The housing market will never crash.. you will just rent forever
First lets get some info out there:
- The federal government doesn’t give a fuck about you
- there is no housing shortage
- business is taking over single family homes
- you are going to rent forever… thats your future, and you better like it.
The federal government has been posting lies about a housing shortages across America.
This is simply not true. There is more than enough houses to meet demand of individuals. please note I fucking said individuals.
First let me ask you this.
If banks are increasing mortgage interest rates 2+ months before any “rate hikes” by the FED, is it the banks preparing for the rate hikes, or are they trying to squeeze out the individual home buyer, so the big businesses can hide cash in assets when the market tanks? Hint: It’s the latter. A bank gets much more incentives from the federal government to protect businesses than individuals and thats whats fucking happening.
Proof there is no shortage is in the math:
All data is taken from the Fed and the US Census Bureau.
In 2004 (roughly the peak of US homeownership rates) the US homeownership rate was a bit over 69%. In 2021 it’s at 65%. A decrease of 4%. In 2004 there were 122 million housing units in the US. In 2021 it’s 141 million.
US population in 2004 was 292 million. In 2021 it’s 331 million.
Throw all these numbers into a blender and you get:
A 13% increase in population, a 4% decrease in homeownership rate, and a 15% increase in housing supply.
Yes, that’s right, the housing supply has increased faster than the population, and the homeownership rate during that time has dropped. So where the fuck is this crazy demand coming from? We’ll get to that.
Are people making more money?
Nope. Workers share of corporate income has fallen from 79% in 2004 to 77% in 2021. The jury is still out on the whole bullshit wage inflation thing.
But in real terms wages are down (cost of goods vs pay).
Is it immigrants?
Nope, immigration has been falling for years.
Is it young people starting families?
Nope, family formation is close to all time lows and the oldest millennials who are approaching 40, are 20% poorer than boomers were at their age.
Is it inflation?
Nope, bond yields are currently signaling deflation, but the bond market has been wonky as fuck all year so who really knows.
So basically you’ve got more supply relative to population, construction of new units slowed down during COVID but is ramping up- 1.8 million starts in Jan to 1.7 million starts in March down to 1.6 million starts in May, prices are rising, and sales are slowing.
Jan 6.5 million existing home sales, 993,000 new home sales.
May 5.8 million existing home sales, 769,000 new home sales.
So, to recap for the slower folks in the helmets on the short bus with the flavored windows:
Supply relative to population: Up.
First time homebuyers 2021: 30% (the lowest in recorded history per National Association of Realtors)
Now lets talk about WHO is buying homes
We already know, it’s businesses hiding cash as assets in single family homes. Look at the home buyer rates. Look at all these public companies with new capital assets on their books. Look at fucking Blackstone (blackrock). Shit open up apartments.com or padmapper.com and check out all the new houses for rent.
The fun fact about these companies hiding cash in capital assets is that a shitload of them are foreign or llc’s and partnerships with foreign holders. Thats right a lot of these homes not sold to an ibuyer, or hedge funds are being given away to foreign investment firms.
how can we fix this? how can we save the American dream?
fuck i don’t know. garbage in garbage out. they are in the pockets of business thanks to citizens united.
create a vacant property tax.
tax businesses more that own and rent single family homes.
Get rid of the vacant unit tax write-offs
Get rid of the accelerated depreciation on single family homes.
block foreign owned firms and businesses, without US citizens as partners, from owning single family homes.
Force banks to have competitive loan rates when it comes to businesses buying resident assets vs individuals buying homes. why do they get 1% interest while i have perfect credit and they now want 4%.
this is a rant… let’s get some discussion going. thoughts? opinions?