By Michael O’Connor
There are multiple theories as to why house prices continue to reach unfathomable heights.
One that gets a lot of airtime is the role of private equity firms in the market. The generally accepted narrative is that these funds come in, buy up all the available property supply and leave nothing for the rest of us. In reality, this effect is somewhat exaggerated.
It's always a crowd-pleaser when you blame surging housing prices on the big bad investment banks. After all, who doesn’t love to rally behind a ‘Vultures Out’ campaign. As much as I would love to burden them with most of the blame, the stats simply don’t back it up.
The share of total home sales that come from investor purchases has actually been in decline. In 2020, estimates showed that investors make up about 20 percent of housing sales.
Bear in mind that number is not just the share of institutional investors but anyone who isn’t just buying a house as their primary residence.
This 20% includes people purchasing second homes, vacation rentals, individual investment properties, and small investors flipping homes for profit.
In the US since 2011, the cumulative acquisitions from institutional investors has approached 400,000 single-family homes. This may seem like a lot, but with 83 million homes in the US, this represents less than half a percent of the market.
If we narrow our focus solely to the 16 million homes on the rental market, institutionally backed firms only own 2.5% of the market.
In reality, large investors make up just one to two percent of all single-family purchases, while other investors make up 18 to 19 percent.
The numbers show that most rentals are owned by small investors; your neighbours and friends.
To be clear, I agree that levies should be in place to prohibit bulk buying of properties, but simply using private equity firms as the scapegoat ignores the crux of the problem.
As masters of the dark arts of deflection, politicians are quick to point the finger. In reality, money supply, over-regulation, a distinct lack of planning, inadequate funding, and extended periods of undersupply post the Global Financial Crisis are the driving forces behind the current housing crisis but I guess it’s easier to fix the blame than fix the problem.
Where do prices go from here?
I expect home prices to grow more moderately in the coming years as more supply reaches the market, but this will take time. Those waiting for a considerable pullback could be left wanting.
Don’t expect housing to become affordable any time soon.
"If I had to guess, it’s going to be years until we see anything approaching a “normal” housing market. We simply didn’t build enough homes following the last housing crash to meet the demand coming from millennials reaching their household formation years" - Ben Carlson 'A Wealth of Common Sense'
Looking ahead, rising rates could slow things a bit if mortgage rates get high enough. With that said, the central banks are relatively boxed in. Interest rates are unlikely to skyrocket given the effect this would have on the service level of Government debt, but that’s for another day.
Remember, just because you think house prices should fall, doesn’t mean they will. The distinction is vital.
The waiting game hasn’t always paid off.
Top awards for innovative students
By Michelle Crean Killarney students proved that their projects can make a positive impact after being honoured at the Young Social Innovators of the Year Ireland (YSI) Awards. The five […]
By Michelle Crean
Killarney students proved that their projects can make a positive impact after being honoured at the Young Social Innovators of the Year Ireland (YSI) Awards.
The five members of ‘Operation Red’ in St Brigid’s Secondary School were celebrating this week after receiving a national Bronze Award for their project which is raising awareness about the lack of knowledge surrounding menstrual disorders. Their goal is to encourage open discussion on these issues, so no woman ever feels alone. The team will receive a prize bursary of €750, which can be put towards developing their idea and increasing the impact of their innovation.
Young Social Innovators is a non-profit organisation that believes in the power of youth. Its vision is to empower, equip and inspire young people to change the world for good. The girls’ project was one of 34 shortlisted from over 400 YSI groups around Ireland.
“As part of our project we’re in the process of developing resources for the SPHE classes in our school,” Transition Year student Anna Cashman told the Killarney Advertiser.
“We’ll try it here as a pilot project and branch out to other schools.”
She added that plans so far include educating students by putting an information booklet together using HSE and NHS advice.
“It’s important to have the right information as it’s a very under researched issue. We have had a positive response to it.”
Cait Fitzgerald Healy from YSI arrived to the school as a surprise to the group and presented the girls with their trophy towards the end of the online ceremony. There was huge excitement all round! Teacher and mentor Catherine O’Donoghue also received the ‘Let them Shine’ award for her involvement with YSI over the last five years.
MAKE OUR WORLD SAFER AWARD
Picking up the ‘Make Our World Safer Award’, a team from St Brendan’s College was recognised for its ‘One Punch Can Kill’ project, which aims to combat toxic masculinity and raise awareness amongst young men of the seriousness of ‘one punch attacks’.
When researching the issue, the team found that many perpetrators rarely reoffend and the percentage of male-on-male violence in society is extremely high. The group examined the route cause of the issue, which stems from a variety of factors, and wanted to raise awareness that spontaneous and random ‘one punch attacks’ can have serious and life-changing consequences.
Amongst its many actions, the team embarked on media outreach, designed and delivered student workshops, created a poster campaign, held an Anti Violence Week and is currently working on a children’s book in an effort to promote the important message that ‘One Punch Can Kill’.
Pres footballers are in seventh heaven
The St Brigid’s Presentation Second Year footballers were crowned County Junior B champions on Friday last following a superb seven-goal victory over Mercy Mounthawk Tralee in the Ballymac sunshine.
The girls hit the ground running, bagging two quick goals from the boots of Lily O’Shaughnessy and Niamh Cantillon.
The Pres defence was solid and dogged throughout and managed to keep Mounthawk from breaching their goal for the duration. Abby Cronin scored three goals and a point to torment the oppostion and Niamh Cantillon scored a second goal plus a point to keep the Killarney school well in front.
Further scores from Muireann Healy and a final goal from Lara O’Neill gave us a final score of 7-4 to 0-11.
It was an excellent performance from the entire team, including the substitutes who all played their part. Captain Eve Culhane proudly accepted the cup on behalf of the team, and St Brigid’s, at the end of the game and joyous celebrations followed.
Congratulations to all the players and to their trainers: Mr Counihan, Ms Healy and Ms Brosnan.
Top awards for innovative students
By Michelle Crean Killarney students proved that their projects can make a positive impact after being honoured at the Young...
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