Good riddance, I hope this company burns to the ground
The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right
Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses
As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in my area, I cannot help but have tears of joy when corporations who hope to profit off of our desperate housing situation get hit by reality straight in the face
Ask yourself who benefits from housing prices rising. If you lie to yourself that it's people who are trying to move up the housing ladder, remember that your flat appreciating 50% in 2 years means the house you want to move into by selling your flat also appreciates 50%, so you win nothing
It's the rent seeking leeches of society that think that by buying a "portfolio" of houses, they can live out their lives without contributing society in any way
Anyone arguing against this has either a dog in the race, or loose screws in the head
> It's the rent seeking leeches of society that think that by buying a "portfolio" of houses, they can live out their lives without contributing society in any way
What implication am I supposed to take from this? Everyone has must contribute meaningfully to society or they're shit?
> Anyone arguing against this has either a dog in the race, or loose screws in the head
So if I don't already agree with you, I'm either lying for finical gain, or insane? Rough options... :(
So am I allowed to 'rent seek' if I also contribute? Or is 'rent seeking' so bad, merely contributing isn't enough? Is there an amount of rent seeking that's ok? Or is any amount of rent seeking egregious enough to get you on the shit list?
I think you're confusing the common meaning of rent for "rent seeking"[1] which, in economics, means specifically getting more resources in return for nothing. It's a pejorative definition.
Getting paid for a service is not rent seeking in the way people are using it here.
I actually didn't know about the pejorative nature of 'rent seeking', so genuine thanks for the link! IMO I didn't need to either, knowing the commonalty doesn't change the intent I was going for. Even if you're seeking rent above the break even point. I'd still say that's amoral at it it's worse ethically speaking. I mean to expose the hyperbole of the assertion that wanting to wake profit in of itself doesn't make you a leach. Manipulating the market, coercing a negative sum game (accepting a loss to force out competition because you can expend the resources). These are the immoral things people do. Pretending that, just owning property and having them gall to dare to not rent it at or below cost is what's immoral or unethical is harmful to persuading anyone currently undecided, that there are real harms with allowing malicious parties to abuse their capital to prevent others from even playing the game. Which is where the majority of the harms originate from. You dont win hearts and minds by lying about how the game is unfair, and anyone who dares to play is immoral. That's obviously untrue. The people that are cheating, or abusing the rules are what's unfair. And without the majority consensus we'll never be able to fix the defects in the rules.
Again, I think you're mistaking what people are saying.
> Pretending that, just owning property and having them gall to dare to not rent it at or below cost is what's immoral or unethical is harmful to persuading anyone currently undecided[...]
This is not what people are critiquing. No one else is talking about the thing you are. They are expressing their own moral judgements about a certain category of economic activity. That's why I linked you to a definition of "rent seeking." Economics does not make a moral judgement about rent seeking - it just says systems of exchange are more efficient w/o it.
Not everyone agrees on where to draw the line between productive business and rent seeking - but when someone speaks about businesses or owners "seeking rents" they are specifically talking about a proportion of their business that is past the point of making things worthwhile for them and into the range of excess. The definition of a "rent" in this context is that the business owner would make a reasonable profit without it. If they need to charge as much as they do to break even, it is not a rent (with some exceptions[1]).
There is another conversation all together that happens outside economics about how we should organize our society. The 'left' side of that conversation often includes the ideas that all landlords are bad or that profiting from property you own w/o labor is bad. Those are all ideas we could also talk about but they are orthogonal to the economic discussion. Economics cannot tell you what system of ownership is moral and morality cannot tell you what economic systems are stable.
[1] If an owner makes a bad investment and, say, buys a building at the peak of valuation, and then tries to pass on their bad investment to their tenants an an unethical way, that could be considered a "rent" in the economic sense as they are tying to get income on an unfair value of the building.
I think the point is that there is a structural issue with renting housing, in that most people who rent do not do so for the convenience of renting, but because they cannot afford to purchase. This creates a naturally exploitative relationship between the landlord and renter - the former is not providing a good (e.g. convenience) to the latter, they are holding the good (the housing) and then using the wealth asymmetry to extract rent.
Lending money endures risk. Landlords do have some risk but in the current supply side limited housing market the risk is drastically lower than the typical returns. e.g the bond market is probably a lot closer to the market equilibrium than the housing market. There are no NIMBYs in the bond market.
> If you lie to yourself that it's people who are trying to move up the housing ladder, remember that your flat appreciating 50% in 2 years means the house you want to move into by selling your flat also appreciates 50%, so you win nothing
I think that is a little myopic.
Older buyers that are downsizing can make an excess profit in that situation. Although perhaps if excess numbers are downsizing to the same retirement homes, then maybe the retirement home owners win instead.
Also if you have a second investment property, you are definitely winning.
Finally, as house prices go up, you do end up with more equity (perhaps way more equity because a mortgage is geared lending). More equity can make a huge difference if you have any economic shocks, or if you care about passing on your equity to your children. Let’s say you have 10% equity in a $500k home, which then appreciates to $1M. If you die, you now have 550k equity, which is 11% house deposits for 5 children, or 27% deposits for each of two children. Not a bad trick.
I think a better way to think about it is that you need to own 1 house. If you don’t own a house, then you are shorting the housing market. If you own 2 then you are long the housing market. If you are a couple with kids, then you need to consider the chance of divorce (owning 1 home each is conservative, owning 1 home together is risky), and consider how much you want to give to your kids. Due to moral hazard I can’t see how you could insure against the risk of divorce.
> I think a better way to think about it is that you need to own 1 house. If you don’t own a house, then you are shorting the housing market. If you own 2 then you are long the housing market.
> Because they would outbid people who actually want to live in those homes
If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P
Buying things you think are underpriced and reselling them is not frontrunning. (Ever since GME, a lot of people learned the word frontrunning and started using it in every possible situation.)
Zillow's plan was to act as a market maker. Market makers make a profit by buying things and then reselling them for slightly more. The difference is called the spread, and it's how market makers make money. Another example of a market makers is used car dealerships. Despite maybe seeming like a useless middleman, the reason market makers can exist is because they provide a valuable service to the buyer and the seller. They provide liquidity: you can go to a used car dealership and buy or sell a car today, instead of having to find someone to trade with directly. (If finding someone without a middleman were just as easy, the buyer and the seller would both benefit from just trading with each other directly. But they don't, which indicates that used car dealerships are actually providing a useful service.)
Zillow wanted to be a market maker for homes. They have a lot of data and thought they could use it to find homes that were underpriced, make a cash offer (benefiting the purchaser by giving them more liquidity via the faster sale), then quickly resell it. Their pricing algorithm didn't work, though, and they lost money. C'est la vie.
The key is that market makers are doing large volumes at very small margins. The market maker just needs to guess the market movement direction for the next interval of time (stocks would be sub second timescale, homes could be daily/weekly, etc.) then they can adjust what they buy and sell very slightly to profit from this spread.
If the spread is a large percentage of the assets value then it doesn't work as well and public perception is more negative. The housing market is much more difficult to properly become a market maker in because the transaction costs are high. The seller's realtor is going to want their >=3% commission. There's other costs like title transfer fee/cost, inspections, etc.
Also scalping is typically more of product's that are impossible to otherwise obtain and are sold at a huge premium.
I think Zillow frequently tried to make the seller cover these costs (whether directly or via a lower offer amount) but it seems they didn't do this successfully. It's also possible that the seller's who accepted Zillow's offer tended to have some X factor that would make their house more difficult to sell but properly handling every possible X factor is very difficult.
But the whole point is that the entertainer doesn't want liquidity, they want illiquidity, for two reasons:
1. The marketing value of a ticket being impossible to obtain. The best way to do this is to sell the ticket below the market clearing price. Then you get rows of people sleeping before the day they go on sale, etc. A lot of people want that image as they believe long term the marketing will generate more revenue.
2. They want fanatical fans rather than rich fans. They may feed off the worship or cheering and want those who go through a lot of hoops to get the tickets, rather than a salesman using the company expense account to wine some client who might not throw their bras on the stage or paint their face green and scream for their team. In this sense, you can think of the money the entertainer gives up by selling below market as the purchase price of audience enthusiasm.
Now if the scalper steps in, and instead of having the underwear tosser you get the businessman, then many entertainers/performers would be pretty upset as the scalper took for themselves the enthusiasm payment and left the entertainer with the market-rate fans.
Scalpers provide liquidity to producers of goods in markets that don't need additional liquidity. For the consumers, he does not provide any liquidity at all. So effectively, scalpers do not provide any "effective" liquidity.
Scalpers always buy stuff where there is already high organic demand from actual end users, because scalping only works if demand outstrips supply. This demand is the liquidity the producer of the stuff needs, and it's already sufficient for them to sell all their inventory quickly, so the scalper obviously does not provide any useful service to the producer.
For the buyers, they act as a seller, but for each item they offer, the original producer has one less to offer, as the scalper has bought it from the original producer. Therefore, they provide exactly no additional liquidity for the end user.
The only thing they do is ratchet up prices and reduce customer service levels (the original producer or an actual, professional reseller will most likely offer better customer services than some random guy on eBay), which are both net negatives for everyone but the scalper.
Aha, I was thinking of scalpers like the guy outside the stadium buying and selling tickets from fans, creating a secondary market. I can see how a scalper who swoops in and buys up the original tickets is not doing that.
I don't know how to frame this in economic terms, but here's an observation. It's no easier buying a GPU from a scalper on eBay than it is buying that GPU from Bestbuy. In fact, it's probably harder. So, they seem to be making it harder to obtain the item.
>If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P
The same set of people who would move their price points up after a few months and get larger mortgages. This worked for all of 2020 and most of 2021 and only the past quarter did it fail as a strategy.
>Buying things you think are underpriced and reselling them is not frontrunning. (Ever since GME, a lot of people learned the word frontrunning and started using it in every possible situation.)
You're missing that this is Zillow, not a neutral market actor. They have unique information about demand for houses and even get to influence prices upward through Zestimates.
> They have unique information about demand for houses and even get to influence prices upward through Zestimates.
And that's the same shit booking.com tried to pull, that got them in trouble with the EU market authority. (If I remember correctly.)
The trading department should be separate from the affiliate department. Otherwise it's LIBOR scandal all over again. :|
> The same set of people who would move their price points up after a few months and get larger mortgages. This worked for all of 2020 and most of 2021 and only the past quarter did it fail as a strategy.
If they have a few months. Sitting on empty houses is not free.
Though the whole problem with Zillow seems to be that they disrupt the local markets, because due to their sheer volume they effectively corner each local market where they operate, which makes them able to set prices.
(But then why have they stopped? Probably they realized they'd need more money to do that effectively, or that they'd get a huge asswhoop eventually. Or that they were unable to hedge their risks.)
> If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P
I mean, exactly - they lost $550 million. Didn't stop them from burning massive capital reserves to outbid tons of people and fuck up the market a bit for them on a bad bet.
So they basically gave $550 million to UMC homeowners by overpaying for houses, while making it slightly harder for other UMC wanna-be homeowners to buy homes for a couple months. Not the worst outcome I can imagine
Framing Zillow v residential buyers as some efficient market where Zillow is
competing like anyone else and not only that, providing critical liquidity via DMM capabilities (designated market maker) is absurd on multiple levels.
DMMs operate on exchanges with membership licenses and a galaxy of exchange regulations, especially around price moves. Zillow and the open real estate market has none of that. Similarly, a DMM would not outbid and market capture the way Zillow does. Another one you wouldn’t see on an exchange with DMMs is the army of debt financing behind Zillow vs what’s behind retail purchasers. Explaining beyond that how framing Zillow as a DMM is a cherrypicked approach with no basis in real estate market reality is not worth the time. It’s really a nothingburger of an approach that comes off as a quote from a Rand book.
At its core, a DMM provides liquidity. Zillow buying real estate, taking it off the market for a month to renovate and flip at a higher price, is not that.
> Despite maybe seeming like a useless middleman, the reason market makers can exist is because they provide a valuable service to the buyer and the seller.
Well, and also because it's illegal in some states to buy directly from a car manufacturer, so you're forced to go to a dealership whether they provide value or not.
Would eBay and Amazon be considered market makers, as they pair up buyers and sellers?
I don't think so. Market makers normally buy before having a specific seller in mind. I think eBay and Amazon's 3rd party sellers transact directly to customers, and just pay those sites a cut of each sale. eBay only is able to charge that fee (really, it's an economic rent) due to a monopoly enforced by network effects. A classic market failure. (I'm not as sure about Amazon but I wouldn't be surprised if a similar effect was at play.)
New car dealerships really don't many any sense and regulated into existence haha. I was referring to used car dealerships
You're not forced to buy a car from a dealer; manufacturers are forced to sell new cars through dealers in order to guarantee owners have somewhere to go for service and parts.
Back in the early days of the auto industry car companies sometimes existed just long enough to sell some crappy cars and fold before angry customers with defective cars came calling.
That's why the laws around manufacturers having dealers exist, no matter what Elon Musk tells you.
Ever notice that bodywork, parts, and repairs for Teslas are very expensive and difficult to come by? Plenty of Teslas with relatively minor body damage end up in limbo for months or more even though the insurance company is ready to pay for repairs. Why? Tesla's bodyshops have long backlogs because there are no parts, because Musk is desperate to get as many cars out of his factory as he can.
Lots of Teslas also get totaled because Tesla charges outrageous pricing for replacement parts. Musk is exploiting the insurance industry.
Insult to injury is that Tesla can decide one day that your vehicle is too damaged for their tastes, and refuse to sell you parts. No other manufacturer does that, not even Ferrari, and that's really saying something.
How would forcing new car sales to go through dealerships prevent Tesla from making its parts rare and expensive? Wouldn't all Tesla parts come from Tesla anyways, and just go through the chain Tesla->dealership->consumer, instead of Tesla->consumer?
(In case it's not clear, I'm legitimately curious and know basically nothing about dealerships.)
>If they outbid everyone who actually wanted to live there, who were they planning to sell to?
other investors. housing is only "underpriced" because it's become a commodity market that investors play in. the people who want to live in the houses have no hope of affording them when they have to compete with all the various capital funds that are buying houses and hoping to flip them to other capital funds using a slightly different algorithm to calculate value.
Your thinking is that there is a hierarchy of capital funds, each one willing to pay more than the last for the same house? And they all hold the houses, pay property tax, etc. despite the houses never generating any revenue due to no one living in them? That doesn't seem like a very realistic perspective on the housing market
Why would other investors buy an overpriced home? They are also looking for the deals that Zillow is hoping to find. Owners wanting to live in a home are the ones willing to buy a turnkey home above asking.
So if the previous owners moved out and then repainted the house and sold it for 20% additional value, would they be villains too? Or is it okay because they're "middle class" and Zillow's shareholders presumably are just yacht-owning billionaires?
I think there’s a difference between a company with enormous amounts of capital buying a bunch of houses to flip, intentionally trying to drive a trend of increasing home prices to profit, and a single homeowner improving a single house and profiting primarily because of the improvements and not because he’s driving the market up massively..
Zillow wasn’t fixing them up, though. They were putting minimal-effort, superficial changes with zero care or actual investment, and then resisting for a higher price.
People who flip houses don't put in more money than they need to, that's a tautology. It still adds value to the market.
"Scalping" makes zero sense in this context. Scalping exploits ticket mispricing and asymmetrical access to the market (waiting in line). Houses are bought at auction; you can't "scalp" at an auction. Try it at Christie's sometime.
To further your auction analogy, Zillow was doing the equivalent of offering Buy it Now prices above asking and owners were selling immediately. They had asymmetrical access to the market because they had asymmetrical capital.
They were literally scalping properties. And, like a scalper who has too much inventory, they’re now selling at a loss.
The first part of this is correct; the second part isn't. Rather than earning a profit, Zillow's current situation is the result of the invisible hand of the market correcting its economically-irrational behavior.
Real pain would be buying an overpriced house that was bid up by Zillow or other similar companies and then needing to move. Missing out on that overpriced sale would actually be great!
Which is going to be a lot better for the middle class in the area then the situation pre-Zillow iBuyer (given the massive discounts). Zillow was a net-positive at least for the Phoenix market.
I take issue with the cheap flips. This type of flipping is really only possible in a hot market where inspection contingencies are regularly waved. Cheap flips are basically robbing the community by lowering the quality of the housing stock and leaving future owners with higher maintenance costs. In a more balanced market, these houses would either drop in price or linger on the market until the owner did worthwhile improvements.
Granted plenty of mom and pop flippers are doing cheap flips in this market as well. Zillow was just jumping in on the action at a much larger scale. But if I was king for a day, I think I would pass a law that required inspection contingencies on all residential real estate transactions. And maybe some sort of escrow for undisclosed maintenance issues that occur in the first year or two after the sale.
It's actually even worse; a fresh coat of paint can truly hide actual problems. I've had that experience house shopping myself. I tended to shy away from places that smelled like paint, even though often they're painted for "good" reasons.
Hell, just last weekend I read a home inspection that specifically cited inability to assess interior and exterior wall cracking due to recent paint.
In defense of Zillow, they weren't looking to buy a "portfolio" of houses - they bought as many as they sold, and didn't have any net negative effect on housing supply.
Yes, they're profiting off of a bad situation, but they're not the cause of it. Bev from the local council's planning department, as well as Michael Caton's horrific propaganda piece, has done more damage than every flipper combined.
I'm not saying Z is the cause of the crisis, it's more like them trying to capitalize on it. How bad you view this is based on your political quadrant, so fair enough to those who don't think it's a problem.
What I'm trying to bring attention to is that our generation is frustrated, we are priced out of owning a home unless we have some massive help from our parents or inheritance, and being repeatedly told that we will own nothing and it is for our own good is demoralizing.
There might be a sizeable portion of people who do have help from their family of putting down massive six figure deposits or are up on their luck from investments, but I still think it's important to bring attention to the housing crisis for those of us who haven't had the same sort of luck.
>What I'm trying to bring attention to is that our generation is frustrated, we are priced out of owning a home unless we have some massive help from our parents or inheritance, and being repeatedly told that we will own nothing and it is for our own good is demoralizing.
I don't disagree with you, and I'm in the same boat personally (young family currently renting, looks like we'll be able to afford a house but only because one of our businesses has taken off in a massive way).
I just feel like we as a generation, when expressing our frustration, obsess over who has what rather than the systemic obsctacles getting in the way of us gaining a stake in society.
Screaming at people who have more than us is cathartic, but ultimately achieves nothing. We need to refocus our efforts towards solutions that are achievable and impactful.
I never advocated for a "pacifist approach", but if we want housing to be affordable we need to pick the right battles.
Advocating for things like tax reform, financial restrictions which limit the utility of residential property as an investment vehicle, incentives for empty nesters to downsize, less restrictions on property development, or even high-speed rail between metro areas and regional hubs will all put downwards pressure on property prices.
The "own nothing" wouldn't be so bad if there were massive reasonably priced rental units being built, but that's not a thing either. NIMBYism is killing rental too.
"own nothing" may be good in a competitive market with lots of small players that can't feasibly fix prices and engage in cartels. Reality has not been like that. At least where my sight reaches, every commodity our days is engaged in cartels and (somewhat) regulated.
No, not at all. They were trying to set themselves up as a market maker. They did not want to hold a position. They screwed up and got behind, which incurred the risk of the market moving against them (it did).
Matt Levine's Money Stuff column covered this in detail. Incompetence, not villainy.
Zillow was literally scalping housing, a basic human need that all people must buy. That's generally considered very immoral by most reasonable people. And they didn't just do it once or twice, they did it at ridiculous scale (tens of thousands of homes sold last quarter, was a sale to a scalper to artificially drive up all housing prices).
Most reasonable people would consider this behaviour to be evil (like, comic-book-villain level evil). Even scalping a optional-only luxury item like concert tickets or whatever is already considered unethical by most folks.
I don't consider it evil. When you buy a house, fix it up, and resell it, you're essentially providing a renovation service to whoever will buy it next. There's no meaningful difference between you renovating a house and selling it and an owner-occupant buying the house and renovating it themselves.
In this case, Zillow bought houses too high and sold them too low. As a result, the market punished that irrational behavior.
If there's no difference then there'd be no profit for Zillow and they wouldn't be doing this to begin with. Clearly there's a difference and it's morally bankrupt
That would make sense if Zillow employees were literally the people painting the walls. As it is (or was), there's probably a project manager that managed hundreds of houses, spends all day on the phone call painting companies, and then just assumes they do a good job. I'm perfectly capable of calling a painting company myself and don't need to pay Zillow thousands of dollars extra to do it for me.
The integration of renovation in the sales process is a differentiating factor in itself. That you're not the target market or, that it might not have been successful, doesn't change that.
>Zillow was literally scalping housing [...]. That's generally considered very immoral by most reasonable people.
sorry, what were they doing?
Scalping may also refer to:
Scalping (trading), in trading securities and commodities either a fraudulent form of market manipulation or a legitimate form of arbitrage
Ticket resale, the resale of tickets to a public event such as a concert or sporting event
The arbitrage definition under "Scalping (trading)" (ie. making money off the bid/ask spread) doesn't seem very immoral to me. I don't think they were buying houses in an area, then recommending people to buy it, so it doesn't fall under the fraudulent definition. The "ticket resale" definition doesn't really fit, because zillow isn't really acquiring houses at below market value. They're buying houses from the same market as everyone else.
>a basic human need that all people must buy
you need to buy housing, not necessarily a house. They're not the same thing. You need to buy food to survive, but you don't necessarily to buy a farm.
>tens of thousands of homes sold last quarter, was a sale to a scalper to artificially drive up all housing prices
but the fact that they lost money suggests that they didn't drive up housing prices?
First of all, lots of people thinking something doesn't make it true. Verify yourself at your local church.
> Most reasonable people would consider this behaviour to be evil (like, comic-book-villain level evil).
This requires supporting evidence. Comic book villains do things like murdering half of all living things. Show me that study that says people think flipping houses is that bad.
I've met plenty of people who were flipping houses, and I'm pretty sure if most people thought it was on a par with comic book villainy, they would not just stand at a kids birthday party and talk about it.
Willingness is not necessarily, informed consent, and even that might be due to exogenous probabilistic predetermination.
So if we go by Rawlsian concepts: if it's not fair, it's immoral. If the market maker makes too much, then it's economic rent (due to rent-seeking behavior), which a lot of people consider immoral.
I don’t understand how it is rent seeking. They are actually improving the supply of housing by fixing them up.
How is it possible for the market-maker to make “too much” in a free competitive market? They don’t have any special capability that the average home buyer doesn’t have.
I really don’t understand the angle. Capitalism is all about selling 5 cent pencils for 10 cents.
It's more complicated than that since they also have a huge influence on prices through Zestimates. They undoubtably kept housing prices rising for the past few years, which was very profitable to them as large scale flippers.
More so than providing liquidity they are providing increased velocity. I would love to know if there are properties that Z has bought and sold more than once...
Would there be a bad situation if there was nobody profitting from it? Maybe there is a root cause, but Zillow is certainly one cause why this is so bad. Not the root one, but a cause still.
> buying a "portfolio" of houses, they can live out their lives without contributing society in any way
A lot of people want this. Its basic human nature ... take or construct the path of least resistance. Its just that most people cannot do this and only top 1% can.
The whole FIRE movement makes ppl aspire for the day when they can live on passive income from the savings/investments.
When we used to have a functional banking system, you could work your ass off, make your money, and simply put it in a savings account, or Certificate of Deposits (CDs), and make 4-8 percent interest while inflation was 2-3%. That money was reinvested locally as loans to local businesses.
The advent of free money to cover the insolvent institutions caught making stupid decisions, but managing to be "too big to fail", stole a lot of money from local economies, and my parents.
The thing with FIRE movement is more about escaping being forced to work soul sucking jobs, commuting, management, mindless boring tasks.... And it's not always easy to change fields, or change company, move city, ....
People that I know that are already FIREd or plan to don't actually intend not to work. They want to, but on things they actually enjoy. If there was UBI the FIRE movement would go significantly down because one of it's main goals would be achieved by default. Right now the only way to get those goals is with passive income from investments.
We have this one life, and wasting it is not the way to go. FIRE people don't want the riches or hoarding insanes amount of money for power trips with their buddies. Most are very frugal in fact, that's the only way to achieve FIRE in the firs place. They just want the freedom from forced work. That is the essence of the FIRE movement.
I think FIRE is mainly about not needing to work anymore. Passive or investment income isn’t the goal, just an (important) way to be done working earlier. E.g., in a hypothetical world where you only had interest-free savings accounts, you could still retire early, you’d just need to save more first.
Until Zillow starts whining about neighborhood character at city council meetings and donating to Howard Jarvis taxpayers association I couldn't care less what they do
Commenters calling your comment ‘myopic’ is the pot calling the kettle black. Their attitude exemplifies the problem of the commoditization of a fundamental human need. They sacrifice the long term health of the housing market for short term profit. It’s shameful and I expect better from people who so often claim to be educated and logical. Personally, I couldn’t live with myself if I sold perfectly good family housing to a corporation for convenience’s sake.
Note that the free market has ultimately punished these companies. On the other hand, the unaccountable councils and politicians are the ones creating the problem due to zoning an supply issues. As such, I think the outrage is a bit misdirected (as it often is).
Since I don't own any properties I must have some loose screws in my head as apparently only 2 options are available. :)
It must be this then that leaks some questions in my thoughts.
What if the money you buy the properties with is a result of your contributions?
Is there a decent and accessible way to have funds to buy such properties while not having to contribute first?
Let's say I've spent 20 years working 12 hours a day contributing about 4x the average productivity - would it be ok to buy properties and continue not contributing or should I be forced to continue contributing?
What is the optimal path to reap rewards of my contributions? Having taxpayers pay that money to me in a form of retirement is one way, but what if I paid 10x more taxes as a result of my contributions should 10 other people pool their taxes to pay my retiremenet to make it fair? Or will I get the same as those who worked half what I did?
I remember my father told me that in communism there were two options as well, you either had to contribute how you were told or else you were a parasite and put to jail. Seemed fair to many.
In 1920s Russia they mostly genocided them - this is not considered fair these days.
I guess the reason it seemed fair to many is that there is truth to the simplistic formulation of your feelings.
The best definition of evil I've ever heard was - "all evil is perverted good, and it is that aspect of the good which it retains that makes it attractive to many people"
Anyway, writing this as someone "without a dog in the race" what about your dogs in the race - you mentioned you were looking at properties right now?
> What if the money you buy the properties with is a result of your contributions?
This isn't math. Prior "good" contributions to society don't even out "bad" contributions, no matter how we define them. To put an extreme example, you're not allowed to steal from anyone no matter how many people you helped recover their money from scams.
> What is the optimal path to reap rewards of my contributions?
It's very easy: do not speculate with human rights. When you buy a house for "investment", you are adding demand to the market, pushing prices up. Housing is inelastic, specially in the short term, so you're probably driving someone that needed a place to live out of the market, just for what? To sell it later for a higher price, driving prices further up? To rent it to people that need a place to leave, making it so that they lose wealth to you instead of owning it?
There's no need to delve into deep philosophical discussions of what is right and wrong, what is fair and isn't, and what did the communists do. The discussion is simple: don't speculate with housing.
You're manipulative with words ... "bad" contributions is something that's not a part of this discussion and buying a property to rent is not a bad contribution only for people with contradicting also selfish interests (I want to buy myself a house cheaply) ... maybe that's why you see "no need in going into deep philosophical discussions". Human rights is a nice buzzword used very loosely and it tends to mean whatever the user considers useful to themself at that moment, I recommend reading some fundamental bills and know what's in it.
> "bad" contributions is something that's not a part of this discussion
It is, the GP said that renting is a leech and you said "but what if I buy the house with money from my contributions". If doing something is bad (however you define bad) for society, it is bad no matter how many good things you did before.
> buying a property to rent is not a bad contribution
A lot of people have already explained how it can be a bad contribution. People need houses to live, and that's not optional. By buying a house to rent you're taking it out of the market, maybe from a family that wanted it to live in it. That family might need to move to a different, cheaper place (possibly offsetting the housing discount with extra expenses in commuting and transport) or might need to rent and pay money to you instead of investing it in their house. If enough people do the same thing they'll drive prices up in an area, and because they need to recover the investment they'll also put high rent prices, because people need housing and will end up paying increasing rent prices when there's no other option.
> Human rights is a nice buzzword used very loosely and it tends to mean whatever the user considers useful to themself at that moment, I recommend reading some fundamental bills and know what's in it.
I'll just leave you with Article 25, Universal Declaration of Human Rights [1]: Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.
Well I sold my house in Massachusetts, moved to California, and bought a new one this year and I definitely think the extreme liquidity of housing made it much easier, plus without the equity I doubt I would have been able to afford it. But yes obviously it’s not favorable for anyone who doesn’t already own.
I do think there is a place for a service like this even in a less frothy market. Like a trade in for a car, there’s definitely some percentage of people willing to accept a deal that is not the top one if it means they can cash out faster and with less hassle.
You make a common mistake about leveraged bets here in your claim about "gaining nothing".
Suppose house prices evolve from price p0 to price p. The market gains (or loses) p/p0 in that period. If you get a mortgage, you're borrowing money to buy at p0; at any point in time with a price p and total repaid r your total value is given by (deposit + r + p) - p0. You're in negative equity if (deposit + r + p) < p0. You're in the money if p > p0, but note that this isn't multiplying your investment by the market gain. Instead, it's exposing you to the absolute change in price. So suppose (deposit + r) = 40k ; p0 = 145k ; p = 190k. You're in the money for 40k + 190k - 145k = 85k, having invested 40k (roi=2.1). p1/p0 = 1.3 (<2.1), with your leverage (mortgage) having bought you more exposure to house prices. You can then liquify and re-lever back into the housing market, with a larger loan due to you larger deposit (and likely increased income). Historically this has worked very well for people as p has tended to be larger than p0. It does not work well if you end up in negative equity.
Although I mostly agree with your point except it being unnecessary emotional, I want to bring your attention to the fact that for some people having enough money to buy a house means that they contributed to the society and was rewarded with this wealth for it.
I agree with you. Moments like these are a mask off moment for HN. The North Star of the community is to get rich quick, no matter the cost. Just look at the Who’s Hiring threads, and 90% of them are fly by night SaaS looking to make a quick buck.
I agree with you 100% except I don't think that people trying to buy some houses to maintain and rent out are the problem. Mainly these huge corporations, esp. things like Tesla, and Arms corporations, that for decades have leeched from the middle class and gov contracts. Our gov is captured, dems can't keep a positive rating after trump because they wont pass anything meaningful.
Come on. You talk about SV types not knowing what they are doing and then offer this up as an explanation?
Real estate is going up in value for the following reasons:
- Almost 2 decades of QE and cheap loans
- More people working from home
- Boomers leaving the workforce and cashing in their retirement
- People leaving high cost of living areas
- Foreign investment
There is no conspiracy. As these things pull back, and they will in the next 5+ years, things will soften. What Zillow was trying to do is something a bit different but it doesn't matter because they ultimately failed.
So? Flip yourself then. Buy a 2 family unit, renovate it while you live in one of the units, and then flip when you're done. Repeat a second time. Now you're set. All of this is folded into your mortgage. If you're not a capitalist, you're not going to have a good time since no one is going to break your doors down to save you.
And where do you suggest an average person gets the money to do this? A lot of people cannot even afford to buy a home for themselves, let alone a 2 family unit.
The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right
Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses
As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in my area, I cannot help but have tears of joy when corporations who hope to profit off of our desperate housing situation get hit by reality straight in the face
Ask yourself who benefits from housing prices rising. If you lie to yourself that it's people who are trying to move up the housing ladder, remember that your flat appreciating 50% in 2 years means the house you want to move into by selling your flat also appreciates 50%, so you win nothing
It's the rent seeking leeches of society that think that by buying a "portfolio" of houses, they can live out their lives without contributing society in any way
Anyone arguing against this has either a dog in the race, or loose screws in the head