This isn’t a problem of entitled Americans demanding unreasonable outcomes. Rents are up like 20% too, more in many markets. Wanting a place to live for less than half your monthly income is not unreasonable. The fundamental issue seems to be a lack of supply of housing. Of course, once you’re in the club you have zero economic interest in any new housing.
Really fun to see boomers pop in with their “work harder and skip the latte” takes on this.
Antitrust laws. They’re going to build up market power in various areas and then jack up prices. So throw some of the people who do this in prison and then the rest of them will stop doing it.
Why is she buying deep in the money calls? This seems weird. Not even corrupt, just strange. LOL this shit being allowed.
Right, but there are some pretty massive second and third order questions there. Who should build the housing? Where should the housing be built? What current government policy is harmful? What alternative government policy would help? How do we incorporate climate change concerns in this? How do we incorporate post pandemic changes in the way people work and where they work? This is a massive, massive problem.
She exercised expiring calls - not clear whether they were deep in the money when purchased. Not sure what the issue is, other than legislators shouldn’t be buying individual securities.
There isn’t a lack of ideas out there that would fix housing supply. It just can’t get fixed at the city council and county commission level. If you try to be the ‘affordable housing mayor’ then you are going to be hated and voted out immediately.
Yeah that’s why I think you’re probably looking at Federal policy, which again isn’t happening because of stupidity (STATES RIGHT THATS SOCIALISM PROBABLY CRT TOO!).
It does seem like an issue that won’t go anywhere until there’s a breaking point.
Well I belief that homelessness has increased somewhat during the pandemic (not that surprising given the impact on people in more at risk economic situations like retail work). There are about a half a million homeless Americans and that has been pretty stable for a long time. But it’s not hard to imagine literally millions becoming homeless if there is no change in housing cost trends vs. other trends. That would certainly be a huge wake up call to a lot of Americans who can currently comfortably ignore the relatively small number of homeless people in their towns and pretend it’s a problem that only affects Democrat Run Hellhole Cities.
The other possibility here is that there is a surge in housing supply in the Sun Belt to meet this rising demand, followed by climate change that renders a lot of that housing undesirable. Not much appeal to Phoenix if you need to drive to Colorado to get water, or to Miami if the parking lot in your condo is underwater all the time.
My instincts are that this is obviously a job for a Federal Green New Deal that builds affordable, sustainable housing in American cities. But that would require a functional Federal government.
I mean, a huge part of the problem is that almost all of the decisions made in this country that shape the broad economy are made in the interest of Boomers and at the expense of other generations - and the EV of those decisions is correlated to how close in age you are to the Boomers.
So, for example, the rate stayed at 0 way longer than it should have. This helped people who were more invested and hurt people who were less invested. So it helped old people and hurt young people. The trade off should be a huge crash, and still may be, which would hurt old people and help young people. But we’re trying to thread the needle with inflation instead of a crash, which again is better for the Boomers and worse for the Millennials.
So that’s the 30,000 foot view on anything economy/finance related and Millennials.
We graduated into a huge recession and were behind the 8 ball on saving up for down payments for houses immediately. Who’s fault was the recession? Deregulation, repeal of Glass-Steagall, shoddy lending practices. Who repealed Glass-Steagall? Politicians elected by Boomers.
This specific instance is more complicated because it involves supply chain issues, but like all of the previous policies that led to concentration of wealth among Boomers and away from Millennials is why my generation is struggling.
And this is the thing. Institutional money is basically betting that they can fuck Millennials REALLY good, because the amount they’ll spend on rent is elastic. When you’re in your 30s and you can’t afford to buy, and you don’t know if/when you ever will, it’s pretty hard to say, “My rent is going to be what? Fuck you, I’ll go live in a shitty one bedroom for half that.”
All the financial implications being what they are, there are also immense social implications. So as wages go up, rents are going up and not proportionally. Like if wages go up $500 a month, rents are going to chew up whatever amount of that isn’t chewed up by other inflation.
It’s a trap, and to break it you need a windfall, to live well below your means, or to be willing to suffer in poor housing conditions for a few years. I’ve been living well below my means for 5-7 years and haven’t been able to buy a house, in part because I was playing catch up on my retirement fund first.
They make my blood boil with these takes. My boomer dad and I were talking once and he’s not a “skip the latte” guy but he’s sort of like, “Ehh, when I was your age I didn’t make any more than that and we were just find. Your generation needs to save more.”
Me: You bought a '69 Camaro when you got your first job, right?
Him: Yup, loved that car!
Me: Was it new or used?
Him: New.
Me: How much did it cost?
Him: About $3,000.
Me: Now they’re about $35,000. How much was your rent?
Him: I don’t know, a few hundred bucks a month?
Me: Now it’s impossible to find a nice place under a thousand, really more like $1500. How much were movie tickets?
Him: Maybe a dollar?
Me: Now they’re $10. So please, tell me more about how you got by on the same amount of money.
Him: Yeah, good point. Well, anyway…
I think it’s pretty ridiculous she has millions of dollars invested in a company she directly influences, substantially. BBB had what, a $7,500 EV tax credit?
There’s not going to be a breaking point. Home ownership will cease to be part of the American Dream for younger generations, which will destroy any semblance of upward mobility because rent prices will outpace inflation and chew up the vast majority of all wage increases.
Then CNBC will start cranking out daily articles like:
Why Owning A Home is for the Birds
Can’t Afford a House? Why Renting is a Blessing in Disguise!
How I Went from Renting a Studio to Buying a 4-bedroom in a Year!
(with Daddy’s $100K gift)
The only question is how long it takes for this to play out. Probably three years on the short end, 10-15 on the long end. Because this is the play the private equity guys are making:
The only way to break that cycle is for millennials and Gen Z to say “FUCK YOU” and move farther and farther away from population centers, which of course relies on being able to work from home, which is yet another reason the wealthy powers that be hate WFH.
This is true, but there’s one other thing you missed. The oldest Boomers are currently 76 years old. As they die off, the demand for housing is going to drop substantially. The question is will younger generations want to live where Boomers lived, in the homes they lived in, with their 70s and 80s interiors? They probably won’t have much choice, so they’ll buy fixer uppers and deal with it later.
The other question is how profitable is the monopoly play being made by institutional money? If it’s profitable enough, they’ll buy up houses to destroy them.
I totally agree with you. On the politics stuff, I really think it’s more an issue of money in politics as opposed to Boomers voting in the guys that help them. They obviously have done that in the past to their own benefit at the cost of everyone else, but currently there are more millenials than Boomers in the US so the Boomers can’t brute force their way to election victories anymore. At this point it is more the fault of the entrenched institutions - big money, bought and paid Boomer (and even older!) politicians - that are driving the outcomes. They have successfully entrenched themselves in power beyond when they should have unchecked power over the electoral system, which is a recipes for disaster of course. It sure would be nice if the US had a functional democracy and/or Federal government. Alas.
By ‘breaking point’ I mean the point at which younger people with modest incomes not being able to afford housing starts to actually hurt the profit of corporations broadly (at which point you’d get some kind of fix and wonder how/why it happened all of the sudden) and/or the quality of life of older people with homes in a way that’s demonstrable and obvious (at which point maybe you’d get people running and winning on the issue).
There will be a lot of Boomers that give their good homes to their kids outright, and the shitty ones will go on the market.
In California the property tax never resets if you keep a house in the family. Completely outrageous.
It’s both. It’s not explicitly, “Help me and fuck the other generations,” it’s more just selfish politics for decades. “Yes to Social Security and Medicare, no to more taxes. Yes to more defense spending, no to more taxes.” Rinse and repeat for 40 years… Good luck getting elected running on less spending or more taxes.
Same thing applies to a lot of the other policy. The money in politics is also a huge issue, but that has more to do with stuff like Glass-Steagall getting repealed, right? It’s not like Boomers were voting based on that issue, but they fell for the scam for decades and voted in politicians who wanted deregulation, and they reaped the benefits until it blew up.
So, do we excuse them for being conned? Or do we blame them for falling for it for so long?
And hopefully that starts to change now, but there are still more Boomers voting than Millennials, especially in primaries. So we get Biden instead of a progressive who would fix some of this stuff. Plus it’ll take decades to move the Democratic Party back to where it should be on economic issues, and lose all of this Third Way moderate Blue Dog bullshit. Plus their deregulation of corporate finance law may have made that impossible anyway.
Yup, I agree, I just don’t let the Boomers off the hook even a little bit for the consequences of their collective decisions.
I mean as long as the rents just chew up all of the wage growth, people will just trudge along with no upward mobility. If/when they get too greedy and stop following the metrics on how much to raise rents, they’ll blow up their own spot.
I don’t think there’s going to be a political revolution because people are trapped as renters, as long as the places they’re renting are comfortable enough. Especially when the financial propaganda machine starts cranking out op-eds about why renting is the smart play anyway.
Oh, sure. I was just focused on the fact that she wasn’t buying deep in-the-money calls. She was exercising calls that may have been in- or out-of-the-money when purchased. I’m a natural contrarian who sometimes focuses on minor details that I disagree with while ignoring the broader message that I agree with. It’s infuriating to my wife.
