The Human Action Podcast Are Private Equity Firms Really Driving Home Prices?
Sep 21, 2025
In a thought-provoking solo discussion, Bob debunks the narrative that private equity firms are solely to blame for rising home prices. He argues that speculators can stabilize markets instead of destabilizing them and critiques policies like land taxes. Bob emphasizes that zoning restrictions and the Federal Reserve's actions are significant factors behind soaring prices. He also explores the dynamics of investor buying and the myth that corporate landlords will eliminate home ownership. The conversation invites a deeper understanding of housing economics.
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Speculation Stabilizes Price Swings
- Speculative buyers dampen housing volatility by buying in troughs and selling in peaks, reducing amplitude of price swings.
- Successful speculators signal undervalued resources and improve allocation over time.
One-Time Shock, Not Eternal Pressure
- A new class of large, pooled-capital buyers could cause a one-time level shift but cannot indefinitely raise prices without selling or renting.
- Long-run behavior (selling or renting) provides feedback that prevents perpetual price inflation by such buyers.
Used Car Dealer Analogy
- Murphy uses the used car dealership analogy to show banning corporate buyers can hurt sellers and producers.
- Removing dealerships may lower instantaneous prices but misallocates production and harms original owners.
