If Homes Are Unaffordable, Then Who Is Buying Them?

the housing market is on its last legs every year more and more people get pushed out of even having the possibility of having their own home the United States is going through a housing affordability crisis corre now this surge is causing many Americans to wonder are we barreling toward a housing market crash a whole Generation price out their future treading water just to keep their heads above the currents meanwhile the entrenched upper classes and corporate landlords see their Investments Skyrocket in value as the demand for homes continually outruns the supply but this presents a perplexing

situation if almost everyone is priced out of home ownership then what's driving this rapid increase in housing costs and even more importantly if nobody can afford houses who's going to be buying these homes in the first place well maybe this is the reason that for the first time in years house prices have began to fall in the UK and quickly we've seen a 4.7% drop over the past year the highest level was since 2009 and the US isn't far behind pric is finally beginning to stagnate after years of back-to-back price hikes and yet even still

it's almost impossible for anyone to own a home and with stagnating wages and less and less ownership what's going to happen to the housing market is this the beginning of a crash has the market finally hit a Breaking Point or is it just going to recover reset itself and happen all over again when you're a kid you get told that there's a set of goals for you to hit Milestones that make the difference between success and failure some of them are getting a college degree buying your first car getting married and starting a family but

above everything else you're told that buying your own home is the key to not just surviving but thriving it's not just an outdated pitch today it's a fairy tale A Relic of a time when homes were actually affordable and one salary could support a family today everything's different forces like overpopulation inflation inequality and a lack of Supply have gathered over Generations putting us right where we are today if you take a look at how affordable housing is today it's the worst has ever been in decades we all know this and despite the Fallen prices for

the UK there's still a long way to go before average people have a shot at home ownership the average home still goes for a little over £260,000 £45,000 higher than it was in 2020 a figure that's over $300,000 now a lot of this can be chalked up to the 14 times in the past 2 years the bank of England has raised interest rates making it far more expensive to borrow money this has meant far harsher mortgages and less people willing to buy dropping prices both buyers and sellers are getting squeezed and real estate m like

Warren Buffett know a storm is coming so they're making their move in the first half of 2023 his firm sold over $20 billion worth of stock but when stocks in real estate are crashing you can still protect and even grow your savings through diversification thousands of my followers alone have been doing so with one of the most unique reliable assets in the world Fine Art you see our sponsors and Masterworks have generated over $45 million in art sales and delivered the proceeds to over 50,000 investors just like you they didn't need Art Market connections or

billion dollar portfolios they didn't even have to do years of leg work they just sat back and watch Masterworks real of WS they're at 16 exits so far with each and every one of them delivering a profit and with over 850,000 users on the platform demand is growing by the day but since my subscribers have been responding so well you guys can skip the weit list and start investing today by using my special link in the description below past performance is not always indicative of future performance in the short term the UK is facing the

potential of a major crush the postco recovery hasn't gone as planned everything got far more expensive as inflation outpaced wages we're now only seeing wages even begin to catch up when the interest rate was 0% during Co and even before mortgage dealers were much cheaper lots of people took advantage and got in the property ladder buying expensive houses every house is expensive today but still June of 2021 saw the largest increase in homes bought in the UK by a wide margin over 165,000 in April of 2023 it was just under 40,000 homes sold half of

what it was just a few months before and it's a similar picture in the US over 6 million homes were sold in 2021 it dropped by a million in 2020 and is expected to drop a bit over 4 million this year the average mortgage on the average home with a 20% down payment cost $2,440 a year now in the US nearly $1,200 less than it was 2 years ago when all these deals were being signed lots of these homeowners got in with comparatively good deals but those fixed rate deals are coming to an end soon

it's the next few quarters where you'll see the worst pain for the housing market because the majority of mortgage borrowers in the UK are on fixed rates and the bank of England estimates that only a third of the rate hikes that have already been done have passed through already as those mortgages all get renegotiated to today's interest it's going to leave people with a massive jump in monthly payments payments that are still just going to the bank for interest a massive proportion of people won't be able to make the payments a similar situation to what

happened in 2008 other costs like energy food and the rest have all gone Skyhigh as well leaving little room for this the average American is already over $10,000 in debt through credit cards alone people are overstretched and falling house prices will only make things worse without Equity people will be left without the means to downsize and buy a different house this is just one reason why it might not be a great idea to sell your house right now in the UK home prices have dropped for 6 months in a row the only thing keeping them

up has been the rampant inflation real drops are as high as 133% once you account for it with even more price drops looming any home you buy might fall in value by 10% or more within a year if you only had enough for a small deposit under that amount you'd end up losing far more money than if you just waited or rented massive interest rates also aren't helping things and they aren't going to go away anytime soon they make it so much more expensive to pay off a mortgage especially considering the first years of the

deal and mostly paying off interest this means you'd be stuck paying the banks far more than usual in a few years the interest rates will hopefully have C down and there's also the very clear potential of a massive crash right now anyone with skin in the game that knes downsides after the massive hit would find it hard everything we just talked about would make make it much more costly to get out of a bad deal it's a cruel Circle that tons of people need house prices to fall to be able to afford one but if

they do fo it will ruin millions of other people's Financial plans and stability it's a result of the shift in Fus and homes from a necessity and a commodity to an investment after World War II when the Boomers were being born buying a home was a lot different everything was a lot different really compared to our current stagnation it was a time of rebirth in the US this growth was pushed by the GI bill to reward the people who fought in the War and restart the economy the government provided a massive package of a to

Veterans they subsidized mortgages paid people a years worth of wages if they were unemployed and gave out low interest loans which people could use to build a new life it was a reflection of a less specific rebuilding project going on throughout the West in the UK over 1.2 million new homes were being built between 1946 and 51 house prices remained steady and low for years more were being built and mortgages weren't seen as financial investments like they are today there wasn't an expectation of continued growth offset against interest payments it was this world of prosperity

that the baby boomer generation was born into to and they enjoyed the benefits as they were growing up and buying their own homes but it couldn't last forever over time through building frenzy died down more people were born more families were created and more houses were needed soon enough demand and inflation started to outpace the supply and the prices started going up by now it was the' 70s and masses of baby boomers had grown up and bought their own homes there were more mortgages than ever for the banks to play with but the current model

wasn't working too well back in those days mortgages were from shorter had highed deposits and a final lump sum to be paid at the the end of the ter there wasn't much room for the banks to make interest and they had to deal with each mortgage individually they weren't glamorous or particularly good at making large amounts of money for the banks but one man could see their true potential for profit and his name was Lewis Ranieri Lewis was born in New York in 1947 to an obscure relatively unknown family after dropping out of college his

first job in the banking industry was unremarkable starting in the mail room at a firm called Solomon Brothers leis spent a decade slowly working his way up the corporate ladder early in his career though his boss is noticed his skills with maths and his ability to see profit where others couldn't along with his uncanny salesmanship and so as he went up the totem pole Lewis eventually found himself in a leading role at the mortgages Department in his bank it would have been a dead end for most but Lois's biggest strength was his ability to innovate

and it was here that he would come up with his career- defining idea the mortgage back security it worked by combining a whole set of mortgages from various homeowners into one asset which would pay out the interest payments made to whoever owned it Lewis had single-handedly turned mortgages into a profit Bonanza using his sales techniques and the help of a banker called Larry think their Bank sold them by the truck Lads with other Banks and Pension funds across the country and this was one of the most important shifts in the last century Lewis had turned

what was once a boring commodity designed to let people have homes into something his bank of friends could exploit to make billions you might not know who he is but he changed your life more than Michael Jordan the iPod and YouTube put together you see Lewis didn't know it yet but he'd already changed banking forever with one simple idea the mortgage Bank security you've got your average person's mortgage fixed rate 30 years boring safe small payoff right when you have thousands of them all bundled together suddenly the yield goes up but the risk is still

small because well they're mortgages and who the hell doesn't pay their mortgage and it was these mortgage back Securities that would eventually lead to the 08 crash but for now it was incredible for the banks the mortgage back security Market was worth 150 billion by 1986 just a few years after Lewis had his bright idea but before that happened a few other changes in the housing markets led to the disaster we're watching on for today as the Boomers got their homes and became the largest voting Block in history they started favoring laws that would keep

house prices High politicians obliged happy to make more money themselves housing subsidies ended the GI Bill never saw modern renewal and bureaucratic red tape surrounding housing got a whole lot worse once the Boomers had gotten inside the market they made sure it was incredibly difficult for anyone else to do the same it led to the Labyrinth Maze of zoning codes planning permission and arbitary limits that we know today the flow of new houses dried up as construction companies had to get permit after department just to start a new development they added years of legal fees

waiting and paperwork to the process so even though it was in The public's interest for more houses to be built it just wasn't profitable for developers and today resistance to any new housing developments that aren't more Suburban Wasteland has gotten so bad that there are protest by pensioners whenever a car park gets redeveloped into more housing like this protest in the summer of 2023 in London where old homeowners gathered to keep their investment safe from a new set of affordable apartments which could replace their beloved car park their local MP is right behind behind them

of course and all of this resulted in the current view of housing as an investment something for Wall Street to tamper with for people to sit on their whole lives a way to build wealth rather than a basic necessity for survival this kind of thinking is completely toxic to society the 2008 crisis was the result of Decades of this bilding up and Lou rary's mortgage bonds only got worse and more risky Banks made so much money off of them that they interfered with rating agencies which determined how risky they were corruption and collusion meant incredibly

risky awful mortgages were backed up and sold as safe Investments they invested trillions into these mortgage back Securities and eventually it all blew up Millions were left without homes and the economy went into a nose dive but it's still was struggling to recover from you would expect that such a massive failure of the whole system would ignite a complete rethinking of how we treat homes but you'd be wrong the banks got bailed out with taxpayer money and they pretty much got off scot-free if anything the banks have gotten even more Reckless and predatory firms like

Blackstone Goldman Sachs and pretium partners have bought hundreds of thousands of single family homes you don't need me to tell you how awful this is aside from the Practical effects of increasing demand and artificially raising house prices it's symbolic of how institutional investors have literally taken control of people's homes once they're on the books for these corporate investors they hand over the management to monolithic letting management companies these corporate landlords then put the bare minimum into keeping the homes maintained as well as skipping on anything else that impacts their bottom line if tenants complain or

the bank see more money in it they get evicted the 2022 prediction by one asset manager states that if patterns continue as they are institutional investors could ear 40% of the single family rental homes on the market by 2030 Silicon Valley has also been looking for a way to solve the housing market take Open Door a company that uses algorithms and a tech driven instant access business model to try and undercut estate agents their basic plan is to build up large amounts of liquid assets and use these to buy homes from people looking to sell

they use algorithms in AI to figure out how much it's worth buy it for a bit less than that and then sell it on after a few months the problem with their plan is that you can't just throw some algorithms buzzword and investor money at the housing market to make money you still need to deal with in-person viewings repair and renovation costs and all the ground stuff to make that happen and the financial data has been troubling from open door and their competitors as their stock price has been fing for a straight year shares of

open door cratering today after reporting a steep second quarter Revenue decline in a pretty weak Outlook causing them to lose a billion dollars in the past year alone it's clear proof that their business model just doesn't work even with all the hype of getting some big names in Silicon Valley to bank roll the operation it hasn't panned out instead it's just another example of how silicon Valley's Miracle Solutions often end up as massive pump and dump schemes to make the founders richer when they inevitably sell the company the rental market is one side of the

story that we haven't covered yet everything that we've talked about has led to insane rents the higher rent goope the less likely it is for people to be able to afford a deposit if you're paying 50% of your income to some landlord or some Wall Street Bank it cripples your ability to save up anything and it's a complete drain on the economy that's not an exaggeration for some as londoners are paying over 50% of their income to rent on average London renters also paid around £3,000 more than homeowners for is essentially a much worse deal

on average across the UK renters pay around 34% of their income on average to housing costs nearly four times as much as the 9% that the average homeowner pays now sure homeowners are normally richer than renters so the figure is cued by that fact but it's still a clear example of how the West is changing the rich get richer and the poor get poorer what's really destroying the renting Market though is The Chronic housing shortage the majority of local councils in in the UK haven't built a single home in the past 5 years despite over

a million people on the waiting list Nationwide anyone who's been in the unfortunate position of needing to rent a place in a big city knows how awful it can be in New York our long Waits and long lines of viewers are the norm for even the most overpriced dilapidated Apartments elsewhere it can take months to find a place with renters often being forced to offer the first 6 months upfront or even the whole year just to get a chance add in reference checks and the evasive questions and it's more like a job interview now all

of this and people get much smaller rundown Living Spaces you just can't build a good life on your kitchen your bedroom and your living room are all the same room it's a trap that more and more people can't get out of in the UK the renting population has doubled in the past 20 years and if you're stuck renting then you're always stuck paying someone else's mortgage building their wealth and life instead of your own however predatory mortgages might get at least that's the eventual promise that you actually own the home although that's after you've paid

years of interest to the bank and you probably won't actually own the land you just lease it it's a trend that surpasses the housing crisis the movement away from Individual ownership in the world economic forum's Infamous predictions for 20130 they claim that you will own nothing and be happy with it this is the key and it's a big part of why institutional investors are scrambling to get in on the rental market by buying up family homes they know what's coming because they're constantly trying to create it the ingredients for it are already here you don't

need to own your own car you can just use Uber if you need to buy anything a drone can deliver to your house you don't need a cashier you can use a machine you never actually need to leave other than going to the other tiny cubicle where you can spend the other half of your life in artificially lighted work might as well get your money's worth for that $3,000 a month studio apartment anyway you don't need to actually buy anything either you can just use credit to pay it out over the course of years you

don't need to own a home you'll be much happier renting for the rest of your life even media and entertainment operate off these rules now subscription systems and monthly fees and the new Norm for everything it spreads so far that printers and other appliances now have subscription fees sub subscriptions that lock people out of using the thing they bought if they sto paying them obviously most people aren't happy about this it's a major cause for the underlying resentment You' seen people today but what choice do they have take the car example most people in America

live in places with little to no public transport even your own two legs are mostly useless because everything's so spread out and built for cars Uber and ride sharing is becoming the only choice that's despite the fact that it's far more expensive in the long run anyway it's soon becoming a world where corporations own everything it lets them extract far more money out of each person person if you're a company and you sell something for $100 obviously you only get $100 but if people rent it though for just $5 a month they're already pay more

in less than 2 years turning every transaction into debt simply makes them more money and gives them more power ownership is being eroded everywhere you look even your own privacy is gone renamed as data and stolen by these same companies to make the advert slightly more annoying and effective it's all part of the modern Fugal system that they're trying to create but most people can't see the bigger picture here they just see the instant access we now have to every kind of instant pleasure you could possibly think of and they consider it progress our current

Pace we may well hit the world economic forums predictions of 2030 often it's framed as a necessary change in order to stop climate change the responsibility shifted to regular people pressuring them to use paper straws take shorter showers and generally live worse lives it's a psychological tactic to shift the blame without even acknowledging it happened the real damage is done by corporations and governments of all the garbage in the ocean most comes from rivers and 93% of that plastic comes from just 10 Rivers eight of them are in Asia yans being the largest Pluto and

the other two are in Africa as for carbon emissions 71% of it comes from just 100 of the largest companies the top 20 are responsible for a third of all the carbon emissions and so the housing crisis is just the tip of the iceberg and we can only hope that things will get better eventually if anything is true though is that everything is always changing things can't go on forever like this the resemblance and anger will eventually reach a breaking point one thing the world economic Forum won't be right about is that people will be

happy with this new normal that's at least something we can count on but all this said though what's going to happen next for now the housing market looks like it's on the brink with far less people selling movement has been propped up at the upper end through cash purchases of million dooll homes in capital cities that definitely isn't anything shady ATU about these Anonymous buyers right you know I've been paying attention to uh these companies that are buying up affordable housing yeah like Black Rock and Zillow yeah that's scary it is scary that's scary cuz

if they can move the Entre country into renting like right nobody can own that's what they want to do right that's what I'm saying they don't want anyone to own anything if you get a a giant majority of the population that are just renters that don't ever own property they never have their own real real home yeah and then you make sure that you control their wage because you have massive corporations whether it's Target or Amazon or whatever and they limit the amount of possible growth you have within a company yeah and there was that

article you'll own nothing and be happy in 20 that is wild rents have been going up as well as they have been for years now an increased mortgage costs have put dent in landlord's bank accounts of course but not enough to compensate for the massive price hikes we see today the result is a whole generation locked out of the entire system and exploited for what little money they do have it's a big reason why so many people are forced to just stay at home well into their 20s and not for much longer without rich friends

to house share with or very rich parents that can subsidize a deposits there isn't any other choice in the UK over the past decade over 620 thousand more young people are living with their parents compared to 10 years ago it's not just a problem caused by the housing crisis though obviously it does carry a lot of the blame the pandemic wrecked so many people's social lives and confidence that keeping people at home years after they also put the breaks on tons of people's plans throwing a wrench into any hopes they might have had of moving

out men have been more affected than women making up 2/3 of the young adults still at home often a comparison is drawn between other cultures where children often stay at home for years after graduating or entering the workforce but this can't be a reason to say the situation isn't a disaster on a societal scale it should be a choice that people can make not something they're forced into then there are those people who aren't lucky enough to even have the option they're stuck in a world of private rentals housing shares with strangers and exorbitant rents

nobody can truly and accurately predict the long-term future of the housing market but what you can do is look at the Historical precedence of these kinds of situations when millions of young people get shut out from success it undermines their reason for participating in society if you know that hard work when pay off what's the point historically a large population of young men and women completely disenfranchised isn't a predicted for Success they can only take so much before they either give up or look for a different revolutionary way to make a good life for themselves

we're already seeing the first of these things happening all the time and it won't be long before we see the second