Investor-owned housing emerging as key issue for metro Atlanta officials

[Beretta]

Mod note: this thread is no longer Atlanta centric. Moved to Real Estate.

[Lillie767]

Originally Posted by arjay57

Well, it seems kind of sad to see folks permanently consigned to the whims of the rental universe. Without ownership, they will always be subject to the man saying, "Sorry, the rent's going way up" or "Sorry, we're selling out next month and there's no place for you anymore."

When we started out we had nothing. But we finally scratched up the down payment on a little bungalow. It was in a part of town that wasn't considered so great at the time, and it needed a lot of work. But with elbow grease and working to make the community better, we finally built up a little equity. Then we were able to get a place that was a little nicer, and we kept building up from there.

Had we not been able to get a toehold, we might never have started the uphill climb.

"...subject to the man..."


Are you stuck in the 1970's?

[Lillie767]

Keynes had an interesting theory regarding rentiers. [Rentiers are people who live off their investments such as rents and interest. They do not directly create jobs or products; entrepreneurs provide provide these.]

"In the last chapter of his influential 1936 book The General Theory of Employment, Interest, and Money, Keynes concludes by inferring a number of lessons from his previous discussions. One of those lessons became famous for the phrase it contains, "the euthanasia of the rentier": the notion that once high interest rates become history due to expansionary monetary policy, the class of people who live off their savings will gradually and silently disappear. But why did Keynes advocate low interest rates in the first place, and embrace the annihilation of the rentier class which it would bring?

For Keynes, interest is a purely monetary phenomenon, determined on the market by the demand for, and the supply of, money. As such, it is divorced from people's ability to save and thus accumulate capital. Instead, interest is "the reward for parting with liquidity," equilibrating individuals' liquidity preference with the supply of money.

If this is true, it is quite easy to see why Keynes favored low interest rates. Whenever the economy falls below full employment, the monetary authority could simply increase the supply of money, and given that liquidity preferences stay constant, the interest rate would fall, thus stimulating private investment and bringing the economy back to full employment.1

What justification, then, could there be for people who live off high interest payments? None, according to Keynes. There should be no reason to tolerate the existence of people who contribute nothing to society and only "exploit the scarcity-value of capital." Armed with Keynes's theory, governments could lower the interest rate to zero, thus increasing “the volume of capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus.”

https://mises.org/wire/keynes-and-euthanasia-rentier

[Sunshine Rules]

The large REITs (real estate investment trust) have been active in FL for a number of years, buying up first single family homes and then, when homes became scarce on the market, condos and townhouses. Blackstone Group, one of the larger REITs working in our area, started snapping up homes back in 2012 and are still buying them today.

The REITs have been quite aggressive in both the Tampa Bay market and in my area, Sarasota - Bradenton - Venice. It's difficult for home buyers to compete against big investor buyers who come in with cash offers, usually with no contingencies or appraisals and quick closings. They started with the more affordable homes and have gradually moved up into the $400k+ range, including buying up new construction wherever HOA rules allow (and most builders allow investor buyers). By the way, they have also been buying up apartment buildings and mobile home parks.

As more and more homes have been converted to investor rentals, that has lead to less inventory of resale homes coming on the market for "regular" buyers, driving up the prices. People who may have put their homes on the market to move up or size down have put plans on hold because of fears of selling their properties and not being able to find affordable replacements. So even less inventory. Investors competing with other buyers for new construction lead to local builders halting normal sales. For quite awhile most went to monthly releases limited to a handful and buyers having to bid for the lots being released in order to build. Recently most area builders have switched to offering spec homes already under construction, with no option to select the lot, floor plan or upgrades.

As the inventory of homes for sale shrank over the months, would be buyers had to opt for rental properties instead, driving up rental rates to the point that local employers are complaining they can't recruit workers to our area because of housing costs.

From what I have been reading, this is going on all over the southeast. They are also buying up properties and whole subdivisions of new homes in Texas.

I read somewhere recently that REITs in the US now hold over $1 TRILLION in housing equity.


To combat investment buyers, a number of local subdivisions with HOAs have amended their deed restrictions to prevent rentals after purchase for 1 or 2 years. That does cut down on investor buyers, but as I mentioned above, the builders of new developments rarely exclude investor buyers and control of the HOAs won't be handed over to the residents until a specific number of homes have been built (in our area 90% is typical). Many of the investor purchases have been in non-deed restricted neighborhoods where rental restrictions don't exist. So investors continue to snap up local properties.

I wish there was a simple answer on how to stop the REITs but there is not. Perhaps the only way they will be stopped is if they destroy themselves from within, and if that happens it will unfortunately also have major impacts on the housing markets over much of the country.

[arjay57]

Originally Posted by Lillie767

"...subject to the man..."


Are you stuck in the 1970's?

More like the 60s.