How the Housing Market Went Off The Rails 

Exactly 💯

Capitalism

@@zoanth4 “crony” capitalism is capitalism working as it was designed. It is a system of fixed hierarchy where you have those with wealth that rule and those who lack wealth who have to work to live

@@zoanth4 that's the same excuse as "thats not real socialism. If done right... yada yada." The point is, this is what capitalism leads to...

Studying the housing market is literally my job. And although making the point and backing it up requires a far longer explanation, you are exactly right. What it boils down to, is cash inflation and a pervasive disregard for value in use.

It’s going to suck, but at least you are educated about what’s going on and can prepare. A lot of people aren’t cause the banks sold them a bill of goods talking about how the home is a great investment. Meanwhile they’re paying back double or more of the principal and bought at the peak of a cycle.

While the corporation that is causing this will be bailed out, we drop in value even more! Yay!

Yeah, when I saw the title, I thought “which time?”

Nha if you wanna a quick take look up "The Economic Doom-Loop Has Begun" by Adam mill, the TL:DR is that the Fed is trapped, he has to chose between crashing the economy or let the inflation run lose, This third crash is a rebound from the second , cause instead of letting things run its course the Fed done QE and bought all the malinvestments for itself in exchange for slushing the economy with cash...

@@uria702 I'm honestly excited when it crashes maybe I'll be able to find a place to live. Probably renting because very clearly there's no way in Hell I'll be able to afford a home.

But land is a finite resource, it has recognizable and quantifiable value. If land was infinite then, yes, people and corporations would stop seeing it as an investment, but it isn't infinite so therefore it will always be an asset that increases with value over time as supply and demand changes.

@@catdogmousecheese In time we won't have a place to grow food.

You ever heard of hydroponics? You don't need dirt to grow plants anymore, all you need is water and sunlight.

Corporations/Private Equity/Hedge Funds have always been allowed to purchase homes. It was only recently that the massive supply constriction created the logic for them to purchase homes as an investment. The calculus has shifted not because people "treated homes as a commodity or investment", but because the price growth of homes has overtaken the price growth of equities that these firms would "normally" speculate on.

@@JasonT404 And the cause of the limited supply is zoning and nimbys.

Why didnt you guys lived in your parents homes until having enough money to buy? I see that families have shrunk a lot too, my parent's house was the home of 12 people when they were young, surely those were bigger houses than the US standard but not by much and the shared costs made living almost free for everyone, not to mention the chores etc. Having 1person preparing the food of 12 frees a lot of time in sum. Im currently doing so with my gf and we are 8 at home, we bought a house at 24 as a project to consolidate money but we dont use it and keep saving. I think banks were the ones changing our morals that made us being suported and strong to make us divided, weak and poor

I won't be taking care of them specifically for the reasons you mentioned.

@@ESPkenner48 Living with parents isn’t always a viable option for folks due to any number of reasons.

@@ESPkenner48 LoL oh silly silly child... bless your heart: You're assuming they have parents. You're assuming those parents would have a home. You're assuming they would be welcomed to live in their parent's home. Not everyone has a support system to rely on in this world.

@@ESPkenner48 My parents have been dead, my father since I was 18, so almost 20 years ago, and my mother almost 8 years. Living with parents isn't always an option. Extended family doesn't always offer a place to stay either. They believed I should have been able to handle everything on my own...

ironic that he was living the american dream while shitting on it

Too bad I am an insomniac who sees the truth for what it is and is not that offended easily. :)

@@cobrakingofeart He was living the American Nightmare and reported on it

@@cat-le1hf only an entitled brat or someone blinded by propaganda couldn't see how lucky he was to be in america.

@@Helaw0lf You really thought you did something there.

You figured out the game. You're supposed to loose while those who have more money win.

You should have never sold. People have to understand that you’ll just have to buy another overpriced home and go into more debt. We’ve gotten letters in our mail with people willing to pay triple what we paid for our house. We refuse to sell.

Yeah, banks and brokers win, new home owners lose. Existing home owners think omg I made so much cash, but you still need a place to live

What you paid a premium for was the ability to live a home now instead of 30 or 40 years later when you're too old to enjoy it. For some people that is worth a premium, especially if you have children and care where they go to school. You also saved by not renting, because you were able to leverage the equity in your home for purchasing the next one.

Save the profits and rent until housing collapse and then purchase the next home. #WINNING

Jesus that's a little fucked up

I am so sorry you were turned away. It’s disgusting living in this country …

So sad .... A great nation that cannot guarantee the basic needs for a good chunk of its citizens

find a job first and cultivate a craft

@@archmad the flux is wrong with you? I had a job, the problem was I was PREVENTED from VOTING because I owned no House.

and oh how in hindsight I bet they wish they went with the latter idea

There are some that were built like that...but yeah the shop only model is proving to be a failure now.

And as somebody mentioned in another comment, the pandemic brought us a ton of foreign "digital nomads" from wealthier countries and a lot of places are being gentrified at light speed. My bf is from Cozumel and I hate how when I visit we go for like a single taco and a coke and somehow end up spending 10 usd on that -.-

iDK, bro, there is a shitload of free space in Mexico, wanting to live in inner city is the issue.

for a stable society... certain things shouldn't be commodified... whether it's human bodies... or something else...

No you are living in a dystopian reality. We all are.

The Matrix has been super duper glitchy lately, no?

Nimbys and zoning did it.

Same

I make almost double but same

Thank nimbys for that.

Just know.... you'd have at least one subscriber.

My mom and I make at least 3 subscribers.

Post your first link, and I'll be there.

"come to terms"? like sheep? or unite, find solidarity with your neighbors, and starting speaking up to the landlords? none of this come to terms bullshit. rise.

I have been thinking about moving to Argentina. I can’t afford to live in the USA anymore.

@@angelgjr1999 Well it will be pretty cheap for you. My little piece of advise is that you dont move to the big Urban areas because it is insecure. But the rural areas of the south for example, are calm and with beautiful landscapes.

Yup. I read an article that said around half (don't remember exactly) of all homes in the US are being bought by overseas investment firms. Not sure if the same thing is happening in SA, but I wouldn't be surprised

@@JasonX909 I dont think that is exactly the case here, i think it has more to do with the over exploit urbanization and lack of growth in rural areas (we have the population here all together in small areas). But is just a guessing from my part about what i see here, maybe i am not seeing the whole picture

@@hanalucez Buenos Aires is dangerous?

He's lucky to have that. Some people dont have grandparents

See? Grandparent: houses, plural. You: a home. Your son: absolutely fucking nothing

@@cancerino666 everybody has 2 sets of grandparents, that's what he means

@@oliverpalmer7855 Cancerino's comment still points to the way exploitative housing speculation and hypercapitalism lead to unequal outcomes. Apparently even just two generations ago, it was common for people to be able to buy a house (since all grandparents have houses) whereas today, it's very difficult for people to buy. It also points to how generational wealth is built by home ownership, as renters will have nothing to give to their grandchildren. This is why historic injustices like redlining have been so damaging, as they help keep racialized groups in poverty over generations.

@@katattack907 woah no need to turn this into a reddit thread

Right. They need to make it illegal to own more than a few ☝️🤷‍♂️. Like look, you work hard and buy, or inherit an extra house 🏠 I'm not mad 👀☝️thats nice 😌👌 like if you own up to say, 5 houses, okay. Good for you. 🧿 But the GIANT corporations that buy 100's of homes and hold them hostage to profiteer rent money (and not fix jack shit) THAT should be illegal.

I bought mine around the same time u did, paid only 230K... now my sister is trying to hold onto one. no fk luck whatsoever, these houses now are going for +350k. ridiculous!!

Oh yeah, Zillow, Blackrock, and other asset managers have bought up all the land in America. Welcome to serfdom.

Wait how is that possible? I’m also 35.

Yeah dude its insane right now.

It'll crash. This can only last as long as people keep paying for it. The bursting point will come when the speculators fail to flip and are left sitting with useless property they don't need. When that happens, prices will correct themselves.

@@1krani in the meantime what's the alternative? You're talking about something that may take years to happen and the last time it did it caused the great recession

Enjoy the American Dream, it is to be hustler till you die, which can also be said as a slave to capitalism forever.

@@GuerrillaGorilla023 Simple: hold on to your wallet. Stock up on food or save up and buy a large freezer. If you have investments, maybe double-check them or ask your accountant if you're at all tied up in housing brokerage companies. Look for opportunities to make more money in the meantime. Yeah, it'll hurt, but part of what caused the Great Recession was civilian ignorance and government interference. Be aware of where your money is so that none of those "too big to fail" companies take you down with them. Don't let the government bail anyone out this time, for absent government interference the market will correct itself quickly, as it did in 1921 when President Harding solved a massive financial crisis (on par to the one in 1929) by simply forgetting to do something about it. By contrast, President Hoover tried to fix the 1929 crisis with government programs, as did FDR, and all they did was stall the correction and move jobs from the private sector to the state.

Small time landlords with one to four properties are a MUCH bigger piece of the market than major corporations.

@@benhatcher2603 Yeah, youre right there. Probably more relevant and worth highlighting too. The FDI buying lots of property seems to be becoming more prevalent the last 3 or 4 years. It might have always been there and is just in the public consiousness more now (Im no expert!) but seems to be an issue at the minute. Was reading about Noonan and that Lone Star Private equity group recently and its very clear the strategy Fine Gael were playing. But yeah, the small time landlords are much more common. I'm from a fairly middle class town here and nearly all my parent's age with civil servant jobs own 2 or 3 properties in the area and rent them out. Real Celtic Tiger stuff; Mortgage lending was a bit different back in the early noughties! Unthinkable that civil servants in their 20s/ 30s now would be able to afford a second property!

The whole system is a pyramid scheme that crashes every 6-10 years. And of course the taxpayer pays the bailouts.

@@angelgjr1999 True. The point is, the scheme is a new thing. It wasn’t always this way; and it doesn’t have to be. FYI tax payer money does not pay for anything. That doesn’t work that way either. Government operate on what they call fiscal policy. Another pyramid scheme.

I appreciate the added context in your comment but it's not really accurate to say that generational wealth is a lie. Yes, there was a housing boom in America post-WWII, and maybe those houses have only changed hands a few times. But even if that's when home ownership sprang into existence (which it didn't, of course-some families have been building wealth through ownership for many generations before the New Deal), home ownership could still lead to generational wealth and better opportunities for families for all the reasons listed in the video. Better schools, more financial flexibility, more stability, more neighborhood investment, improved mental health, and so on. These things all contribute to an individual's ability to succeed in our economic system, even if you're not looking at inheriting houses. Edit to add: I totally agree that speculative investments are a cancer. We desperately need to enact policies to keep investors from buying up all the houses as boomers pass away and further inflating their cost out of the reach of American families.

The Economics Explained channel did a good video on this. Specifically this part where he shows since the introduction of mortgage bonds home values started to deviate from median income: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-nUFZ1_fC3Kw.html

I think it's a little more complex, but you've got a great point in focusing on the evils of speculation. When you learn about US History, you hear a lot about "The Panic of (insert year here)", economic cycles where the US economy would just die for awhile. The reason behind nearly all of them? Speculation! On land, on railroads, on any hot new commodity. Even the Great Depression had its origins in people speculating on artificially elevated stock prices. When did we *not* have "panics" like this? During and in the years following the New Deal. When did we start having them again? Around the late 70s and then a lot more frequently after Reagan's deregulation spree. Shock of shocks, here we are again.

And you guys are a joke compared to china´s housing bubble

True. I don’t doubt there’s some level of broad scale institutional investment a la the US market going on here, but you’ve got to wonder how much of it is being driven essentially by a somewhat well healed middle class choosing to invest in real estate as a safer/more profitable bet than the stock market. Of course we may be seeing the wheels fall off that now. I bought my first (wholly owned) place late last year and honestly, while I was sensible and as conservative as I could be, it’s a bit scary. The only saving grace being that rentals are even more expensive and very scarce where I am…. unlike a wannabe property investor with real estate agents talking into their ear, the bank at least has a vested interest in keeping me in my home and making my payments.

Absolutely this. We need to build more housing! I don't understand why this video didn't at all cover the fact that we simply aren't building enough homes, especially in cities like San Francisco or Los Angeles. There is an entire social movement (the YIMBY movement) that is pushing for policies that support construction of dense housing.

I disagree with multifamily housing alongside single-family homes. The very nature of multifamily homes lends itself to a more transitory residence with little emotional or financial investment in the community. The infrastructure, such as traffic patterns, schools, and services, is also strained. Where I live currently, large corporations are buying up family farms, using both HUD and law firms to bully the local governments, and strong-arming the zoning boards by threatening individuals with lawsuits into building apartments. The corporation profits and then leave town, the cost is passed, and inconvenience is given to the homeowners now having to widen the roads ( destroying the community's aesthetics), build schools, or expand with trailers and a host of other issues. The "older homeowners" have a right to complain when the social contract is broken by political and special interest groups impacting their lives. Just as many urban residents "complain" about the effects of gentrification within their communities.

I respectfully disagree with the economics of this solution. The act of changing zoning fundamentally changes the economic game around the pricing of housing in a given area. If you can only build single family housing in an area with a given capped density, then there is a fundamental limit to the land value in the eyes of an investor. On the other hand, if you change zoning to include large complexes with multiple condos or apartments in them, you have changed the economic incentive to have ONLY large investors buying up the land to construct larger projects at the detriment of smaller buyers like first time buyers who would like to build a smaller house. This argument of densification fundamentally doesn't understand the economics involved in dense housing investments and goes 100% against the stated goals of lowering costs for families. Any land that can be used to house 50 people as opposed to 5 has a completely different valuation attached to it and none of the young people forming families can compete with investors at this kind of valuation. As someone else also pointed out, zoning areas for single family houses is well documented as favoring strong communities because of the incentives involved. Someone who bought a house they live in has a very strong incentive in keeping it well maintained and keeping a good social network in the area because they know they will stay for a while on average. On the opposite side, large property developpers typically have no personnal incentive towards this and as a result, devalue the community cohesion in the long run. People who buy condos also typically stay for shorter times than single family home owners. Same goes for apartment renters. None of the people involved have any incentive to keep a long term healthy community in the area. The way I see it, we should simply be opening more land to single family housing and continue building them in higher quantities. Our problem is that we don't have enough of them, not that there are too many. We should also be building a lot more starter homes. People in their 20s don't need mansions, they need a small house that fits a family comfortably, nothing more and nothing less.

@@Not.a.bird.Person there is a whole world of built forms missing between single family homes and apartments. I'd also like to mention I've been renting for over a decade and spend more time, money, and effort than many homeowners to improve the place I live. Give folks a chance to build what works for them instead of painting with a brush of your own lived experience.

@@UrbaneOracle You're missing the fact that what most people want, by far, is single family homes. If you were to ask everyone what they prefer to live in, most people would say single family housing. The reasons for this are simple, more space is better for raising kids and lowers social pressures for disagreements. It's much easier to be friendly with your neighboors when they don't live on top of you or below you. Having a bigger personnal space is also much better for one's own sanity on average and there's research to back this up. You're also missing the point about the average apartment dweller's experience. The point is that it's the average that matters, not the statistical anomaly of one person enjoying their apartment for dozens of years which happens rarely in comparison. Most people don't stay in the same apartment for a long time (more than 5 years). That's litterally the only economic advantage of having an apartment, it's a less permanent housing solution for people who need the freedom to move around more often. You also completely ignored the most fundamental point I'm trying to make. Changing zoning laws change the fundamental economic game being played. By default, allowing for larger units being built means you're eliminating younger buyers from the equation entirely. It's an approach favoring monopolistic companies buying up lands and building profit generating assets on them. The reality is also that most investors buying land to build projects rarely have incentives to build housing that is affordable. If you pay a high price for land, you expect a high return. You just completely ignored that because it's inconvenient.

You say greed I say competition. There are those who go hard. There are those who don't. There are those who work 80+ hour weeks. There are those who don't.

@@DarkLordJmac It doesn't matter how much you try to "go hard" if the only job you can get in your area pays $9/hr.

@@AnyBodyWannaPeanut vote with your feet and leave. You have the right to pursue happiness.

@S. G. my problem is that I'm living in a 3 bedroom apartment with only my brother that's already costing $1242/month and just need to downsize to two bedrooms for like $250 less then what I'm paying rn. My bro is also between jobs so I'm the only major income with my parents helping with my bros half. I need to downsize soon >.>

It’s like running a marathon only to find you’ve only cleared half the distance and need to run the rest twice as fast

At this point I have considered moving out of the US. You’d be shocked how cheap houses in South America are. Literally cheaper than a car…

@@angelgjr1999 What you're saying about South American houses being cheap is what the rich people in your country think about the housing in your area that makes the housing prices rise. It's only cheap for you: It's expensive for the locals and you'd be contributing to make it more expensive. Pls don't be part of the problem.

51, and I left America in the 90s. Every time I go back I’m like no…..

Oh, I feel that. I'm 47 and don't make squat surrounded by half million homes. If my mom cashed out, I'd be living in my car. Yes, I've looked into living in an RV. You know Recreational Vehicle... thank God I don't have kids.

That's basically the millennial experience, and I'm in a similar situation. I can make ends meet, in fact I'm renting a really comfortable apartment alone, and I usually have some money left over at the end of the month... but not enough to save up for an own apartment anytime soon. (And I can't even blow it on a PS5 because of the fucking scalpers.) It feels like being stuck. The only thing that could allow me to move "forward" in life would be if a hithertho-unknown great-uncle died and bequeathed a cool million euros on me, or the property market collapsed. (Or if I got a girlfriend who moved in with me, though "I wanna split the rent without having to share my toilet with a stranger" doesn't feel like the right motivation to date anybody.)

I am right there with you my friend. Graduated, finally got a "good paying" job... just for the goal posts to be moved. I wish I could offer you hope but all I can do is let you know you are not alone.

Capitalism in action

@@GreebusBleeb No, capitalism in action would be someone going out and building cheap housing to sell below market price, to take advantage of the inflated prices and the ravenous demand. But because tight-fisted zoning boards and activists against "gentrification" (meaning any attempt to build new or better property, as opposed to actual gentrification) stop new homes from being built, not to mention rent control sapping any incentive to build new apartments, we have a lot of demand and no way to readily supply it. Just like the last housing bubble in 2008, this was caused by the economically illiterate government. Last time, they demanded banks give out loans to lower income families who couldn't afford to pay them back, thus increasing the bottom amount that the market could pay and thus driving prices up. When those families predictably defaulted, the banks lost their return and the housing market collapsed.

How's your liver.

5 years ago, that money would've been enough for a down payment on a decent house in my area.

@@GreebusBleeb cringe

No it's a very different crisis. They're not using financial tricks and hiding the values of mortgages in big batches to be traded through the markets or bet on with insurance. It's raw capitalism using technology and huge buying power to be able to sit on properties until they can make a return on the investment, artificially inflating the prices of homes via supply and demand.

Not corporate investors. Lobbyists. If not for lobbyists and the govt power that makes it worthwhile to lobby, entrepreneurs would simply build new housing to take advantage of the soaring prices and competing with the big boys. But because of the nightmare that such ventures turn into, especially with activists both on the streets and in the state, such ventures can accrue ridiculous costs just to pierce the red tape.

Hey don't lose hope. I also had a roommate at 30 and couldn't buy a house until I was 35. I thought my life was shit but I kept my eyes open and jumped on a good job opportunity and now I'm doing well. The "American Dream" of owning a house and having a family in someone's 20s turned to bullshit decades ago. Don't use home ownership as a judge of your worth! Good luck!

@@pogtuber5146 thank you so much 🙏 yea that myth really fucked up my life expectation’s lol.

I think that's a different phenomenon than real estate investors swooping in and using their wealth to buy all the houses out from under families.

@@katattack907 yeah this. And even if I wanted to take the responded statement seriously it's too narrow for dilemma. Too many missing factors for this to be properly validated.

I don't! I see them as trash to be taken out.

It's a sad historical reality: way, *way* too many people see what they don't have and see the people benefitting from a corrupt system, and rather than thinking "hey, we oughta change that!" default to "well, I'LL take advantage of the system, so it's ok." The fact many of them fail to take advantage of the system at all just adds to the tragedy. We're conditioned to think individualistically instead of collectively, and it's ruining us.

Or instead of restricting the market, allow developers to increase supply. As long as that isn't allowed, it will always fall short of demand.

@@jonatand2045 you can't increase supply endlessly without damaging other sectors, people tend to like to live in areas that are farm land or forests, so either you are damaging food production or the ecosystem by building houses in mass when it isn't necesary. there is a lot of proof showing that if housing was limited to a single home or even some families with vacation homes. There would already be enough supply. I live in a town right now where the city center has a lot of empty second floor apartments that have been bought for speculation as if they were stocks and bonds. and many other cities have the same issues.

@@liamnehren1054 Density allows it without increasing sprawl. Nimbys don't like it because it changes their neighborhood, even though they could still go to live where there is low density. Is the supply you mention where people want to live? Even if it was, allowing more decreases prices. Speculation doesn't change that fact.

@@jonatand2045 speculation creates a price bubble, actual desire for a house is way below the current prices. especially because everyone knows they can't afford them at the current prices. So as things stand we can't even properly calculate where people want to live or how many people prefer to be mobile (renting allows quick changes of residence). On top of all that most of the people who remain mobile because of the possibility of getting their next gig in another city might not need to in the next few years as home office has become more and more popular. This would also lead to more people only wanting houses with one or more sound isolated rooms to serve as home offices. meaning houses built now with current styles might not be as desirable in the long term. Just look at china where they bought up a ton of land on the outskirts of cities and built cities that are now ghost towns because they didn't understand that people were moving out of the cities to escape predatory house prices. Now china is on the brink of an economic collapse on the level of the 1920s because of over development and zero understanding of finance.

@@liamnehren1054 A bubble that eventually bursts. It should burst itself because higher prices motivate development, but it hasn't been allowed. The market is more capable of finding out what the consumer wants. Future consumer preferences aren't a reason to not allow development now. The system in China encourages construction when demand isn't already there.

Wow. Telling poor people to live with only 2 luxury cars, and fire the butler. I live in a TINY apartment. The only way I can live below my means, is to stop eating entirely. To just starve to death.

​@@danbeaulieu2130 You missed the part where I tell people to get a job in STEM. I am telling people who make $60,000 or above to keep the small apartment. It is a more efficient use of their income. If you're making less than $30,000, then you need more income. Particularly with food costs going up, that's not enough to keep afloat in our society today. If you can stomach the risk, consider forming a union.

The problems we are seeing at present go beyond just the Federal Reserve. The Fed sets the interest rate, but inflation comes from businesses raising prices and national debt comes from Congress passing budgets with huge deficits. Many factors have led to the present situation - where it's increasingly difficult to buy a house without already having enough wealth on hand to buy the whole thing at once. If this follows the track it did in Britain prior to the Industrial Revolution, t will reach a point where land will be considered "too valuable to sell" and can effectively only be passed *through inheritance.* The Fed's policies can be changed - but to do so would require young people to actually get involved and vote in elections. Which also means they need enough free time and access to information to do more than work overtime and save money for a down-payment.

Form an LLC and all of you are equal partners in it. The LLC can buy the house.

@@Falconlibrary That is a genius idea..🤩 And I'm on RU-vid so I can learn what an LLC actually is! Thanks!😁

That's pretty much it. All their talk of freedom and justice was more about their own as opposed to everyone. People look at lines like "all men are created equal" and think it's pretty clear they wanted equality. That idea deflates when you realize that who they considered "all men" where straight, white land owning men.

@@isaac1670 It's especially wild to think people hold the founding father's opinions as practically god-like when in reality the majority were under 30 years old when the declaration of independence was signed. Many were in their teens! They were also drunkards. They were basically the drunk frat boys of their time but people hold them up as paragons of wisdom because most of our images of them were painted when they were old men.