[[{“value”:”No, as I argue in my latest Bloomberg column. This one is basic economics: The simpler point is this: If large financial firms can buy your home, you are better off. You will have more money to retire on, and presumably selling your home will be easier and quicker, removing what for many homeowners is
The post Is it a problem if Wall Street buys up homes? appeared first on Marginal REVOLUTION.”}]]
No, as I argue in my latest Bloomberg column. This one is basic economics:
The simpler point is this: If large financial firms can buy your home, you are better off. You will have more money to retire on, and presumably selling your home will be easier and quicker, removing what for many homeowners is a major source of stress.
And all of this makes it easier to buy a home in the first place, knowing you will have a straightforward set of exit options. You don’t have to worry about whether your buyer can get a mortgage. Homeowners tend to be forward-looking, and a home’s value as an investment is typically a major consideration in a purchase decision.
And:
When financial firms buy homes, they also tend to renovate and invest in fixing the places up.
A less obvious point is that lower-income groups can benefit when financial firms buy up homes. Obviously, if a hedge fund buys your home, no one at the fund is intending to live there; they probably plan to rent it out. The evidence shows that when institutional investors purchase housing, it leads to more rental inventory and lower rents.
If the tradeoff is higher prices to buy a home but lower prices to rent one, that will tend to favor lower-income groups. Think of it as a form of housing aid that does not cost the federal government anything. Economist Raj Chetty, in a series of now-famous papers with co-authors, has stressed the ability to move into a better neighborhood as a fundamental determinant of upward economic mobility. Lower rents can enable those improvements.
The article also show that the extent of financial firms buying homes is smaller than many people seem to believe.
The post Is it a problem if Wall Street buys up homes? appeared first on Marginal REVOLUTION.
Economics, Uncategorized
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