This doesn't make sense. Each wealthy family can only live in one house at a time. Yes, they might have multiple homes, but a billionaire having a luxury vacation home in Lake Tahoe or a penthouse in Manhattan are not the reason housing is unaffordable. The type of home a billionaire would buy would never be affordable anyway.
You assume they are buying homes to live in. I don't think that's a reasonable assumption. Maybe they buy real estate because it's a useful part of a portfolio. They can rent it or just sit on it and sell it later.
Renting it still increases the housing supply, someone can live there.
I doubt there is any significant amount of housing that is just bought and left vacant. Why would you do that? It’s a stupid and expensive place to park money. You have to pay taxes, possibly condo/co-op/HOA fees, pay someone to do maintenance and keep out squatters, pay transaction costs both buying and selling, it can’t be sold quickly.
Why would you do all that instead of just buying treasuries or some other liquid instrument that actually earns money?
There may be some of this from foreign investors that don’t have easy access to financial markets, but again, some Russian oligarch buying a $50M penthouse in Manhattan is not the reason an average 3 bed 2 bath suburban home is $700k. They are not remotely in the same market.
> I doubt there is any significant amount of housing that is just bought and left vacant. Why would you do that?
In high-demand areas property value often increases in value over time. You can literally “buy and hold” property, keeping it empty, doing nothing with it and expecting to sell it for a profit at some point in the future. It’s relatively safe and the rate of return can be significantly greater than inflation.
This ignores property taxes and costs of doing business of course. But there are also situations where you might want a reported tax loss on a profitable asset.
And zoning restrictions are part of the reason why housing prices "always go up." Constrained supply is exactly and precisely what makes housing a profitable investment.
One of many reasons. Supply is also constrained because people are buying it as an investment. It’s a feedback loop.
If I were extremely rich and had a lot of properties to rent in California, I’d look at relaxed zoning laws as an opportunity to buy even more properties.
Banks will not loan you money to put it into the S&P. The wealthy generate money by generating credit in part.
They definitely will. JP Morgan for example charges SOFR+1.85% for 10M+ accounts[0], which is better than the mortgage rate they offered me. Or depending on what you mean by wealthy, you might be able to afford having someone get you a better deal by trading on the markets (e.g. selling SPX box spreads) assuming you don't have the expertise to do that kind of thing yourself/aren't interested in doing your own wealth management.
[0] https://www.jpmorgan.com/wealth-management/wealth-partners/l...
Why would you borrow money and use it to buy a house and leave it vacant? Now you're paying interest on top of everything else. Do you think wealthy people just light money on fire for no reason?
You rent out or naturally. If most buildings in a given area are rented out. Then the owners have leverage on the renters.
If there are more buildings than people who want to live in them, then the owners have no leverage. They have to compete for renters. You make that happen by building more housing.
Bill Gates owns 275,000 acres in the USA. I doubt he's even gazed upon half of it. The billionaires aren't buying homes to live in like us proles, they're buying lots of finite land and water rights and such.
That is about .01% of the US land area, and I’m guessing it’s not downtown in major cities or other places that people want to live. It’s probably mostly undeveloped wilderness for conservation, right? That has zero effect on home prices.
There is no shortage of land in the US. There are huge, huge empty spaces. There is only a shortage of housing in places where people want to live because local governments won’t let anyone build new housing.
Edit: Looked this up, and Bill Gates owns farmland, which is producing food, so this also wouldn't be available for people to live on anyway.