<p>Depending on how poorly the law is worded, investors would just aggregate into a company and own as many they want (either companies will have no limits, or the limit will be based on the number of &quot;investors&quot; in the company). (No change in the market)</p>
<p>Assuming no corporation shenanigans, if the definition of &quot;apartment&quot; is too tight, then they will find a loophole where the new building is not classified as an apartment. (No change in the market)</p>
<p>If the definition is too broad (includes everything), then investors will simply sell their current holding and buy a larger one (progressively getting larger skyscrapers). This will increase demand on the existing supply of large apartments, increasing their value and accordingly decrease the value of existing single family homes. New builders will prioritize the more lucrative investments of multifamily homes and building new single family homes will be more expensive.</p>
<p>At the same time, demand for mortgages will fall. Since the least risky demographic (institutional investors) is where this will be concentrated, mortgage rates will increase for everyone else to make up the lost revenue. Since the price of newly built homes are expensive, eventually the price of existing homes will also rise until it is at parity with new buildings. Since this will mean that prices for both existing and new single family homes are higher and loan rates are higher, then single family homes will quickly be unaffordable.</p>
<p>This should increase the number of people seeking housing in the apartments owned by investors and the value of rents will increase. In short, artificial restrictions will (obviously) just make everything more expensive.</p>

CC BY-SA 4.0
2022-10-26T19:53:38.140Z
2022-10-26T19:53:38.140Z
uberhaxed
<p>What would happen if investors were restricted to only own 2 apartments, one to live in and one to rent out? They wouldn't be able to own any more apartments. How would it look? If needed, explain with pictures.</p>

<microeconomics><government><property>
What would happen to the housing market if investors could only have one extra house?
Telma
# What would happen to the housing market if investors could only have one extra house?

(Asked by: username_0 on 2022-10-25)

What would happen if investors were restricted to only own 2 apartments, one to live in and one to rent out? They wouldn't be able to own any more apartments. How would it look? If needed, explain with pictures.

**Tags:** microeconomics, government, property

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## 1 answers

### Answer by username_1 on 2022-10-26. Score: 1

Depending on how poorly the law is worded, investors would just aggregate into a company and own as many they want (either companies will have no limits, or the limit will be based on the number of "investors" in the company). (No change in the market)

Assuming no corporation shenanigans, if the definition of "apartment" is too tight, then they will find a loophole where the new building is not classified as an apartment. (No change in the market)

If the definition is too broad (includes everything), then investors will simply sell their current holding and buy a larger one (progressively getting larger skyscrapers). This will increase demand on the existing supply of large apartments, increasing their value and accordingly decrease the value of existing single family homes. New builders will prioritize the more lucrative investments of multifamily homes and building new single family homes will be more expensive.

At the same time, demand for mortgages will fall. Since the least risky demographic (institutional investors) is where this will be concentrated, mortgage rates will increase for everyone else to make up the lost revenue. Since the price of newly built homes are expensive, eventually the price of existing homes will also rise until it is at parity with new buildings. Since this will mean that prices for both existing and new single family homes are higher and loan rates are higher, then single family homes will quickly be unaffordable.

This should increase the number of people seeking housing in the apartments owned by investors and the value of rents will increase. In short, artificial restrictions will (obviously) just make everything more expensive.


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