That's also how Commies/Socialists foment their revolutions. They destroy the middle class so everyone is either poor or rich. There's always way more poor and they form the cannon fodder for the subsequent bloody revolution.
I can see it happening in cities like Hamilton and Toronto; the housing bubble bursting, while the ultra rich keep building bigger mansions with only 2 residents or maybe just seasonal occupation. Young people don't dream of ownership and that disappointment spills over to a lack of ambition and hope for the future. Trying to save money for the future looks futile for many, and I see them losing hope, giving up that dream and replacing it with mere survival and a deep and bitter resentment. They have a "homeless" mentality, taking comfort in quick fixes whenever they can. There's no incentive to work hard and save, raise a family, be part of a community that cares. Too many are falling through the cracks and becoming a burden to society and adding to the chaos of urban life.
the uneven terrain angle is the key thing most housing commentary misses. it's not one market - it's hundreds of micro-markets each responding differently to the same rate environment. what works in austin doesn't work in cleveland and vice versa
There are a lot of cascading failures that are making homes unaffordable.
The biggest one is that the younger people don't have money. (Duh!) But a large part of why they can't afford homes comes from their personal choices. Taking out student loans that they can't afford to pay off for degrees that are often not even closely related to their careers (or actually necessary). Buying thousands of dollars worth of goods and services that are eating into their paychecks such as overpriced cars, cell phones, computers, big screen televisions. Tons of subscription services. Eating out instead of preparing their own food. They don't have enough money left at the end of the month to survive, let alone save for a downpayment.
Then the housing supply has been twisted by a combination of things. Lots of people are using housing as an income and investment rather than a home is a major part. The media points to the boogey man of the institutional investors but that is a relatively small part of the problem. Management costs, repairs, and rising taxes makes for pretty thin margins for existing homes. It is anything but passive income. It is a lot of work. The bigger part is individuals grabbing them up and making "upgrades" to them to turn a quick profit make it nearly impossible to buy a "starter home" that young people would normally take on. For new construction, it takes very little additional construction cost to build a 4000 sq.ft. house than it does a 2000 sq.ft. house. Slap on some luxury finishes such as granite countertops and suddenly you are looking at $400,000 homes on the same lots that would have been half that price with lesser homes. Why would a builder even think about building something affordable? It doesn't generate nearly the profit.
The rental market has the same pressures. If you are going to build rental properties, there is no incentive to build $1000/month apartments when you can pay a tiny bit more to build $2500/month apartments on the same property.
That doesn't even touch on the issues created by what passes as city planning. They are in the business of generating tax revenue. More expensive homes that pay higher taxes will get the greenlight and anything else will just fight an endless gauntlet of resistance.
Love your Substack, but I think there's more at play here. You write "in a market defined by tight inventory, high interest rates, and unaffordable prices for younger buyers". I might suggest that in many markets, inventory is up year over year, interest rates have come down and are not historically high. The prices are too high for anyone with half a brain. The influx of cash and credit plus Covid under Biden drove housing prices to ridiculous extremes. Now they will have to correct. Any market lacking liquidity (housing, also see the Blackrock private credit redemption issues for eg) is open to some pretty tough potential corrections. In Eagle, ID, two homes in my neighborhood, both priced over $1m have been reduced 20% and still aren't selling. Four homes for sale on my street alone. Anyone who bought a home since 2001 is underwater after closing costs. Builders are offering significant incentives. Check out Ed Dowd for some fairly sophisticated market analysis. Also Melody Wright.
You're right, there's always more at play. We have said many times in our writing that past trends and patterns have seemingly not translated into what would normally have been an expected outcome.
Housing inventory is up year-over-year -- true. Interest rates have come down slightly... we would argue moderated and, at that, for those who have the facilities; if you have bad credit or a crappy downpayment, you're still stuck. Worse, as you know there will be an employment holocaust in the next 12-18 months with AI -- as crappy and as ill prepared as that 'intelligence' may be - taking over so many jobs in the quest for higher profits and corporate efficiency. We have no reason to doubt it, and so expect more housing inventory and more price cuts as people can no longer afford houses and pay mortgages. Whether such a market is met with legitimate sales to *actual individuals and families remains to be seen. We have our own thoughts on that but we know we're not going back to the heady days of an insane housing market of irrational exuberance (to quote Mr. Greenspan). We're also not going back to 2.5% on a 15-year mortgage. The trend toward collectivization has started in earnest -- state housing and UBI are legitimate contenders for our future when most useless eaters and jabbed-to-the-hilt Boomers are eliminated and a handful of state-linked corporations own everything, having snapped them up at pennies on the dollar.
Invoking any politician as the 'cause' of *this or *that is unfortunate. What we have seen with naked clarity in the last six years extends beyond the influence of a single politician or political party. COVID and its associated impacts on thought patterns, health, the economy, and our societies were all largely coordinated. Hopefully you've seen the youtube videos of the exact same script, being read by the talking heads at 'local' TV stations across the country recounting the same BS propaganda script. That's just America. Rest assured, the few at the top are calling the shots and manipulating their puppets to our detriment.
With all due respect, we used to think highly of Ed Dowd (and many others who emerged in the heady first days of COVID), but his origin story is linked with Robert Malone. In that context, we would encourage all our readers to recognize signs of the gatekeepers of Camp Two. If you don't know what that means, see our interview with David Hughes: https://www.collapselife.com/p/inside-the-omniwar-with-david-a-hughes
Robert Malone raises many questions. Not the least of which corresponds to the old adage of "follow the money". Nice farm he has there! Who paid for all that? (ie, who were his employers) While I don't always agree with Dowd, I do like his data based approach to markets. I'll check out the David Hughes interview. By the way, I'm a NOT-jabbed-to-the-hilt-boomer and find gross generalizations about any demographic group kind of insulting. From my own life path, I would say that for some of us, age and experience has brought some perspective and wisdom. And it's kind of fun to watch people 10,15 and 20+ years our junior tell us "how things are". Events change; human nature does not.
We definitely did not say YOU were a boomer or cast aspersions about YOUR health choices. Just to be clear, we said: "...when most useless eaters and jabbed-to-the-hilt Boomers are eliminated..." We're not pointing a finger specifically at you and apologize if you felt that.
If we were to tie the boomer comment to housing, boomers still constitute a MASSIVE and weighty influence on our society by virtue of their numbers and wealth. And we know, for example, that politicians love to pander to groups with money and influence. So for now, I suspect we are witnessing an ongoing pretend-and-extend real estate market (and even jobs market) even though the bottom should have already fallen out. Imagine what would happen to all those folks who bought homes for $100-$200-$300,000, now worth (at least on paper) $1-$1.5-$2 million, and they lived to see the actual market return to earth, fetching numbers similar to when they bought? There would be pandemonium.
Age does not always provide wisdom. If it did, the elders currently running this society would have the sense to run it properly.
We don't delude ourselves into thinking WE specifically, here at Collapse Life, are wise. We pray for wisdom -- for us, only Yah is that true source.
No apologies needed. I rather agree with you. On the housing market, it's like turning the Titanic. I have no looking glass, but I do believe that at some point markets become more efficient (note, I did not say efficient!). On one end of the market, a lack of affordability has created a lack of liquidity. Illiquid markets tend to correct violently. All it takes is a few low ball sales figures and pandemonium will ensue.
On the other side of the market is the silver tsunami, ie baby boomer liquidations. If we get a stock market correction as many believe is in the making, those boomers may panic as they watch their savings disappear and secondary or rental properties may be put up for sale. Fearful sellers are a race to the bottom. Remember: He who panics first, panics best.
Right now, between historically low sales (unaffordability)and significant builder incentives, price discovery is hidden. That too will change.
I also ask for wisdom. In the meantime, I watch, listen and observe. And hopefully learn.
You will own nothing and be happy. People are having a hard time seeing the "happy" part because we are not yet on the other side of something many will not survive. Those who survive, will be happy they did.
This part was left out of the slogan, for good reason.
Fair and pertinent observation, @Rolled Oats. If things continue the way they appear to be going, there may be NO survivors. Someone decided to FA, and now we're all going FO. Let's see how this all plays out.
That's also how Commies/Socialists foment their revolutions. They destroy the middle class so everyone is either poor or rich. There's always way more poor and they form the cannon fodder for the subsequent bloody revolution.
I can see it happening in cities like Hamilton and Toronto; the housing bubble bursting, while the ultra rich keep building bigger mansions with only 2 residents or maybe just seasonal occupation. Young people don't dream of ownership and that disappointment spills over to a lack of ambition and hope for the future. Trying to save money for the future looks futile for many, and I see them losing hope, giving up that dream and replacing it with mere survival and a deep and bitter resentment. They have a "homeless" mentality, taking comfort in quick fixes whenever they can. There's no incentive to work hard and save, raise a family, be part of a community that cares. Too many are falling through the cracks and becoming a burden to society and adding to the chaos of urban life.
the uneven terrain angle is the key thing most housing commentary misses. it's not one market - it's hundreds of micro-markets each responding differently to the same rate environment. what works in austin doesn't work in cleveland and vice versa
Excellent point.
There are a lot of cascading failures that are making homes unaffordable.
The biggest one is that the younger people don't have money. (Duh!) But a large part of why they can't afford homes comes from their personal choices. Taking out student loans that they can't afford to pay off for degrees that are often not even closely related to their careers (or actually necessary). Buying thousands of dollars worth of goods and services that are eating into their paychecks such as overpriced cars, cell phones, computers, big screen televisions. Tons of subscription services. Eating out instead of preparing their own food. They don't have enough money left at the end of the month to survive, let alone save for a downpayment.
Then the housing supply has been twisted by a combination of things. Lots of people are using housing as an income and investment rather than a home is a major part. The media points to the boogey man of the institutional investors but that is a relatively small part of the problem. Management costs, repairs, and rising taxes makes for pretty thin margins for existing homes. It is anything but passive income. It is a lot of work. The bigger part is individuals grabbing them up and making "upgrades" to them to turn a quick profit make it nearly impossible to buy a "starter home" that young people would normally take on. For new construction, it takes very little additional construction cost to build a 4000 sq.ft. house than it does a 2000 sq.ft. house. Slap on some luxury finishes such as granite countertops and suddenly you are looking at $400,000 homes on the same lots that would have been half that price with lesser homes. Why would a builder even think about building something affordable? It doesn't generate nearly the profit.
The rental market has the same pressures. If you are going to build rental properties, there is no incentive to build $1000/month apartments when you can pay a tiny bit more to build $2500/month apartments on the same property.
That doesn't even touch on the issues created by what passes as city planning. They are in the business of generating tax revenue. More expensive homes that pay higher taxes will get the greenlight and anything else will just fight an endless gauntlet of resistance.
All good points.
Love your Substack, but I think there's more at play here. You write "in a market defined by tight inventory, high interest rates, and unaffordable prices for younger buyers". I might suggest that in many markets, inventory is up year over year, interest rates have come down and are not historically high. The prices are too high for anyone with half a brain. The influx of cash and credit plus Covid under Biden drove housing prices to ridiculous extremes. Now they will have to correct. Any market lacking liquidity (housing, also see the Blackrock private credit redemption issues for eg) is open to some pretty tough potential corrections. In Eagle, ID, two homes in my neighborhood, both priced over $1m have been reduced 20% and still aren't selling. Four homes for sale on my street alone. Anyone who bought a home since 2001 is underwater after closing costs. Builders are offering significant incentives. Check out Ed Dowd for some fairly sophisticated market analysis. Also Melody Wright.
You're right, there's always more at play. We have said many times in our writing that past trends and patterns have seemingly not translated into what would normally have been an expected outcome.
Housing inventory is up year-over-year -- true. Interest rates have come down slightly... we would argue moderated and, at that, for those who have the facilities; if you have bad credit or a crappy downpayment, you're still stuck. Worse, as you know there will be an employment holocaust in the next 12-18 months with AI -- as crappy and as ill prepared as that 'intelligence' may be - taking over so many jobs in the quest for higher profits and corporate efficiency. We have no reason to doubt it, and so expect more housing inventory and more price cuts as people can no longer afford houses and pay mortgages. Whether such a market is met with legitimate sales to *actual individuals and families remains to be seen. We have our own thoughts on that but we know we're not going back to the heady days of an insane housing market of irrational exuberance (to quote Mr. Greenspan). We're also not going back to 2.5% on a 15-year mortgage. The trend toward collectivization has started in earnest -- state housing and UBI are legitimate contenders for our future when most useless eaters and jabbed-to-the-hilt Boomers are eliminated and a handful of state-linked corporations own everything, having snapped them up at pennies on the dollar.
Invoking any politician as the 'cause' of *this or *that is unfortunate. What we have seen with naked clarity in the last six years extends beyond the influence of a single politician or political party. COVID and its associated impacts on thought patterns, health, the economy, and our societies were all largely coordinated. Hopefully you've seen the youtube videos of the exact same script, being read by the talking heads at 'local' TV stations across the country recounting the same BS propaganda script. That's just America. Rest assured, the few at the top are calling the shots and manipulating their puppets to our detriment.
With all due respect, we used to think highly of Ed Dowd (and many others who emerged in the heady first days of COVID), but his origin story is linked with Robert Malone. In that context, we would encourage all our readers to recognize signs of the gatekeepers of Camp Two. If you don't know what that means, see our interview with David Hughes: https://www.collapselife.com/p/inside-the-omniwar-with-david-a-hughes
We will look into Melody.
Robert Malone raises many questions. Not the least of which corresponds to the old adage of "follow the money". Nice farm he has there! Who paid for all that? (ie, who were his employers) While I don't always agree with Dowd, I do like his data based approach to markets. I'll check out the David Hughes interview. By the way, I'm a NOT-jabbed-to-the-hilt-boomer and find gross generalizations about any demographic group kind of insulting. From my own life path, I would say that for some of us, age and experience has brought some perspective and wisdom. And it's kind of fun to watch people 10,15 and 20+ years our junior tell us "how things are". Events change; human nature does not.
Yes Pat, you're right -- nice farm!
We definitely did not say YOU were a boomer or cast aspersions about YOUR health choices. Just to be clear, we said: "...when most useless eaters and jabbed-to-the-hilt Boomers are eliminated..." We're not pointing a finger specifically at you and apologize if you felt that.
If we were to tie the boomer comment to housing, boomers still constitute a MASSIVE and weighty influence on our society by virtue of their numbers and wealth. And we know, for example, that politicians love to pander to groups with money and influence. So for now, I suspect we are witnessing an ongoing pretend-and-extend real estate market (and even jobs market) even though the bottom should have already fallen out. Imagine what would happen to all those folks who bought homes for $100-$200-$300,000, now worth (at least on paper) $1-$1.5-$2 million, and they lived to see the actual market return to earth, fetching numbers similar to when they bought? There would be pandemonium.
Age does not always provide wisdom. If it did, the elders currently running this society would have the sense to run it properly.
We don't delude ourselves into thinking WE specifically, here at Collapse Life, are wise. We pray for wisdom -- for us, only Yah is that true source.
No apologies needed. I rather agree with you. On the housing market, it's like turning the Titanic. I have no looking glass, but I do believe that at some point markets become more efficient (note, I did not say efficient!). On one end of the market, a lack of affordability has created a lack of liquidity. Illiquid markets tend to correct violently. All it takes is a few low ball sales figures and pandemonium will ensue.
On the other side of the market is the silver tsunami, ie baby boomer liquidations. If we get a stock market correction as many believe is in the making, those boomers may panic as they watch their savings disappear and secondary or rental properties may be put up for sale. Fearful sellers are a race to the bottom. Remember: He who panics first, panics best.
Right now, between historically low sales (unaffordability)and significant builder incentives, price discovery is hidden. That too will change.
I also ask for wisdom. In the meantime, I watch, listen and observe. And hopefully learn.
"Remember: He who panics first, panics best."
Love it!!
"I watch, listen and observe. And hopefully learn."
YES! Us too. We are the first to admit that we are deeply flawed; let us have eyes to see and ears to hear.
Then there's gratitude -- which, it turns out, is the wifi password for life worth living.
We are glad to be with you on this journey, @PatWetzel!
You will own nothing and be happy. People are having a hard time seeing the "happy" part because we are not yet on the other side of something many will not survive. Those who survive, will be happy they did.
This part was left out of the slogan, for good reason.
Fair and pertinent observation, @Rolled Oats. If things continue the way they appear to be going, there may be NO survivors. Someone decided to FA, and now we're all going FO. Let's see how this all plays out.