![]() Positions, same as the last post, puts on HYG because there are a lot of bullshit zombie companies that should have died years ago but are propped up by index investing and cheap corporate debt that the FED keeps buying, calls on SPXS because when this thing pops it's going to explode like nothing seen before to the point where Bigfoot and the Loch Ness Monster are going to sit around roasting marshmallows on the dumpster fire that used to be the stock market. And remember, millions of units are waiting to come on the market once evictions start up again. Don't buy a house until the market crashes. Maybe it's Chinese nationals trying to get money out of the CCP's control, maybe it's AirBnB, maybe it's Blackrock and REIT ETF's, maybe it's something else entirely, but it's definitely a bubble, and it's definitely Fuckery. Who is doing the fuckery and why I don't know. So, to recap for the slower folks in the helmets on the short bus with the flavored windows: May 5.8 million existing home sales, 769,000 new home sales. Jan 6.5 million existing home sales, 993,000 new home sales. So basically you've got more supply relative to population, construction of new units is slowing down - 1.8 million starts in Jan to 1.7 million starts in March down to 1.6 million starts in May, prices are rising, and sales are slowing. Is it inflation? Nope, bond yields are currently signaling deflation, but the bond market has been wonky as fuck all year so who really knows. Is it young people starting families? Nope, family formation is close to all time lows and the oldest millennials who are approaching 40, are 20% poorer than boomers were at their age. Is it immigrants? Nope, immigration has been falling for years. Workers share of corporate income has fallen from 79% in 2004 to 77% in 2021. So where the fuck is this crazy demand coming from?Īre people making more money? Nope. Yes, that's right, the housing supply has increased faster than the population, and the homeownership rate during that time has dropped. ![]() Throw all these numbers into a blender and you get:Ī 13% increase in population, a 4% decrease in homeownership rate, and a 15% increase in housing supply. In 2004 there were 122 million housing units in the US. In 2004 (roughly the peak of US homeownership rates) the US homeownership rate was a bit over 69%. I left off decimals wherever possible because I know my audience can't do that kind of fancy math. So, whenever I see something that doesn't make sense in any kind of market, I always wonder, is there a reason for this? Or is it Fuckery? Let's talk about the current boom in housing prices and why I suspect Fuckery.Īll data is taken from the Fed and the US Census Bureau. When the blackouts and price spikes were happening, Cali had 45GW of installed power, and demand was running at 28GW. Enron was shutting down power plants to drive up demand and cause artificial shortages to make money. Everyone pointed and laughed at the crazy conspiracy guy. Gray Davis should send the National Guard to seize the power plants and keep them on. Then there was this one guy who came out and said Gov. I remember watching this on the news and being confused as to how Cali had power for all their stuff last week, but not this week, and all the press talked about how this was the new normal and people needed to get used to it/stop using so much power/people were too greedy with AC, etc. In 2000, California was getting hit with blackouts and high prices, power companies were failing, and it seemed like the crisis came out of nowhere. ![]() There's a bunch of reasons I'll get to shortly, but first lets take a little trip down memory lane to 2000-2001 in California when there were a bunch of rolling energy blackouts. So I made this post about how to play the coming market crash and a lot of you have been asking, both in the comments and messages, about why I think the housing market is fucked and bubbly and primed for a crash. ![]()
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