Comment by tptacek

I don't get how that hasn't had an effect on prices.

There's not enough houses on the market (zoning, and people want to keep their low-rate mortgages), there's people worried they can't afford houses (prices inflated faster than wages, rates went up), and a large amount of housing transactions (someone quoted 29% of starter homes) are being paid for by institutional investors (who can pay cash).

Wouldn't these institutional investors buying houses be "marginal consumers", kind of like the marginal producers who set the price of inelastic commodities such as oil? Seems like 29% of transactions is even more than marginal.

I assume that sellers would need to come down in price to what non-institutional buyers could afford if institutional buyers were removed from the equation.

As an aside, I'd rather see supply increased, but maybe demographics over the next decade or two will fix that problem anyways.

Manipulating markets by controlling liquidity while not holding a large percentage of the overall stock is a thing. The fact that you could juice trading volume by doing something stupid for no reason doesn’t make it a useless statistic for evaluating what is going on in a market (unless you’re alleging that institutional investors would do this, and I can’t see the motive). This isn’t some shitcoin whose creators are faking trading volume to appear on the leaderboards - it’s houses with deeds.

To be clear, I don’t think institutional real state investment is a substantial part of the reason housing prices are so high. I’m just trying to push whatever argument they were thinking of toward something quantifiable.