Housing globally is in a bubble (See chart below) which we’re constantly assured isn’t a bubble. As I discussed yesterday ( The Problem Isn’t a Housing Shortage, It’s the Concentration of Ownership by the Wealthy
central bank and government policies that enrich the already-rich, who were incentivized to outbid each other with low-cost credit to snap up “investment properties” with their “surplus capital”
artificial scarcity–a scarcity created by central bank and government policies, not the “market.”
This hoarding is (as I explained) the only possible result of policies that asymmetrically distribute credit, and thus income and capital gains, to the already-wealthy rather than to the not-yet-wealthy.
This model is called short-term vacation rentals (STVR), and the already-rich have been pouring their wealth into STVRs for the past
This model is called short-term vacation rentals (STVR), and the already-rich have been pouring their wealth into STVRs for the past 15 years.
It’s not uncommon to visit tourist-magnet cities and see entire buildings with only a few lights on, as many units are owned by the wealthy and left empty, as rents are not as important as having a safe place to “park surplus capital.”
As I explained yesterday, the flood of post-pandemic price-insensitive “revenge spending” pushed tourist lodging rates to the moon as resorts and STVRs competed on exploiting price-insensitive tourists.
The Pareto Distribution is a handy tool for understanding how an entire neighborhood’s home prices are re-set by a mere handful of sales.
the “vital few” 4% exert outsized influence over the 64% mass. So 4% of sales can re-set the valuation of 64% of all neighboring houses.
The STVR bubble was entirely an artifact of 1) historically absurdly low mortgage rates and 2) post-pandemic price-insensitive “revenge spending”. Both are over.
There is no way the bottom 90% can afford homes at today’s bubble valuations, so the pool of buyers is limited to the top 10% already-wealthy, whose appetite for owning “surplus capital” rentals vanishes once the lofty weekly rates and low vacancies reverse into high vacancies and collapsing rental rates.
Housing globally is in a bubble (See chart below) which we’re constantly assured isn’t a bubble. As I discussed yesterday ( The Problem Isn’t a Housing Shortage, It’s the Concentration of Ownership by the Wealthy
central bank and government policies that enrich the already-rich, who were incentivized to outbid each other with low-cost credit to snap up “investment properties” with their “surplus capital”
artificial scarcity–a scarcity created by central bank and government policies, not the “market.”
This hoarding is (as I explained) the only possible result of policies that asymmetrically distribute credit, and thus income and capital gains, to the already-wealthy rather than to the not-yet-wealthy.
This model is called short-term vacation rentals (STVR), and the already-rich have been pouring their wealth into STVRs for the past
This model is called short-term vacation rentals (STVR), and the already-rich have been pouring their wealth into STVRs for the past 15 years.
It’s not uncommon to visit tourist-magnet cities and see entire buildings with only a few lights on, as many units are owned by the wealthy and left empty, as rents are not as important as having a safe place to “park surplus capital.”
As I explained yesterday, the flood of post-pandemic price-insensitive “revenge spending” pushed tourist lodging rates to the moon as resorts and STVRs competed on exploiting price-insensitive tourists.
The Pareto Distribution is a handy tool for understanding how an entire neighborhood’s home prices are re-set by a mere handful of sales.
the “vital few” 4% exert outsized influence over the 64% mass. So 4% of sales can re-set the valuation of 64% of all neighboring houses.
The STVR bubble was entirely an artifact of 1) historically absurdly low mortgage rates and 2) post-pandemic price-insensitive “revenge spending”. Both are over.
There is no way the bottom 90% can afford homes at today’s bubble valuations, so the pool of buyers is limited to the top 10% already-wealthy, whose appetite for owning “surplus capital” rentals vanishes once the lofty weekly rates and low vacancies reverse into high vacancies and collapsing rental rates.
