This real estate bubble won't pop
jaredabrock.substack.com
This real estate bubble won't pop
1–10 of 110 posts
Re: This real estate bubble won't pop
#2Not a bad overview, but misses some things
(1) political instability
(2) $10M/home as sticker price wouldn't happen. Apartments and row homes would be more common substitutes (and already have sopped up demand in the starter home markets)
(3) what inflation measures show 10% inflation?
Re: This real estate bubble won't pop
#3The price of the average house in the USA is based primarily on the government-guaranteed 30 year fixed rate mortgage. For a given interest rate and income, the house will cost exactly the maximum amount of loan the borrower can get. Banks no longer have any skin in the game - they go through a massive checklist, gather tons of documents, and once they can fulfill their legal mandates they immediately approve the loan and flip the note to investors.
With interest rates so low for so long, a significant increase in rates would decrease the real value of homes as the monthly payment would exceed what someone can afford.
As home ownership is a political football, you can be sure the price of homes will only go up. 2008 was a blip in the steadily increasing price of homes.
Re: This real estate bubble won't pop
#4> 5. Housing construction isn’t keeping up
This is sufficient to explain why prices are much higher than they used to be. All the other stuff is window dressing for things the author already believes about the world. Once you've admitted that we've way under-built, then you don't need any other explanations.
Re: This real estate bubble won't pop
#5I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
Re: This real estate bubble won't pop
#6> He’ll have to navigate totalitarian social credit systems and surveillance panopticoins.
Great typo!
Re: This real estate bubble won't pop
#7Ah, the classic signal of a market top: "This time is different; prices can't ever go down."
Re: This real estate bubble won't pop
#8The author lists every reason under the sun while missing the most important one: zoning or aka restricting buildable land that is causing the housing shortage
Re: This real estate bubble won't pop
#9The US is vast, and we have a ton of affordable housing if you look outside the coastal cities.
Re: This real estate bubble won't pop
#10I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
LLCs are cheap. It's not uncommon to form separate holding companies for each property.
Not impossible to write a law that pierces the corporate veil for taxation purposes, of course.