On the subject of corporate buying of housing

So, why have the corporates gone to buy houses?

QE.

What’s the point of QE? To lower the long term risk free interest rate. Therefore people must, in pursuit of income and yield, move out along the risk curve.

So, why do corporate buyers invest in housing? They’ve moved out along the risk curve in search of yield.

QE works that is….and if you want to stop it then stop QE and allow the risk free interest rate to rise.

6 thoughts on “On the subject of corporate buying of housing”

  1. Perhaps income from rents, sheltered by depreciation, attracts some corporate buyers in search of yield, but isn’t the realization that the more demand there is for housing the more local governments resist allowing more housing, so if supply remains constrained while demand grows it would appear to provide some opportunities for appreciation.

  2. CITIZENS!
    ATTENTION!
    WE WILL FREE YOU FROM THE BURDEN OF A MORTGAGE!
    ALL YOU WILL HAVE TO DO TO FIND SHELTER IS PAY RENT TO US, FOREVER!
    YOU WILL OWN NOTHING AND YOU WILL BE HAPPY!
    WE WILL BUILD BACK BETTER!

  3. BlackRock aren’t buying houses for their own book; they’re buying them and bundling them up, then allowing investors to buy into them.

  4. In some touristy areas investors are buying luxury homes and then selling partial interests in them good for so many days a year much like a timeshare.

  5. Yes, QE in the sense that inflating the money supply (no matter how fancily) will cause inflation. Add to that governments helicoptering money onto economies they’ve just trashed, and well, rampant inflation.

    What do you do when you have money that is going to become worth less (worthless?)? You buy assets that will retain value to exchange for the revalued currency later.

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