20+ year resident of Austin here. I skimmed the article so maybe I missed it, but one thing that is lacking is the actions of private equity real estate purchases. During 2021/2022 (I'm not sure exactly the start/stop of the window) house values went up 50%+ here, and rent went up correspondingly. At the time, P.E. first were responsible for 40% of all home purchases.
I just had a look at zillow, as imperfect as that is, it estimated my home value in Jan 2020 at $882K. It shot up during covid and peaked in May 2022 at $1.7M. It is now $1.2M. Anyway, the point is I think the private equity buying spree was also responsible for much of the run-up, which has since cooled off somewhat.
It's reasonable to wonder how rents and home values doubled over a few years when the population didn't.
It wasn't PE directly buying houses that falsely inflated housing costs, but how they laundered their collusion through software to manipulate the availability of housing across the nation and manufacture demand for property, with global effects. They just set themselves up to massively profit.
PE-backed rental price fixing software allowed a handful of property management companies to control up to 80% of all multi-family dwellings in the nation. They were able to make their repayment obligations by setting non-negotiable rents despite massively warehousing apartments (some areas were maintaining as low as 75% occupancy rates, far below the historical 95% failure threshold).
If you can't increase the population, just artificially shrink the housing supply. And when rental prices are determined by median house prices, and house prices are based on the affordability of rentals... the feedback loop should be apparent.
> It's reasonable to wonder how rents and home values doubled over a few years when the population didn't.
Is it a mystery? As I understand it, more people want to live in the same few places (where jobs are or are otherwise desirable). There are huge parts of the country where real estate is cheaper than ever.
Are you implying that this somehow explains the full price? Those same few places are also the best places to buy investment properties, and this fake demand (not buying to live there) increases prices too, and this impact could be huge.
10+ year resident of Vancouver (the Canadian one, eh) here. Saw a similar increase in both Van and Dallas during that time period, knew something fishy was going now.
Now we know it was a coordinated attack on all housing and equity using drug money. I still can't figure out if I should marvel at the events that have transpired or be scared shitless of the things to come. Guess we will figure out soon enough.
Zillow themselves were buying a lot of property that they planned to rent them or flip. They reversed course on that and ended up selling them all off.
Neither. They do cross-promote a company, Opendoor, that does flipping, but Zillow's main goal is trying to replace realtors (or, rather, REALTOR®s, because the term is a trademark that wormed its way into people thinking of it as a business category).
I just had a look at zillow, as imperfect as that is, it estimated my home value in Jan 2020 at $882K. It shot up during covid and peaked in May 2022 at $1.7M. It is now $1.2M. Anyway, the point is I think the private equity buying spree was also responsible for much of the run-up, which has since cooled off somewhat.