“You won’t lose the house. Everybody has three mortgages nowadays.” – Ghostbusters
When Zoomers start to pass away, will they have eulogis?
FYI – no podcast tonight. I’m sure you’re shocked. I’m out travelling. Next week???
The American economy is broken in several ways, but one of the biggest is housing. When I was a wee Wilder in my twenties, I bought a house that was about twice my income. The mortgage payment was doable, just barely.
I just looked up what it’s going for today, and the answer was . . . over 10 times what I paid for it. Was it a nice house? Sure. But not that nice. Why did it go up 10 times in value?
Several reasons, and not because it grew a hot tub and a golden toilet, either.
This particular house was nice because it was in a suburban neighborhood where the schools weren’t . . . bad. The local elementary school and high school were pretty safe which was why we bought it in that area in the first place. Places with “good schools” tend to have much higher property values than those that don’t have good schools.
But good schools lead to high home prices because a mother will sacrifice her husband’s kidney to the Hong Kong black market to get her kid into a good school.
Why does that picture remind me of the media during COVID?
A lot of that is bounded by driving distance – people will drive a long ways to have good schools, but there is a limit. The suburbs were set up based on just that mathematical tradeoff. The fact that the ‘burbs had much higher appreciation just means people will pay a lot to avoid . . . bad schools.
Around this time, people stopped looking at homes as a place to live, and started looking at them as an investment. What they noticed was that prices in the ‘burbs seemed to go up faster than their salary, so houses began to resemble shake-shingled slot machines.
Places like California saw this effect first – as big city with a very desirable climate, people flocked there for the jobs created by a variety of businesses, from defense to entertainment to manufacturing to importing illegals.
Enter the predators.
Blackstone® is now there in California. Recently, they’ve been building housing in San Diego. Rent? $3000 to $4000. A month. But it’s not just California – the median housing payment for people who bought homes is now a record – $2,819, not including taxes and insurance.
There are, of course, two sides to the equation: my freshman economics prof would note that supply and demand have led to this situation.
During COVID, there were a lot of trials held on Zoom™. Does that mean the case was settled out of court?
Demand is up because tens of millions of illegals have flooded this country in an unabated wave. Whereas a typical American family has three or five people living in it (nine if you’re the Brady family) the average foreigners will often rent a cot in a kitchen so that the houses are packed with people, India-style, so that 10 or 15 people are paying $200 a week to live in these homes. A landlord could make $8,000 or $12,000 gross profit if they rented to people to whom that would still be better than living in Haiti or India.
Yup, turning suburban houses into Mumbai Motel 6 one cot at a time.
Oh, and I mentioned Blackrock™. Not content to strip mine American companies by loading them down with debt and ejecting them like Osama Bin Laden’s corpse off a flight deck, the private equity firms have entered as a competitor, buying houses with one goal: to turn people from one-time purchasers into full-time wagie wealth engines who end up paying but never owning.
You’ve heard their slogan: You’ll own nothing, and like it™. Hey, at least you can put a happy face on your rent check. Wait. It’s all direct withdrawal now.
So, there’s the demand problem. Americans didn’t ask for this, but here it is.
What do you say to your English teacher when she’s crying? “There, they’re, their.”
What about supply?
Supply isn’t increasing to match demand. There are lots of reasons for this, among them zoning laws, environmental laws, contractor requirements, building codes, and other Not In My BackYard (NIMBY) restrictions that make it complicated and expensive to build anything. In fact, in places like California, it’s turned into BANANA – Build Absolutely Nothing Anywhere Near Anyone.
That reduces supply.
If you bought a home 25 or 35 years ago in a place like this, congratulations. The restrictions in supply of housing make your investment worth a lot more than it would normally be worth if the market were functioning properly. I suppose the upside is that very expensive houses create the perfect environment for . . . good schools.
That has other consequences, though.
The Mrs. asked me if I had a police record. “No, but I do have one by Sting.”
Whereas I could get into a house at the age of 24, that’s simply not the case for kids today in most areas. My modest first home (I checked its current value) would lead to a full-in payment of at least $5,000 a month. That’s $60,000 a year, after tax.
Not a lot of just out of college kids can afford that, so forgetaboutit.
Young families are locked out in that area.
That has a knock-on effect: lower family formation, lower numbers of children being born, and miserable young men. Oh, there are miserable women, too, but they’re older than forty and they’re miserable when they find out that the only role left for them in society is Cat Loving Wine Aunt™.
As I said above – the economy is broken, and housing is part of it. Oh, wait, now we have an oversupply of wine aunts.
Will that result in making box Chardonnay too expensive?
As one of the other commenters noted, the phrase “good schools” is a euphemism for “a certain kind of neighbors.” Neighbors with well paying jobs, upward mobility, and a penchant for the values and behaviors that foster stability. That includes a reluctance to make petty crime (or worse) part of one’s contribution to society. It’s not just “white people” but white people with ambition, expectations, drive, and JOBS that aren’t going anywhere soon. White people without jobs can be very problematic… said by someone who has spent decades in rural America. Regardless, the question of economic opportunity lies at the heart of a lot of this.
There certainly is less economic opportunity in Modern Mayberry. And that’s okay.
How come no one every talks about the Dog Loving Bourbon Uncles? It’s like we don’t exist….sigh.
J-Bird
Ha! It’s the matriarchy holding you down, man!
The current situation is certainly multi-faceted. But the genesis of patently unaffordable housing really began, in my opinion, decades ago with the rise of feminism. “You can have it all, girl! So get out there and get a “career” that frees you from the shackles of patriarchy! No more going to college for that “Mrs” degree for you! Sign on with Globo Corp in some meaningless role and you, too, can spend your best years clawing your way up the corporate ladder, one rung at a time. Just like a man!”
When that biological clock started ticking like a time bomb, however, Ms. Stronk-and-Independent gave up the Chad chase and settled for Mr. Soy-Beta. They had to pool resources to squeak into what used to be known as a ‘starter home’, because millions of other unhappy couples just like themselves did likewise, and drove the housing market to ludicrous heights. Can’t afford to quit her job to be a stay-at-home mom, so they spend 80% of her net pay to have someone else raise their wretched nestlings.
Result? Overpriced housing, frustrated, guilty women, divorce rape and broken homes. One unhappy household has split in twain, further burdening the housing market. The children of those miserable unions stand no chance in hell of ever being homeowners, themselves. And from what I’ve seen, most don’t even care. They saw what struggling to own a home did to their parents and they are resigned to the ‘Ok, renter’ life.
Now season that spicy soup in modern times with hordes of uninvited guests pouring over the border, and the situation becomes ever more dire. Adult children boomerang and relearn the joys of living at home with one or the other parent. The cost of housing continues its relentless march upward, impoverishing those families who, in another life, would have fared just fine on a single, modest income.
Thanks, ladies. You’ve come a long way, baby.
Yes. Feminism is cancer. And it is also birth control.
I’ve been amazed at the cost to build over the last twenty years. Home prices have reached the square foot price of hospitals in the nineties, and the materials steadily declining in quality.
Exactly. Even in Modern Mayberry housing prices (to build) are north of $200/SF.
Graduated high school in 82 and grew up in South Jersey. The Pine Barrens got protected and that restricted areas you could build and how much land was required according to zones. This helped to drive up prices. The Pines burn every year, so I’m not too excited when I see stories of the forest fires there every spring. In fact, without fire, the Pine Barrens would no longer be pines, but mostly deciduous trees.
It has been a source of anger with me that all through my school years the teachers in public school harped on us not to have many kids and to practice contraception. Then the doors to immigration were thrown wide open thereby growing the population and making it harder to find housing, among other things.
It’s not that they were worried about population – they just wanted a different population.
The housing market in the U.S. has become increasingly unaffordable, especially in areas with good schools. It’s alarming how home prices have skyrocketed, making it nearly impossible for many to buy. The focus on homes as investments rather than places to live has distorted the market. Suburban areas, once seen as affordable, are now out of reach for most families. Why haven’t policymakers addressed this growing crisis effectively?
Great post. Well thought-out.
Thank you!
“lower family formation, lower numbers of children being born, and miserable young men”
Yes. But is it good for the Finks?
Are you saying Finks’ family first?
Living in a touristy city, we see scads of single 50+ chicks out together, but their preference is $15/glass Chardonnay (or NZ Sauvignon Blanc). Who believe that Mr Right their age is pining for them, when he has his pick of much younger single women. Delusional.
Bought a SFR in 1977, $19/sq ft. Price? $24, 800. It’s in a sh*t small county seat, probably appraised at $80K, maybe $90K these days. Put it in Charlotte, it’d be over $300K in the right neighborhood.
All overvalued markets crash; looks like that day is close, just like in 2008. In our area, desirable SFRs have almost doubled in the last 6-7 years. That’s not sustainable, and I wonder how many have HELOCs financed to the hilt.
You know, I wonder how many folks are on the DNC’s Universal Basic Income plan and how many will get DOGEd?
Who is building and buying housing these days is a confusing topic.
I look around my own area and there is an explosion of huge multilevel condos and subdivisions of small cottage type houses that are obviously huge investor financed rental projects. I really wonder where all the people to fill these are coming from. The traditional subdivisions with houses bought by individuals are a distinct minority and come at astonishing prices that my grandkids don’t have a prayer of covering. Their big problem is student loan payments. These got paused by COVID and coasted with no payments for years. The pay-me-back machine started up again last Sept and the results are predictable. 10 million young people have now hit the 90-day overdue line on their payment on $250 billion in loans – 15% of all student loan borrowers. That number is gonna get worse. That’s 10-million-plus mortgages that ain’t gonna be written.
https://www.lendingtree.com/home/mortgage/u-s-mortgage-market-statistics/
Of particular interest in that link is their chart on house average price. These prices haven’t gone up at a steady rate – there was effectively a 30% jump in 2012-2014 followed by a 40% jump in 2019-2021.
https://www.lendingtree.com/content/uploads/2025/03/mortgage-statistics-home-price.png
As for investors taking over the housing market, yes they have…
https://nlihc.org/resource/gao-releases-report-institutional-investments-single-family-rental-housing
…er, no they haven’t…
https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html
Like I said, a confusing topic.
It is . . . but investors own a *lot* more single family homes than they did 40 years ago . . .
“Good schools” is how Karen avoids saying “no Blacks.”
It’s certainly how realtors say it.
The entire real estate market was originally skewed by one simple fact: the industry is built on White people avoiding living near blacks. That is it. Why did people move out of neighborhoods in a city so they would have to drive half an hour to work in heavy traffic? Sure some of it might be because they love doing yard work but mostly because they don’t want to live in a high crime neighborhood. Drive around most midwestern cities and you will see lots of once very nice homes now in disrepair and divided into duplexes or apartments because Whites moved out.
AHS-
The reverse has happened in ATL, Charlotte and many larger urban Southern cities. I’ve dealt with mold, heating oil tank removals, asbestos, etc. since March 1989. On Monday I was in an area of Charlotte that used to be a dump, but a new client was buying there.
Asked him, “So, I gather this area is the new hot gentrification opportunity, right?”
His answer, “Yes. The gays started buying here last fall.”
Well, also living in downtown of big cities is stifling if (like me) you’re used to going outside and walking around in your yard, on your grass. I never understood how families could live in an apartment.
No one has ever accused me of being relentlessly optimistic, but I see Blackrock differently.
Instead of “Not content to strip mine American companies by loading them down with debt and ejecting them like Osama Bin Laden’s corpse off a flight deck, the private equity firms have entered as a competitor, buying houses with one goal: …” I see them simply as a company that’s in business to create return on investment for the people who hire them to do that.
Because of that, their interest in buying up land and houses is the old saying about investing in real estate: they’re not making any more of it. People hire Blackrock to manage their retirement nest egg and real estate is about the safest thing you can invest it. The more customers tell them they want safety and will take a smaller growth if it minimizes losses, the more land and houses they’ll buy.
Might be their own pension fund that’s pricing them out of the housing market?
Lathechuck
That is true – and legal. But focusing only on ROI is not necessarily moral or helpful.
Fit Fink’s smug comments on “forcing behaviors” into that “just doing their fiduciary job” model. Making money is a goal (and a legal one), sure. But resentment-driven social agenda is also there. And resentment may be a bigger driver if there (mis)behavior than profit.
I always suspected that Wall Street’s interest in single family homes was for purposes of a section-8 type rental, one backstopped by the Federal Government. The checks are always in the mail. Deep pockets.
Had an acquaintance that built those. Then after the tax break period expired, he’d boot the low-income and replace with higher income.
If you want cheaper housing, restrict mortgages. If mortgages were eliminated, or no longer than 10 years, demand would drop until prices become reasonable. Young families aren’t competing with other families. They are competing with the banks.
I like it.