I work in NCIBs for a major bank and it’s the busiest we’ve ever seen it. Everyone is buying back shares at high volume currently, and historically companies are way better at forecasting the future of the market than investors.
My prediction is inflation comes under control in 6 months and rates drop soon after, market explodes sometime in the next 3-9 months.
I think the missing factor is that there is a limited supply of real estate near population centers where all of the good paying jobs are, there are factors (climare change) that will reduce that supply, and if they can corner the market the only limit on rent is what people are capable of paying after other core necessities are paid for. There is some theoretical tipping point where the returns should go way up.
Nobody has market power in residential real estate, and that’s highly unlikely to change.
That’s definitely conventional thinking but I’m not so sure it’s going to apply here. I think that when you filter by desirable location and factor in the extreme concentration of wealth, we’re entering uncharted territory.
It’s just not realistic at all. Even if housing is largely owned by corporations, the rent is still subject to basic supply and demand. The conditions for monopolistic pricing power are not achievable.
As a very wise man once said, “If it’s what you say, I love it.”
I disagree with the bolded to an extent. I think when accumulating real wealth is basically hopeless, people will pay whatever they can possibly afford to live in a nice place. Also part of the premise here is more or less cornering the supply, and the demand should remain high in areas like the ones I described - where all the good work is.
Housing should be relatively price inelastic to a point. People absolutely need it so will pay what it costs. That being said there is an upper bound to that set by incomes. How close we are to that is anyone’s guess.
The rents people are paying for absolute dumps in OKC that I see from my clients are insane and this is one of the most affordable cities in the US.
A relatively small percentage goes on the market each year, though. They don’t have to control the entire supply, they have to limit the amount available to new homebuyers at affordable prices.
I mean, smart people running these corporations/hedge funds/private equity firms were buying in cash at bubble prices. You’ve got to ask yourself why, right? Either they’re stupid or they have a plan.
The unhoused population seems to be rapidly expanding too. There were never more than a couple people living on the streets where I am, and now there are multiple encampments ranging from a few people to a couple dozen. Some people were in the Walmart parking lot for well over a year until the property manager ran them out. There’s a new RV spot I can see from my back yard. It’s gone from 1 RV to three in the last week. I think there are tents up behind there too, with people who got driven out of a nearby lot when the owner clear cut everything.
This is not a large urban area. It barely qualifies as a city.
Don’t give them too much credit. They were buying because renting houses out was yielding 5% when treasuries were yielding 2%, which enabled them them to raise capital. Who the fuck is signing up for a massively illiquid 5% return (less fees) with investment grade bonds yielding 6% or more? Nobody.
As I said earlier in the thread it could just be that stocks were overvalued and bonds were returning close to zero and this was seen as the best alternative. It doesn’t have to be cornering the market. It could just be as simple that rental yield is far surpassing bond yield even factoring in management costs and friction and housing rentals are also likely to be a good inflation hedge if inflation continues for a long time.
A once in a lifetime opportunity guys:
Expense ratio 4.2% LOL
I feel CDs can be perfect for a specific group - sometimes late-stage folks not wanting risk, or begginners who have little knowledge on investing or those accustomed to gambling on it. It’s one of the few benefits of rising rates.
Bank of England deciding to go back to stonks go brrrrr QE?
UK policy legitimately incomprehensible at this point.
20% inflation!
Just like with the GOP the people in charge now actually believe the “bonfires of regulation” shit that was supposed to be for the rubes and only applied to worker protections.