Some of you freaks are probably well aware of the insane upward price pressure the US real estate market has been experiencing over the course of the last year. Everyone and their mother has a story of a family member or friend who has recently ventured into the housing market in hopes of buying a home for their family only to be met with the fact that they have to be ready to move very quickly and make an offer well above the listed asking price if they want to have any chance of actually getting a property. Many people I know personally are very stressed about the situation.
What is causing this? If I had to guess, it's being driven by the exodus from large cities to suburban areas that many are making as the concept of work from home becomes more popular in the aftermath of the forced lockdowns. Many are looking for more room and more peace and quiet outside of large metropolitan areas and they are scooping up a ton of suburban homes in the process.
Could this phenomenon be the sole factor driving up home prices at the rate that they're being driven up at this current moment? It seems a bit far fetched to believe that every individual who is leaving a city is able to purchase a home hundreds of thousands of dollars above the asking price. There has to be some other force contributing to the surge in home prices.
Well, there are many out there who are saying that many large institutions, the BlackRocks of the world, are out in force joining those families who are looking for starter homes in the market. They are not only joining, but they are aggressively attempting to front run individuals so they can securitize properties to package into specific REIT products. In the process, exacerbating a heated real estate market that only seems to be getting hotter by the day.
If these rumors are found to be true, they highlight a very dark side of a fiat monetary system that has created completely perverse incentives throughout our economy. A complete lack of a quality assets that exist to serve as stores of value has driven many to treat consumption goods like real estate as places to store wealth over time. Or worse, to aggressively speculate, which seems like many institutional investors may be doing at the moment with single family homes.
Access to cheap credit via capital injections and a suppression of interest rates gives these institutions the ability to load up "cash" and go on buying sprees. Scooping up as many single family homes as possible and packaging them into indexed products to sell to other speculators without having any intention of ever living in the homes. Money printed ex-nihilio is going to speculators who are pushing the ability for actual families to begin building quality lives in an affordable home. The system has completely fucked them once again. Sorry, plebs!
This madness needs to stop. And luckily for us, we have Bitcoin. Bitcoin renders the concept of non-productive real estate as a store of value obsolete and, in time, will return housing back to its rightful status as a consumption good. As more and more individuals realize the opportunity cost of storing value in a house over sats is significantly high due to the fact that housing deteriorates, has high upkeep costs, and can be easily confiscated by a government compared to bitcoin which is digital (therefore, cannot deteriorate), has extremely low (usually one-time) storage costs, and is significantly harder to confiscate; real estate prices will begin to reflect this reality and fall back down to earth.
With this massive repricing will come a shift away from wildly speculating in the real estate markets because institutional investors are attempting to guess where single families want to store their wealth. Another beneficial knock on effect from this repricing may be the resurgence of the middle class as housing becomes affordable for more people again.
Until this repricing happens, the Cantillon insiders will continue to flood the real estate markets with cheap cash. Scooping up homes they never intend to live in and pricing hard working American families out of the market. We can only hope that more of the market begins to wake up to the fact that Bitcoin is a significantly better store of value.
With all that being said, it would be a bit poetic if the great value exodus out of the Frankenstein store of value assets that are most common today and into sats happens at such a pace that makes it so these large institutions pricing out families get left holding the bag.
This rag is coming to you from 40,000 feet above the ground as I make a trek to a bachelor party. First bachelor party as a dad. Should be a fun rip.