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Originally Posted by jyl

I think institutional ownership of houses is bad.

Most Americans don’t have securities or a pension or lots of retirement savings; their house is their primary asset.

Houses are a good long term investment because you buy them with tons of leverage (for $20 down, you get $100 of house, if it goes up 10%, that’s 10% of $100 rather than 10% of $20).

The American system is designed to encourage home ownership; mortgages are fixed rate for 30 years, almost unheard of in other countries, and subsidized by the federal government through the various agencies that effectively fund and guarantee mortgages and through mortgage interest tax deduction plus basis increase for cost of improvements.

Buying a house is low risk because mortgages are non-recourse, you can walk away, not without consequences but the bank can’t come after you personally for the mortgage.

As a result, the home ownership rate in the US is much higher than most other Western countries, and that is a large part of household wealth and retirement security.

Big picture, almost all assets in the US are owned by the wealthiest Americans - the stock market, bond market, etc are almost entirely owned by the top few percent by wealth. Houses are the last major asset class that is still mostly owned by ordinary people.

For that last asset class to shift from ordinary people to the very wealthy, via institutional home ownership, will accelerate the wealth inequality and economic stress that is already way too high.

We’re only a little bit of the way there. Institutions still own only a small percent of houses in America. We can still stop it.

Personally I’d tax the crap out of institutional home fleets, and prevent them from using federally subsidized mortgages. “Institutional” to me means over 100 houses, maybe over 50.

So much truth here. Thank you.