05/23/2022
**State of the Union**
What you're seeing here regarding home values is not a bubble. It's a canyon. The gap between the have and the have nots is growing to an insurmountable divide. I believe it is intentional.
Despite rising rates, remove the mortgage dependent buyers from the market and there are still a slew of institutional investors lined up to buy the home sight unseen at over market price without inspection, appraisal, or financing contingencies. This has been going on for 2-3 years now and while slowing, it's only slowing from a scream to a roar.
You see, Wallstreet figured out a way to legally purchase homes through "straw-man" financing. You or I would go to prison if we did what they're doing now. Nobody would sell to Black Rock Financial, but they'll gladly sell to Open Door. While Open Door isn't a publicly traded company, it's financed wholly by private capital. Wall Street private capital.
Open Door, Zillow, or whatever new tech company isn't buying your home, Wall Street is. How many of you would be shocked to know that John Smith LLC didn't actually buy your home, Black Rock Financial did? ABC home investors didn't buy your house. Fu***ng Vanguard did.
Why would "they" pay đź’° bags of money for these homes, sight unseen, unconditionally, and over value? Stupidity? FOMO fever? Money is cheap? Crypto Bros gone wild?
What does Wall Street know that the average American does not? Let's start with the fact real estate has risen through every major recession but the most recent one of 2008 which was caused by the very banks we bailed out (if you see patterns here you're not crazy).
They know this bs market is overinflated. They know their tech stock valuations are absurd. They always have. They needed the dumb public (myself included) to throw their money in the pot before they pulled the drain plug.
Real estate is tangible. It can't disappear overnight in a barrage of ones and zeros or a bad morning of Reddit stock bros hopped up on energy drinks. Real estate is the safest investment, period. In times of overinflated economies, 10x.
So not only are they reparking their money right now. They are doing so in such an agressive manner that the average person doesn't have the length to compete.
But this isn't about flipping houses for a quick buck. It's not even about basic greed. Sure, the property flippers among us have contributed but they are a drop in the bucket. Wall Street has an ocean of money tied up in the residential real estate market. This is about the long game.
This is about creating an entire nation of renting serfs. It doesn't matter what you pay for a home when you have zero intention of ever selling. Many of us have sold homes to these companies. How many of you have bought one from them?
What we are seeing is an intentional take away of what has throughout the history of this country been the primary means of creating wealth for its citizens; property ownership.
The recent and intentional rise in interest rates means the same $500,000 home now costs $1,000 more for that family. Add to this the rising cost of gas, groceries, and everything else but wages and the perfect recipe for a lifelong renter is in place.
What happens when an entry level home is $500,000? It means you're not buying a home with less than $25,000 in the bank. If you make less than $80,000 a year you don't even qualify for the payment.
Yet and still, call Open Door right now and ask them to buy your house. List your desirable rental house for sale on the MLS at a reasonable price and watch the investor offers poor in, sight unseen.
Just wait for rent prices to catch up because they haven't yet. Right now they're still in takeover mode. It's coming. It will be a tsunami. Of course, that problem will be intentional as well. All of these problems follow their textbook. Problem-Cause-Solution will be Federally enforced rent controls that will grandfather existing property ownership. Haves = Ok. Have Nots = Buried.
They will wait to bury us until they've bought a large enough share of the market they can manipulate rental prices and then, it will happen over night.
There is no bubble people. Home prices may level or slow but they will very likely never come down again. There simply aren't enough homes to fill the need and there never will be, again. The cost of building now prohibits home builders from making a profitable and affordable home. "Affordable housing" is itself an oxymoron. We don't catch up from this problem. This problem was the goal all along. Massive migration to places inflation hasn't yet caught up to will be the only alternative.
So all of you cowering in the corner right now or telling your buyers to wait. Understand, you're doing exactly what the elite want you to do. Everyone pulling over to the side of the road right now is playing into their hands.
If rates fall in the future that only means everyone else will jump back in at that time too. The inventory gap will not be solved by even a short term (half decade) rise in rates. Higher rates for longer than that only serves my point.
You want to be the person who already owns and can then take advantage of your equity and your cash flow when rates do fall.
Right now, unless you have designs on massively improving your income over the coming recession/depression then there simply is no way you'll own a home in the future, if you can't/don't buy one now.
Don't wait to buy a home. I fear many of those who wait, particularly the ones at the rapidly rising entry level, will never own a home. Right now I believe it's buy or die.
