking about companies buying up homes. The stats that are way more important are the buying of homes that are actually put up for sale, not the fraction of the total amount of homes there are.
But he did talk about those who were actively sold and even with the hottest market three big firms only add up to a minority.
For most people real estate is the default investment and believe that it always go up until the interests go up but REIT of SFH are a recent thing.
@@tomlxyz 25% is far far too much in my opinion. When people can't afford to pay rent, let alone buy a house; letting companies buy up 1 in every 4 houses is a crime.
@@Nighthawk20000If that’s a crime, it’s a REALLY dumb and pretty victimless crime. OTOH, the stupidity of every proposal I’ve seen to outlaw it is criminal. Not that I’m saying it’s against the law, “criminal stupidity” is just an old expression.
@@Nighthawk20000 why? they're renting them out. the overall housing supply stays the same. The rental supply goes up, bringing down prices (relative to what they would have been). the price of buying a home is the only thing that goes up (relative to what they would have been). That's not a crime, its how the market works.
The only solution is zoning reform because the limiting factor in every single housing market in the world that I know about is housing supply.
I think there's something to be said about zoning laws that prohibit construction. I know in urban areas there is a lot of NIMBYism, but also a lack of infrastructure in suburban or rural areas to make it easier for some old property owners to move out easily into less urban areas.
I don't know too much on the topic, but those are my 2 cents. I think investors are just playing the game and we need to look at root causes surrounding production rather than the symptoms of greed and frustration.
Production isn't a problem. Most of it is just NIMBY induced red tape to enforce fake scarcity. Wherever they don't have infiuence cheaper homes can go up fast.
Definitely a covariate but likely a small one that impacts prices. Private equity buying up a quarter or more of new homes is likely a much larger impactor.
I also wonder how well these companies service their renters. Invitation homes owns homes where i live in the bay area. Everyone i know who rented from them had a terrible experience. Repairs not being made, difficult communication and even frivilous legal actions that they can afford to fund until renter has no time or money to defend themselves.
That’s a genuine concern, renters are already at a massive disadvantage- now adding the need to fight a billion dollar business for things
I see no reason why they should provide good service. They got a good legal team and much more money than any individual renter. And getting everything fixed asap is just more expensive to them
@@tomlxyz think about it this way, if you go to a restaurant, and they sell you moldy food that makes you sick, should the restaurant have to be held accountable?
or are you being sarcastic?
Exactly, one of the few benefits of renting is not having to pay for maintaining the property. Yet many landlords do not adequately or timely maintain their properties, leaving renters who can’t afford to move or buy their own property stuck in slum like conditions
Of course these people have to respond to investors, not the renters. An individual take care of good renters and he have just 1 to 3 homes in his mind, imagine just a few people managing dozens or hundreds of renters. They will eventually got neglected, you either work for the client or the investors.
I can attest to it being mom and pop; not megacorbs being the ones to buy up homes. I know someone on the west coast who buys single family homes and puts them up for rent, with his current portfolio sitting at 6 houses and growing. We need stronger disincentives on people buying multiple homes, especially within the same city.
This is nothing new. Landlords have been around for ages. It just looks new and different.
yep the issue is flippers.
@@jamisongillespie3524 So dolphins are buying homes now as well ?
@@eddenoy321 bad joke was bad
I knew it! It was the little landlords all along! If I’m not mistaken, they are wreaking havoc on the housing market in the UK as well.
As someone who writes insurance for quite a few 1-4 family rentals, I see a lot of homes being scooped up for cash. I think you nailed it when you referred to the types of homes being built. Simple 1-2 bed & 1-2 bath homes just aren't being built. To me, it just doesn't seem like it would be profitable for a builder to build these at scale these days. They used to exist 50 years ago but not anymore.
This is currently one of the issues I have with social media, people making outlandish claims that rally up people who are in tough situations and looking for someone to blame. The housing one is just another latest trend in looking for a villain for things going wrong in people's lives.
propaganda at it's finest.
Ae you saying that the housing crisis is primarily on the individuals feeling the pressure of increased housing prices?
@@hail_seitan_ That is not the implication at all. It is just not as simple as some villain going around buying all the houses.
Such a phenomenon predates social media by many, many, many years. It has made it easier though, and puts the schemes on wide display for all to see, thus making it seem like a new thing.
There is someone to blame though, predatory older Landlords.
Can't believe the social media influencers who only talk about it because it's the current trend got the basic facts completely wrong.
Greedy people lie about rich people. Comprende?
You can't? 99.9% of social media influencers would lick dog sh*t off a wall for attention and money.
@@samsonsoturian6013 Such a statement is no more nuanced or useful than the people you think you're criticizing.
@@samsonsoturian6013incorrect conclusion. The correct thing is people looking for clout not caring about making deeper research because details are boring for people not interested in actual finance
Sarcasm? :)
Despite this being blown out of proportion it is still generally positive to start barking like rabid dog to scare these players out of joining these real estate markets before they join and it gets even more out of hand. Them joining the market just wont help the situation no matter what
9:48 Thank you for being a YTer making a home video and bringing this up. People love to bang on about a pending crash or placing blame for how prices to got so high, but almost no one seems interested in mentioning that 2008-2019 we dramatically underbuilt relative to both normal housing and population growth leading to a fundamental underlying lack of housing, period.
Your Content Stands Out In A Refreshing Way! I Truly Appreciate The Absence Of Background Music In Your Videos, As It Allows Your Message And Personality To Shine Through Without Distractions. Keep Up The Great Work!
A lot of developers are pushing towards build-to-rent models, especially in the UK, as a way to maintain ownership of strategic land, and secure a reliable income. This is where the property will never go on sale, the developer will get a property management company to run the development for them, and the rent income will pay back the debt.
However, with recent changes to interest rates, these long and slow investments are much less viable, as is all property investing. I imagine a long slow down period with property prices maintaining value, but not growing, alongside a collapse of new home building without significant government subsidies.
Thanks for another great, level-headed video man. Appreciate your work
Some of those small 3-9 entities may not actually be that small since some owners may own way more than 9 properties but group them into smaller LLCs which own 3-9 properties typically near each other
What I would have liked to see you delve more into is the impact of the AirBnB and similar businesses on this particular issue. How many of those are making up the small and mid-sized investors up at the top of that chart of market share?
I had a single family home that I attempted to sell to a "hedge fund buyer" in 2022 and they had a very strict set of criteria it had to qualify for. In my market (at top 50 US city) those restrictions mean only a small percentage of properties would ever qualify and any offer would have been a cash one at or below existing market value.
I can't imagine a corporate investor paying massively over the odds for a house. It makes zero sense.
The whole point of a cash buyer is speed more than anything, and so they often offer as you say below market price because it's an easier still than dealing with mortgages etc.
No way they are paying over the market price
I cant imagine selling my house to a corporate investor instead of a family for more money.
"buying/selling a house" Should of been my first clue!@@HisCoconutGun
Stop the commodification of homes
Increase the supply!
make em free. and put homeless people in all the completely unused apartments
@@Snails69yeah, that's called communism
It IS a commodity. It's essential for life and can be bought with money
@@harrychufan😂😂😂
As someone with lots of anxiety about eventually buying a home this was very helpful context
Buying a home is easy just dont use an agent, avoid paying them commission (Buyer pays both seller and buying agents commission) Take your cash and find properties, get an inspection done at each one you offer on. youll save thousands, especially if its on market and heavily marketed (them agents want their marketing costs / house staging / photo costs back asap)
and some homes youll look at will have qualifications for an FHA loan (3.5% down) and VA (if youre military) 0% down
Assuming you are talking about the US (as this video is discussing), that is completely backwards as far as I know. The seller pays both seller and buying agent commissions in the vast majority of cases. Especially as a first time buyer, and even more so if you aren't hauling around another trusted 3rd party with good knowledge of houses (parent, friend, etc.), an agent is quite helpful. I've only bought one house and it was quite helpful to me to use an agent. You can of course make the argument that you could ask for a 2-3% discount from the seller due to them not needing to pay the buyer agent. @@JTPlayingTunes
@@JTPlayingTunesit’s not easy stop
@@draco_1876I used an agent for the first time this year, and it was my biggest regret financially. It took *longer* to sell because I always had to go through the agent (instead of communicating directly), and I likely got less for it as I was able to market the property myself better.
I live in a Florida town. And Invitation Home is an absolute menace in our area. They overpay for poor quality houses across the town, renting them out for the same prices one would pay for a mortgage while doing feq if any repairs ror renters. The locality of where these companies do aggressive buying has an extreme effect here.
Absolutely LOVE your shows. Decoding what is "really" going on adds immense amount of value.
As soon as I'm re-employed given being laid off currently, we'll get you that adult beverage!
Keep up the awesome work.
Switching gears but about black rock. Use to work at a fintech that handled their financial data and made sure numbers came out right. My job was in data and boy is there little to no effort to make sure information is correct. Sometimes files would be missing so people would copy old financial data and change the dates then process it like normal. Eventually some would pop up as the numbers would eventually get noticed but not all. Just crazy to see how there is so much money moving around and so little actual keeping it tracked. To be fair black rock didn't and still doesn't know about this and probably would quit business with that company if they did.
As someone that lives in Arizona I can tell you there are even companies buying up land, building it out with single family homes and making entire rental communities. It may only be a square mile here and there, but every bit adds up.
Eastmark. you own the house, but not the land. The contract says they can use the land for something else and its up to you to "move the house"
Balanced, informed and objective. I love Richard’s approach to analysing information.
I love how you make learning the truth boring but informative. I'm truly thankful
the root of the issue is that housing is being treated as an investment opportunity instead of something essential for a human to live
think of it like privatizing water and electricity
200%
funny you said that, my country just did exactly this!
@@NelsinhoNecromacer may i ask what country you're talking about?
I wonder if we're running out of, not land itself, but land that people want to live on. There was a house listed for $20k I found... in rural Appalachia. Last time I tried to live there I got really depressed, there was just so much poverty and alcohol abuse and economic depression. I've joked with my partner, though, that we may be able to pull off some sort of communal living situation if we bring a couple other friends.
I also remember this landlord I met while shopping around that never sold houses he moved out of, and just rented them instead. I'm really jealous and frustrated with private collector landlords because it feels like they have a multiplicative impact on housing demand.
Not exactly but there are a few issues that combine together.
A lot of people want to live in the same area, namely cities with the good paying jobs. So a few areas are in crazy high demand while rural areas are becoming dead zones.
Zoning is blocking a lot of home building. Particularly multifamily homes. A lot of it comes from either people with land not wanting their views or land values drop and a lot coming from people who don't want to urbanize their town. Thus a lot of places that could be places to live can't be used.
That's just some of the factors. Like all economic things it's not one villain, it's a mass of small bad decisions, some bad luck, and other random events coming together to make a big mess. And a mass of rich folks (and folks willing to bet it all on loans) trying to profit from it to make it more complicated.
yes
look up land value tax
yeah a house just sold for 11k near us but the population is sub 300 and everything is an hour away, including pharmacies lol
good thing it's pretty easy to make more land in the places people want to live. you do it with this thing called an apartment building that has many floors for people to live on, above the ground level.
What kind of business do you and your partner run?
This channel is so good. So objective and dry humor sprinkled in.
Love this nuanced analysis. You're now my go-to for this kind of info.
Even if you wanted to build a brand new house on your own land, that land, permitting, labor, and materials are going to make it very expensive. Alot of factors are involved.
And THAT is the problem. The overreach of government rules and regulations what people can do with THEIR property.
@@williammathis6044well the high costs of materials and low incomes are also big parts of the problem
@@williammathis6044chief, the government doesn't set the price of building materials or construction labor. The US is a free market, not a socialist state.
@@henryglennon3864but we have multiple levels of government that require permits and often block the production of smaller more affordable homes
@@henryglennon3864Government regulations, permits, license etc, increases prices.
I’d love for you to elaborate on the people buying multiple homes (3-9 homes that you mentioned in the video) as investments. I wonder how much the allure for rental vacation destinations such as airbnb contributed to this.
Could have some effect, but buying multiple real estate is nothing new. Resell, rent long term, use it for personal vacation and/or rent short term, there's always been reasons for doing that.
All I know is someone is buying the older and cheaper homes in my town and then just destroying them. There are no more starter homes. Most don't even go on the market. We have had 2 new LARGE apartment complexes built as well as a condo complex. Soooo, even if it isn't Wal Street, "someone IS"...
Great video. Thanks for putting it in a better perspective. 👍
Obviously the magnitude to which these companies are buy is exaggerated. But if they are buying in pockets of the country at well over asking that pushes those people who would have bought those homes to other areas and then they push people out of the next neighborhood and so on. This domino effect noticeably raises prices for everyone and keeps homes unaffordable for the bottom part of that chain
"putting things in context" with a bit of pack-of-the-envelope calculations should be a guiding principle, in general
Refreshingly unbiased take on this. We can advocate for restrictions on this uncompetitive activity without lying and misconstruing statistics.
Great Video! Thanks for using data, nuance, logic and reason to inform your opinions. What a concept!!
I actually pulled up the parcel data for a large number of sales and found 0 large investors buying up local properties. They were all LLCs- and flippers/rebuilders at that. Not even renters! And it makes, sense, too. If the buyers are there and they can afford the mortgage, they'll buy the house even if it's much more expensive than it was a few years ago. Imagine you're a flipper or a builder- you buy the house now, do the changes you want, and sell the house in another few months/in a year. Bam! You've made anywhere from over $100k in some markets, or over $1m in other markets. Do that enough times in the right market and you're set for life!
and nothing is done but put the blame on an invisible face. They always defend their disgusting actions blaming the gov't or corps when it's their own boomer asses.
That 1/4 number is still worrying, even if majority is from "mom and pop shops". Treating homes as an "investment" is just so perverse to me and in my opinion an idea we should never have normalised.
Are you saying renters shouldn’t have the option to live in a SFH, only high density apartments with paper walls?
Thank you so much for your videos, the research and detail you go into on them. There's no way I could have researched these things for myself. As someone who is incredibly pessimistic about the... lets call them "super powerful", having the details and facts is very important to keep my pessimism from shooting me out of reality.
The music editing in this video was on point!
As you said, corporate ownership all around the US is no big deal, but because nobody invests in shit places like rural towns which amounts to the majority of US territory. What is alarming is them accumulating properties in high density areas like NY, Miami, etc. People will be forced to flee to the countryside in droves.
Have you all not already heard of landbanking? This is/was/ and still is a huge thing in th UK where people just bank the land and force others to pay high prices. This is a litereally centuries old practice.
There's no correlation between land property size and rent. The myth comes from how when cities grow usually developers buy whole chunks of land at a time to build apartment blocks.
The only sensible financial influencer. In this age where lie and misinformation is ripe. People who talk sense and truth are rare gems.
I have been watching more of your videos, and I appreciate your well thought out takes on these topics. It's refreshing to see better informed content on this platform and not clickbait short form garbage that is usually in the finance space.
massive loss of skilled trade labor force has driven home prices up. It's really as simple as that. coupled with unrealistic expectations of what a home "should be" people out buying 2.5k sqft houses as a first home, absolutely nutty.
go back to cranking out 1k and under sqft houses, 3 bed 1 bath, there would be no problems. humility is the only way our gen can save the future gens and that starts by not blaming others, even if it is their fault.
But hoas actively block the production of such homes
@libertyprime2013 HOAs are implemented by the developers of a certain neighborhood. They would have no sway over a new neighborhood they don't own.
anyways, we can't blame others for what they did when we can create something else.
I think the zoning laws are the bigger issue. A developer can build a small house, but you still have to buy the extra land that the house doesn't need. A developer could also buy the small house and build a bigger house and charge rent.
Thanks for putting things into perspective. Marginal buyers and sellers decides the prices on markets though, and so if that buyers interest increased from these institutions that small % of properties they buy can disproportionately increase the prices though. The public does not and cannot easily see things in a nuanced way and that can mean that their "blame" is misdirected. People's concern though is pretty much appropriate when they see house prices skyrocket and think to themselves they won't ever be able to own a home. Would be nice to figure out a solution to this very real problem.
Keep up the great work man!
Thanks for the clarity
The bigger issue is small mom and pop like you said, or flippers.
invitational Homes (Blackstone), Monarch, VesterHomes, Tricon Residential, Progress Residential, American Homes 4 Rent (JP Morgan), and they use Blackrock or Pretuim Partners to fund, or Arrived Homes (backed by Amazon), which treats shelter like a stock option, offering shares of rentals. Further proving they have no intention of releasing that home to the market for sale, meaning the rental options remain high and the real estate for sale remains low.
Man, those institutional investors buying up the sunbelt will be in for a RUDE awakening in 10-15 years when those homes plummet in value because the pavement outside is melting in the summer.
The american dream is tied to home ownership, irregardless of who is buying up the houses, the lack of private property ownership is a massive problem with the country.
This topic is a constant pet peeve of mine. I get asked about it a LOT too because of the nature of my content. Might need to make my own explainer video soon 😅
Larry watches your videos and now he starts buying European castles... Is that fair?
@@Danji_Coppersmoke 🤔 that's fair
If your making your own version of this video, I'm wondering if you changed it from single family homes to residential properties (including apartments) how much that would change the numbers
@@Gronmin it would change it a lot, but I think it's a lot more logical for institutional investors to own things like apartment buildings
I live in the DFW area and some company came into the area in the 20 teens with better than a billion dollars buying something like 15,000 single family homes doubling that price of lower income homes. Before they came in a couple who both worked full time nearly minimum wage jobs could have bought a house. Afterwards you needed at least a combined $30 an hour full time jobs. Me as a single person just making $30 an hour just was barley able to qualify to get an expensive loan that I refide two years later for far better terms.
Why billion dollar companies did this is beyond me as the operating costs are really high and profits are very low as operating single family home rentals are extremely time consuming that's why most people who do it own less than a dozen homes.
15,000 homes in the area? Thats like a fifth of all the homes the largest corp in the field owns across all of America! where do you live. Whats the corp name?
@@WHATISUTUBE Looking for more investment opportunities, landleech?
@@scottandrews947 Dont forget to pay your rent on time😉
@@WHATISUTUBE I'm a homeowner.
But your comment confirms that you're a slumlord who's just virtue signaling here.
Why are all of you landleeches the same?
Understood, thank you. The one caveat I have is that based on the retail sector a change in behavior by 10% of the actors in the market, whether by choice or government mandate, has an outsized multiplicative effect on pricing.
Love the channel!
I appreciate your less sensational takes.
With a topic as nuanced and complicated as housing for a nation, saying 'its the corporations' fault' always felt a little too simple. It's a multi-faceted issue exacerbated by several factors
I trust my eyes. I was looking for a home over the last year. First time home buyer in a medium size city. I had to out bit PE for my home, I saw many properties bought just to rend.
As you said, your eyes can only see a tiny tiny fraction of the real situation, do people/homes in other states/cities/counties not count just because you're just minding your own business?
That's... Wow. I'm a little mindblown. You flipped my entire economic viewpoint. Thank you.
God I love this channel. Informative as always and I love Richard's sense of humor.
This Plain Bagel episode sponsored by Black Rock 😮
Or is it Blackstone?🤔
Or Black Water.
@@privacylock855 Black... Mamba?
@@emeraed The Black mambe is m
favorite 'two Stepper'
The measurement of corporate home ownership shouldn't based on all homes in US, but only homes currently for sale. They are certainly a much bigger influence in competing with available housing stock.
We highlighted how much transaction volume they accounted for though…
Keep spreading helpful info
Great video as always.
Government needs to poison pill this and tax the living daylights out of any one person or entity who owns more than 1 or 2 single family homes. It's the only way to bring immediate affordability to working class people. Deflation isn't coming fast enough with the rate increases!!!
A fucking men. And not to any "one" individual but any family unit. I can just see a family where every brother and sister under 19 owns a house.
Government is what caused the issue. Regulations and zoning laws have driven up prices considerably.
@@sebastianlucas704 That's a myth, find me the zoning laws, I live in the South, and we have almost none compared to the North!
Thanks for the great video!
You probably wont see this comment, but have you ever thought of doing a "How property is valued(Residential and commercial)" explainer video, similar to your DCF/Stock multiples video?
I know its technically out of your wheelhouse, but you have a good way of making starter education videos on financial topics.
Thank you, this was helpful. :)
The Legend is back !
It seems like all the hype of rental properties for passive income drove a lot of this. And while higher interest rates decreases demand, it won't increase supply because they want to keep there low interest rates. I wonder what the actual tipping point will be to get prices back to "normal".
They want a bond with the returns of stocks and think a rent slave is the answer.
Next year, corporate interest rates are set for 3 years and then float, so the vast majority of these speculative homes will have a huge debt burden increase in 2024, because they were bought in 2020/21. The market has already leveled off and is dropping 5-15% in areas, maybe due to this effect kicking in. I think next year will be when most markets in the US normalize. I expect my house I bought in '18 for 203k to be worth 245-260K (basically inflation) instead of the 325K it supposedly would sell for right now. There are areas of strong economic growth like texas that might take longer to normalize due to demand pressure.
Sure, large corporations might not be AS much as claimed, but how about every airbnb investor with 5-6 different properties? I always get into this discussion where the wonks care about semantics but regular people, don't care who...but they see the 'what'.
They didn’t disrupt the hotel industry though.
The entire market isn't being flooded by rich airbnb folks. They are just flashy and yet another villain to get the spotlight.
Pretty much anything that people claim "is caused by THIS PERSON\COMPANY" is oversimplifying. They are always factors but more like cogs in a big machine instead of masterminds.
The percentage of people who own multiple homes is low. The percentage of total homes those people own is far higher. Airbnb or not, the mom and pop landlord story is largely misdirection.
it is the 50+ demographic. not corps.
We are so in lack of nuance. Thanks for the clarification Richard!👍
He kind of mentioned it briefly this video. But there are more than twice the amount of people there was in 1980 who are ready to buy a starter home and no one is building them.
Real Estate as an investment vehicle has been a problem for first time home buyers for decades, well before the private equity players came in, although it is still a bad sign.
Because in the past people bought homes and were happy to sell them at a loss?
Houses are just plain expensive.
It's been a problem because of supply issues. If there was no way for the government to print more US Dollars while demand is growing people would hold cash as an investment. But that's not how currency works. But tangible assets could work that way like housing, gold, silver etc when you have a lot of demand, slow supply/no supply and a lot of inflation/money printing this unfortunately becomes the outcome. It'll take years of high interest rates and homebuilding to fix it.
Yes there have always been landlords throughout history, nothing new.
@eddenoy321
You’re thinking of warlords.
I blame AirBnb as the biggest factor. Yes there are plenty of other factors going on but AirBnb has artificially increased demand for housing by offering a new way of making income by using properties as a short-term rentals. Not everyone wants to buy and flip, or buy and rent out, they will buy a property and list as an AirBnb. So long is the profit is there, and more profitable than short term rentals, people will want to do it. This has added more demand to a market with no significant change in supply. These housing prices will be the new normal unless AirBnb is regulated away or new housing is built on-mass to make up the difference.
I'll keep watching this video to understand better. Thank you
Most of the people in my area who are buying houses aren’t large faceless corps but usually the local rich guy buying 7-8 homes to inflate his networth
God I love professionals give the smack down to people who aren't knowledgeable on things in their domain.
Typical Dunning-Kruger Effect.
Definitely important context added here, but also Vanguard, BlackRock and State Street are 3 of the top 5 share holders of Invitation Homes. I think thats the broader issue, they control the flow of capital.
It is getting too expensive to build for individuals. Which is why it plays right into the hands of the large investment companies and pushes individual owners out of the market. I believe Richard is sincere but misses the precedent being set here. The issue isn't one or two companies specifically but the broader trend of REITS, and other big companies getting all of the housing after a decade of this frenzy.
Did you watch the video? He accounts for their shareholding in the math and it still does not account for very much of the market. They are also both asset managers, their holdings are on behalf of the actual asset holders. He also suggested people watch his other video about Blackrock because of your exact misunderstanding
@@watareyoutalkingabout Semantics on where they are in the financial chain doesn't change the fact they control which companies are put into their funds and why. They control the flow of capital even if it's on behalf of asset holders. That is a ton of power and they certainly use it. ESG funds drop Tesla but keep Exxon for example. Also big banks own nearly all of the float of Invitation Homes. Even if the overall market is smaller right this minute the growth rate is going to accelerate as individuals get pushed out of the market. And just like every other industry in the past 30 years, it will mature and these 'smaller' companies like Invitation and American Homes 4 Rent will be bought by Blackstone and further consolidate.
You forgot to factor in the derivative markets. If there's massive defaults like 2008, who does the assets go to? The creditors. The creditors can choose to salvage their investments but if I can make money from other avenues, I'd choose to hold real estate assets in default long term and buy more foreclosures
Great video!