I get that if GDP growth is less than inflation, then in real terms the economy is shrinking, even if nominal GDP goes up. But stock prices are in nominal dollars; steady stock prices (or prices increasing at the same rate as GDP) would mean a real decline in value. But explaining why prices for these stocks are falling in nominal terms should involve something about why they would grow slower/shrink faster than the rest of the economy, right?
Most reports of GDP growth use "real" dollars, that is inflation adjusted.
Those continue to show growth.
https://fred.stlouisfed.org/series/GDPC1
I mean, the math may be a bit off since measuring GDP and measuring inflation are both imperfect things, but they do try generally.
My paycheck has not increased in size relative to increase of prices of necessities. Every dollar going to necessities is a dollar that can't go to discretionary spending.
Lower discretionary spending for a long enough time means growth slows. The prices traders are willing to buy stocks is a function of a company's future growth prospects. Slowing growth rates makes for a recession.
Too many politicos define "strong economy" in terms of unemployment rates because they're simple scalar values. Full employment with high prices doesn't make for an environment where anyone can eke out margins.
Appeal to authority is a weak argument. We are trying to use reason to figure out what's going on, not close the discussion by saying that we are not the entity that gets to decide such things.
Everyone knows no country besides the US has ever experienced a recession, since the NBER didn't declare it. And even for the US, they've only happened since the establishment of the NBER, since they weren't around to declare recessions before they existed and thus there were by definition no recessions. We should just abolish the NBER and thus ensure there will never be another recession.
NBER has declared that the definition of a recession is when NBER has declared a recession. NBER has declared that disagreements with that definition are clearly invalid, since NBER is the source of the official NBER definition of recession.
I think it's the amazon/meta/google/walmart effect...all$ going to those. The realization setting in that the US economy is increasingly going to be dominated those handful of firms, among others. Unless you own those, you will miss out, hence selling. This is why so many people recommend index funds in order to minizine the likelihood of missing out.
Also, retail losing business to Walmart + Amazon and maybe Shopify. it's not so much that retail is dying but that the $ is going to fewer firms.
Something about that doesn't seem right. What about Apple or literally any of the other mega corps that have passed or closed to approach the 1T market cap?
I take the factoid as not about the companies doing better, it was about investments in the companies. It has become incredibly common for stocks to not pay dividends nowadays, so that the only way you make money from investing in them is by exiting that investment. (Well, if you are ultra rich, you could leverage it.)
Edit: This also means that much of the money you would make from owning something like McDonald's can't be seen by just charting the growth in stock price. You have to also look at the money you could make by taking the dividends and putting that somewhere.
>This also means that much of the money you would make from owning something like McDonald's can't be seen by just charting the growth in stock price. You have to also look at the money you could make by taking the dividends and putting that somewhere.
What about the money you could lose by taking the dividends and putting that somewhere?
That is a bit of a diversion, as you could have picked a tech stock that went to zero, as well.
That said, sibling post disputes if the factoid is even true. So, not clear what the full point is. I am personally sympathetic to the idea that dividends used to be one of the defining differences between profit and non-profits. You have to get into buybacks to fully see the differences today, I think. And that does feel like a very different thing. The argument doesn't get any favors from false factoids, though. :(
McDonald's did outperform both SP500, Amazon and Facebook.
My point was that this kind of comparisons are true when you speak about sectors (growth vs dividend growth the first is gonna outperform in the long run, it's designed to...) but if you compare on a stock basis you find plenty of tech mega caps outperformed by old boring business if dividends are included, McDonald's was just a random example.
> McDonald's did outperform both SP500, Amazon and Facebook.
MCD outperformed AMZN.
META (14%+) outperformed MCD.
SP500 was equal to MCD.
> if you compare on a stock basis you find plenty of tech mega caps outperformed by old boring business if dividends are included, McDonald's was just a random example.
What is a stock basis? If your unit of accounting is money, and your goal is money, then the total return calculator, which includes dividends, linked above is going to give you the only answer.
I cannot conclude there are not plenty of businesses out there outperforming the tech megacaps. Amazon might be lagging in the 5 year period, but you have to look on a timeline of decades. There is a reason these companies are at the top of the market cap rankings. There are entire sectors of other old businesses have not increased in decades by what just AAPL or MSFT alone have grown.
This gets at the issue I see developing sine the 1980s. Pre-1980 much a of small town's economy was dominated by local businesses. Currently I see more money leaving the local economy via subscription. Most historic economic measures aren't that old and economies are not really stagnant. This all compounds into a less generalized economy.
Housing / land valuation is wildly off from the needs of the people. For more than literally my entire life there has been a chronic shortage of housing, with less built than is necessary for multiple decades of time. The issue has compounded.
We are at the point where the solution is to literally build housing non-stop and just do that for years.
Edit:
The buzzfeed article mentions National Low Income Housing Coalition as the source of it's infographic. Here are some additional links. https://nlihc.org/oor/report-graphics
https://ourworldindata.org/grapher/population
The massive growth of the global population is hard for people to grasp, but is a big part of the cost of housing.
Even if we've built billions of new homes in the last century that isn't enough to compensate the bigger still population increase.
Since 1968, 77 million housing units have been completed in the US. At 2.5 people per household, that's enough for 190 million people. The US population has increased 133 million over that time. We have plenty of housing.
Just looking at new housing units is only half of the story. I can't and won't speculate on how many homes were torn down during the time it took to build 77 million housing units, but it had to be a significant number.
If two single-family houses were torn down to make room for one new-build, single-family house, then it is a loss of housing. Not to mention natural disasters, condemned housing, rural housing being torn down for farmland, urban housing being torn down for new highways. I do wonder how many houses were destroyed in that same timeframe.
Absolute footage is the wrong metric of the average per household is also larger. You want to look at the number of units. One thing that can happen is a single family home split into multiple units
The US contains also huge mcmansion-style houses that are actually only classified to hold a single family. I think if you speculated more for the average person, housing is less and less available to them all the time... Although the above poster attributes it to a lack of housing, the actual cause of housing shortage is likely far more complicated. The crash in real estate in 2008 froze construction for over a decade arguably, and also, real estate is considered a commodity/investment as opposed to something like a car. So people plan their financial futures assuming their assets will go up in value, ignoring that this means their assets will by necessity price out their own economic band.
The section about housing being an investment in your comment can't be stressed enough.
We were turned down for a mortgage at the first bank we tried because we refused to finance enough to improve the landscaping. The bank wanted to see what the ROI on the home was. We were buying a forever home. Increase in value is someone else's problem after I'm dead.
This is in the USA? I have never heard of anything like that.
The bank would just be tasked with handling the paperwork (underwriting) of ensuring it is a conforming loan by getting an appraisal done and verifying your income/assets so they can get paid by the US government (fannie mae/freddie mac/ginnie mae/etc).
Not to mention that a lender does not get a piece of the collateral's sale price, so why would they care what improved landscaping would do to the price of the home if and when a homeowner wants to sell it?
Your scenario only makes sense if the lender was also getting a piece of the equity.
That’s wacky, I’ve never heard of that in the USA. You mortgage is a commodity that is packaged and sold off within a month or 2. It just need to meet the checklist of requirements and it gets sold off as a CDO or some other financial instrument. The mortgage writer just needs to make sure you meet the checklist and don’t default while they do the transfer.
I don't think it's realistic to expect that multiple families will start living in houses intended for one, so the amount of sqft doesn't help as much.
>Housing / land valuation is wildly off from the needs of the people. For more than literally my entire life there has been a chronic shortage of housing
If there is a housing shortage then the unaffordability is reflective of proper valuation.
If people need more housing than they are getting, a free market would indicate valuations to go higher. I would suspect that you’d like to see housing revalued lower, though
Housing supply is not a free market. At least in the US, there's a committee reviewing each parcel deciding how many sqft of interior space, how many kitchens, how tall, and what uses.
1 - market is not free, 2 - some regions have zones, prohibiting building medium to high density buildings, 3 - building materials got more expensive, 4- labor too
I came to the same conclusion from another place: the nth time seeing news about some block finding it cheaper to live in a cruise ship than in a retirement home anywhere in the US. This is only possible if all land value is inherently overinflated beyond measure that a floating coal burning ship all expenses paid is cheaper than a retirement home that should have 5x less overhead.
This is because the American home buyer isn't competing with other American home buyers anymore.
They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit.
Everyone who buys a house today wants the value to go up. Nobody who can afford a house needs one. They are not commodities that you utilize and repair. They are now investments, vehicles to grow your money.
That's great for all the snobbish out of touch retirees. But the middle class needs somewhere to hang their hat so they can rest up and make it to work tomorrow.
This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem worse because we will have even less development that people need. We need to heavily update construction regulations to be more sensible like Tokyo, and we probably need massive amount of direct and indirect public housing investments.
I would argue we need to put limitations on what entities can purchase residential property. There is no reason a corp needs to own a 2 bedroom house. It is manipulating a critical market and destabilizing everything. Push them out of the market. They should have have no skin in this game.
You want to increase the supply. I want to tank the demand. Your method won't work because if regular people could afford to compete, they would be already. The players in the market manipulated the prices once to give themselves an advantage. You're just giving them an opportunity to do it again. Only now they have the market cap to do it right.
The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA.
And taxes will come down too because towns will have no choice but to tax property owners more reasonably.
Rentals make up a small percentage of single family homes. Around 5% depending on where you are. Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. We know flooding supply works because we've seen it play out. Tokyo is the biggest metro area in the world, with a growing population, and reasonable rents because the government took serious measures to increase supply. Restricting demand by banning corporate investors probably won't help, but even if they did it did the effects would be minor. Focus on the solutions we know will work.
> Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash.
What data do you have to support this?
> As of 2022, investment companies own about one-fourth of all single-family homes in the US, accounting for 22% of American homes sold, down from 80% in 2020-2021
Naturally, the homes bought are all in the most densely populated areas with a relatively new construction (gentrified neighborhoods). I think it's gonna be a couple years before prices drop.
Large institutions own 5%. Most of these "investors" are house flippers and small landlords trying to "make it big in real estate". It's not the 1% strangling the working class, it's the 10%. Any solution that doesn't hit them the hardest won't be a solution. Infact, we want more density, we need more gentrification, so I don't want to discourage large institutions from investing in a new apartment. But at the very least, if you claim to care about housing prices, don't prevent the government from building more housing.
The average home size in Tokyo is 60 square meters, that's 645 square feet. That's called a one room studio apartment in the US. I don't personally know anyone that wants to live in a box like that, except maybe single people just out of college with little income.
There are plenty of people in the USA who live in apartments today. Building more apartments is outlawed in many areas due to land use rules. If people truly won’t live in the apartments, land use rules can be abolished and developers and builders won’t build those homes because they’ll find them unsaleable in the marketplace.
Individual home owners and business interests have a vested interest in maintaining a very tight grip on the status quo with regard to zoning, which is the primary tool for driving housing reform.
They will continue to do everything in their power to prevent the construction of affordable housing, because it will destroy their current real estate investments.
The non-landed folks have zero leverage within the political system.
If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game and you'll have the corporate owned HOAs that are just out of control expensive. Oh, and plenty of tent cities.
You don't need low income housing. Just make government housing at market rate. If you really want to be kind, offer it at maintenance cost. Even if housing prices don't fall(they probably will), they won't rise faster than inflation if the market is sufficiently flooded. Eventually wages will catch up to prices. Yes it will take a long time, but that's why we need to do it now. No. Twenty years ago.
I'll take C&C barracks (a basic Quonset Hut) at this point, as long as I can own it and it's legally habitable. I don't care about aesthetics. In fact, something like that would be ideal as I could customize it completely.
Unfortunately those sorts of structures are banned by most municipalities.
Well it's two problems: the monetization of non money assets and the artificial housing shortage to encourage housing as an investment vehicle. A significant percentage of property investment is simply hedging against inflation. Even someone speculating is doing so to a large degree.
So the other fundamental problem is that it is impossible to save money because it is constantly being debased.
I think this is flipped. VC's wouldn't compete here if the the supply was much bigger because than the price globally would dip they wouldn't have a leverage advantage. If there was no shortfall in constructions for multiple decades that VC see houses as an opportunity.
I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses.
Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses
If they're using it to "house cash" then the only thing they need is continued inflation of housing costs. Even if it were lower than today, the inflation is the only thing needed for them to continue investing in it as its then considered to be a protection against inflation if nothing else.
that's not true, these things exist today and they don't stop anyone from investing.
What you're trying to say is that it would be less profitable and that may be true but as long as it tracks with inflation it would be worth it as an investment tool.
That’s a big caveat. Inflation is 4-5% officially, bonds are 7-8 ish maybe more for real estate investment. But real estate prices are falling or flat. If you suddenly need to earn even 6% off a house you need to rent it for quite a bit. It might make sense still at the low end (under 250k) but a 500k property needs to rent out for 2500a month to break even. And that’s not including taxes, maintenance, vacancy, admin, and transaction costs at sale. House prices need to come down for this to be a profitable venture again. The bet is that real estate prices will rise to new highs faster than inflation or at least comparable assets. If that doesn’t happen then you lose money
> This is only possible if all land value is inherently overinflated beyond measure that a floating coal burning ship all expenses paid is cheaper than a retirement home that should have 5x less overhead.
This isn't all land. It's just desirable land - in cities basically. The urban to rural migration has been going on for many decades now and doesn't seem to show any signs of slowing down.
This is absolutely false. Since 1968, 77 million housing units have been been built in the US. Assuming 2.5 people per household, today's average, that's enough for 190 million people. US population has increase 133 million since 1968. We have plenty of housing. It may just not be where you want to live and the type of housing want at the price you want. But no one is guaranteed any of those and shouldn't be.
If you want to understand the housing price problem, look no further than the irresponsible monetary policies of the last 20 years.
Simply looking at median house prices to median household income we can clearly see the impacts to housing prices from the stimulus following the dotcom bust, the stimulus following the housing bust, and the stimulus from the pandemic. Hint, they're the big upward slopes.
Because a large number of 401k plans are drawing upon stocks so that retired folk can live out their retirement.
The boomers are retiring, and they're the first major group to retire under 401(k) program. They will be selling stocks and bonds (and whatever else they've invested into) and are no longer buying stocks with their end-of-career top-level paychecks.
"The market is like a large movie theater with a small door. And the best way to detect a sucker is to see if his focus is on the size of the theater rather than that of the door." - Nassim Nicholas Taleb in Skin in the Game
(This is not to say that you, specifically, are a "sucker", and I don't love the term. But I think Taleb has a lot to offer on considering risk.)
You're looking at market cap when you should be looking at volume. 5% of the stock market going liquid at a higher than ambient rate can reduce valuations by significantly more than 5%, possibly multiples more. And as we saw with interest rate hikes and bonds the past couple of years, something like that is a systemic risk and the fallout can easily cascade.
As you'd expect the contribution percentage increases with age (and the amount presumably increases even more). But even under 25s are at about 5% which is more than I would have expected though this is presumably just among people who have the option.
I just glanced at the S&P 500, and it doesn't look like it's down by much. Are stocks really tanking, or is this just another attempt by conservatives to spread FUD about the economy?
No, stocks are not tanking, but there has been a correction in consumer staples. For example, Vanguard Consumer Staples (VDC) is down over 10% from its high. Investors generally buy into consumer staples as a defensive move in the business cycle. But risk free money markets are paying over 5%...
If I can get ~5% risk free return from treasuries, I need to believe I can get MORE than 5% return on equity to pay for the risk. So prices have to fall.
I'm surprised prices haven't fallen more given we've gone from 0% risk free return in a short period.
113 comments
[ 2.6 ms ] story [ 144 ms ] threadI get that if GDP growth is less than inflation, then in real terms the economy is shrinking, even if nominal GDP goes up. But stock prices are in nominal dollars; steady stock prices (or prices increasing at the same rate as GDP) would mean a real decline in value. But explaining why prices for these stocks are falling in nominal terms should involve something about why they would grow slower/shrink faster than the rest of the economy, right?
People can keep clamoring for it, but the only recession the US is possibly in is a “vibes based” recession.
https://ycharts.com/indicators/us_recession_probability
Maybe because the current state implies a higher than normal probability of the US being in a recession? Kinda accounts for the vibes.
Lower discretionary spending for a long enough time means growth slows. The prices traders are willing to buy stocks is a function of a company's future growth prospects. Slowing growth rates makes for a recession.
Too many politicos define "strong economy" in terms of unemployment rates because they're simple scalar values. Full employment with high prices doesn't make for an environment where anyone can eke out margins.
Going green will destroy our economy because there is no infrastructure to replace fossil fuels yet.
The "two quarters of negative growth" was only ever a rule of thumb that mostly fit, never the official definition.
Also, retail losing business to Walmart + Amazon and maybe Shopify. it's not so much that retail is dying but that the $ is going to fewer firms.
Edit: This also means that much of the money you would make from owning something like McDonald's can't be seen by just charting the growth in stock price. You have to also look at the money you could make by taking the dividends and putting that somewhere.
What about the money you could lose by taking the dividends and putting that somewhere?
That said, sibling post disputes if the factoid is even true. So, not clear what the full point is. I am personally sympathetic to the idea that dividends used to be one of the defining differences between profit and non-profits. You have to get into buybacks to fully see the differences today, I think. And that does feel like a very different thing. The argument doesn't get any favors from false factoids, though. :(
https://dqydj.com/stock-return-calculator/
MCD is 11.29% per year for the last 5 years. AAPL is 28.2%, MSFT is 26.49%, GOOG is 20.91%.
Even a riskless SP500 investment earned 11.139%
https://dqydj.com/sp-500-return-calculator/
McDonald's did outperform both SP500, Amazon and Facebook.
My point was that this kind of comparisons are true when you speak about sectors (growth vs dividend growth the first is gonna outperform in the long run, it's designed to...) but if you compare on a stock basis you find plenty of tech mega caps outperformed by old boring business if dividends are included, McDonald's was just a random example.
MCD outperformed AMZN.
META (14%+) outperformed MCD.
SP500 was equal to MCD.
> if you compare on a stock basis you find plenty of tech mega caps outperformed by old boring business if dividends are included, McDonald's was just a random example.
What is a stock basis? If your unit of accounting is money, and your goal is money, then the total return calculator, which includes dividends, linked above is going to give you the only answer.
I cannot conclude there are not plenty of businesses out there outperforming the tech megacaps. Amazon might be lagging in the 5 year period, but you have to look on a timeline of decades. There is a reason these companies are at the top of the market cap rankings. There are entire sectors of other old businesses have not increased in decades by what just AAPL or MSFT alone have grown.
https://www.buzzfeed.com/suzystrutner/how-much-you-need-for-...
Housing / land valuation is wildly off from the needs of the people. For more than literally my entire life there has been a chronic shortage of housing, with less built than is necessary for multiple decades of time. The issue has compounded.
We are at the point where the solution is to literally build housing non-stop and just do that for years.
Edit:
The buzzfeed article mentions National Low Income Housing Coalition as the source of it's infographic. Here are some additional links. https://nlihc.org/oor/report-graphics
One bedroom home in hours worked by county: https://nlihc.org/sites/default/files/oor/2023/2023OOR-ppt-f...
Two bedroom rental in dollars per hour: https://nlihc.org/sites/default/files/oor/2023/2023OOR-ppt-f...
Growth in the developed countries with housing shortages keeps getting revised down.
If two single-family houses were torn down to make room for one new-build, single-family house, then it is a loss of housing. Not to mention natural disasters, condemned housing, rural housing being torn down for farmland, urban housing being torn down for new highways. I do wonder how many houses were destroyed in that same timeframe.
I thought there was more housing sqft per capita in the US than just about anywhere else? If so it seems more like a distribution problem.
We were turned down for a mortgage at the first bank we tried because we refused to finance enough to improve the landscaping. The bank wanted to see what the ROI on the home was. We were buying a forever home. Increase in value is someone else's problem after I'm dead.
It was. Well. Fascinating.
The bank would just be tasked with handling the paperwork (underwriting) of ensuring it is a conforming loan by getting an appraisal done and verifying your income/assets so they can get paid by the US government (fannie mae/freddie mac/ginnie mae/etc).
Not to mention that a lender does not get a piece of the collateral's sale price, so why would they care what improved landscaping would do to the price of the home if and when a homeowner wants to sell it?
Your scenario only makes sense if the lender was also getting a piece of the equity.
I don't think it's realistic to expect that multiple families will start living in houses intended for one, so the amount of sqft doesn't help as much.
That is common in other countries, though it is usually a single extended family.
Not saying we should evict random people, but it is objectively a terribly inefficient allocation of societal resources. There's no easy answer.
If there is a housing shortage then the unaffordability is reflective of proper valuation.
If people need more housing than they are getting, a free market would indicate valuations to go higher. I would suspect that you’d like to see housing revalued lower, though
Housing supply is not a free market. At least in the US, there's a committee reviewing each parcel deciding how many sqft of interior space, how many kitchens, how tall, and what uses.
They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit.
Everyone who buys a house today wants the value to go up. Nobody who can afford a house needs one. They are not commodities that you utilize and repair. They are now investments, vehicles to grow your money.
That's great for all the snobbish out of touch retirees. But the middle class needs somewhere to hang their hat so they can rest up and make it to work tomorrow.
You want to increase the supply. I want to tank the demand. Your method won't work because if regular people could afford to compete, they would be already. The players in the market manipulated the prices once to give themselves an advantage. You're just giving them an opportunity to do it again. Only now they have the market cap to do it right.
The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA.
And taxes will come down too because towns will have no choice but to tax property owners more reasonably.
What data do you have to support this?
> As of 2022, investment companies own about one-fourth of all single-family homes in the US, accounting for 22% of American homes sold, down from 80% in 2020-2021
Naturally, the homes bought are all in the most densely populated areas with a relatively new construction (gentrified neighborhoods). I think it's gonna be a couple years before prices drop.
Large institutions own 5%. Most of these "investors" are house flippers and small landlords trying to "make it big in real estate". It's not the 1% strangling the working class, it's the 10%. Any solution that doesn't hit them the hardest won't be a solution. Infact, we want more density, we need more gentrification, so I don't want to discourage large institutions from investing in a new apartment. But at the very least, if you claim to care about housing prices, don't prevent the government from building more housing.
Individual home owners and business interests have a vested interest in maintaining a very tight grip on the status quo with regard to zoning, which is the primary tool for driving housing reform.
They will continue to do everything in their power to prevent the construction of affordable housing, because it will destroy their current real estate investments.
The non-landed folks have zero leverage within the political system.
Unfortunately those sorts of structures are banned by most municipalities.
https://en.m.wikipedia.org/wiki/Quonset_hut
It does not have to be this way.
https://www.youtube.com/watch?v=sKudSeqHSJk
https://www.youtube.com/watch?v=d6DBKoWbtjE
So the other fundamental problem is that it is impossible to save money because it is constantly being debased.
I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses.
Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses
What you're trying to say is that it would be less profitable and that may be true but as long as it tracks with inflation it would be worth it as an investment tool.
good luck with that.
Can you point it out for me?
This isn't all land. It's just desirable land - in cities basically. The urban to rural migration has been going on for many decades now and doesn't seem to show any signs of slowing down.
https://fred.stlouisfed.org/graph/?g=1aeIa
If you want to understand the housing price problem, look no further than the irresponsible monetary policies of the last 20 years.
Simply looking at median house prices to median household income we can clearly see the impacts to housing prices from the stimulus following the dotcom bust, the stimulus following the housing bust, and the stimulus from the pandemic. Hint, they're the big upward slopes.
https://fred.stlouisfed.org/graph/?g=1adYW
Take away the irresponsible and unnecessary stimulus and you have a reasonable housing market at 4x income, not 6x.
I live in "flyover country" and we don't have those problems here.
The boomers are retiring, and they're the first major group to retire under 401(k) program. They will be selling stocks and bonds (and whatever else they've invested into) and are no longer buying stocks with their end-of-career top-level paychecks.
Boomer 401ks are probably <5% of the stock market, and they aren't going to 0 overnight.
The idea that boomer 401k withdrawals is going to crash the stock market or tamp out future growth is pretty strange.
Defined benefit & defined contribution pension plans are both larger chunks of the stock market than 401ks.
And all of those together are a smaller chunk than foreigner holdings.
(This is not to say that you, specifically, are a "sucker", and I don't love the term. But I think Taleb has a lot to offer on considering risk.)
401k are a type of defined contribution retirement plan.
https://en.wikipedia.org/wiki/Defined_contribution_plan
As you'd expect the contribution percentage increases with age (and the amount presumably increases even more). But even under 25s are at about 5% which is more than I would have expected though this is presumably just among people who have the option.
- Down 1.x% the last month
- Up 2.x% YTD
- About equal over 6months
- Up 13% over last year
That's "tanking"? The article talks about 52-week lows. The market is up nearly 13% over that 52 week period.
How is this even newsworthy? Yes, the market goes up and down.
The next time the market goes up 1.X% will they post an article about how much the market is "surging" and how strong the market is?
https://www.morningstar.com/consumer-cyclical-stocks
Looking at the biggest ones, I see a lot of double and triple growth YTD with some single digit negative growth.
If I can get ~5% risk free return from treasuries, I need to believe I can get MORE than 5% return on equity to pay for the risk. So prices have to fall.
I'm surprised prices haven't fallen more given we've gone from 0% risk free return in a short period.
From 1964 to 1981 (17 years), the US stock market went nowhere. From 1981 to 1998 (the next 17 years), it went up ~10x:
During the first 17 years, US GDP went up almost 5x. During the second 17 years, GDP went up less than 3x.Source: https://finance.yahoo.com/news/mr-buffett-stock-market-fortu...
1985 1,546.67
2008 8,776.39
What years you pick changes impressions. The 70s were an economic mess though.
For the poor and working class: the economy may be terrible.
For the rich and owners of capital: it may be fantastic, if they want to impress, or terrible if they want to layoff and hedge.