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Nevermind This Dip - House Prices Will 10X In Our Lifetime
The shelter crisis isn't over… it's just getting started
Today I’m going to show you why the average house will cost over $10 million in our lifetime, and why almost no one you know except top bankers, hedge fund managers, and billionaires will be able to afford a home unless they enslave themselves to a lifetime of seven or eight-figure debt.
But first, some quick context:
Housing prices have been rising for generations and will continue to do so for reasons I’ll outline below.
Inflation-adjusted income has flatlined and will never recover.
The middle class has been going statistically downhill since 1971, but it’s picking up steam as we head back to assetless feudalism for the masses.
Now, several new factors are about to make affordability significantly worse.
Here are ten reasons why shelter costs will soar to their highest levels in history, along with my estimates on where prices could easily end up:
Fifty years ago, the average house cost $17,000.
Last year, the median was $246,334.
If we experience that same level of price increase for the next fifty years, the average house will cost $3,569,379.
The problem is that we won’t.
Inflation will be far worse.
That’s because inflation is the new way to silently tax the poor while enriching the rich and devaluing government debt. Politicians secretly love inflation. And, despite their best efforts to lie to you, real inflation is over 10% per year. Historically, real estate tracks with inflation, but these days, shelter prices are far outpacing inflation.
Predicted average house price in 50 years: $4+ million
2. Population Growth
Our global family recently topped 8 billion.
It’s headed to 10.5+ billion within fifty years.
That’s a 31+% increase in the number of people who need to be housed.
While this doesn’t mean house prices will automatically increase by 31%, population growth does create more demand, which will increase prices significantly.
Predicted average house price in 50 years: $4.5+ million
The overall population will “only” rise by 31%, but look at the stats on where everyone is moving: Cities.
Four billion people currently live in urban areas, but that number is set to jump to seven billion within 30 years and will hit eight billion in fifty.
Housing demand where most people live will double.
What will the average house cost when twice as many people are bidding on it?
Predicted average house price in 50 years: $5+ million
My grandmother was raised in a farmhouse with a mom, dad, and a half-dozen siblings. My father-in-law was one of nine kids.
Today, both of those homes likely contain less than four people. In major urban centers like New York, it’s less than 2.4 people per unit and falling.
As more people live alone, we’ll need far more housing units. When there’s more demand without adequate supply, prices increase.
Predicted average house price in 50 years: $5.5+ million
5. Multiple house ownership
Looking at you, second-homers, small-time land-lorders, and non-resident Airbnb hosts.
More than 23 million American land-lorders own more than one house. That might seem like a lot, but what it actually means is that 115 million contributing Americans don’t get to own a home because a passive wealth-extracting parasite owns two.
544 new people become land-lorders every day, ramming one new person into renterhood every 32 seconds.
And Airbnb is making it significantly worse:
“Airbnb-type models altered the market irreversibly by proving on a large scale that short term rentals were more lucrative than stable long-term residents.”
— Valerie Kittell
More demand, not enough supply… price rises.
Predicted average house price in 50 years: $6+ million
6. Housing construction isn’t keeping up
Not even close.
To get back to the G7 average of a measly 471 units per 1000 people, Canada would need to build an extra 1.8 million houses, and it’s just not going to happen without a revolution.
More demand, less supply…
Predicted average house price in 50 years: $6.5+ million
7. Soaring building costs
We live on a finite planet with limited resources and those resources are becoming more expensive to extract. Lumber, paint, concrete, glass, labor, and land are all rising faster than average wages.
And don’t let them fool you — these “supply chain issues” are just the beginning of the long-term material shortages we’ll see in the decades ahead.
Predicted average house price in 50 years: $7+ million
I know what some of you are selfishingly thinking. “I’m cool if prices rise; I already own a house so I’ll just hold onto it for a few decades and retire with ten mil!”
But you’re forgetting about property tax.
The current median wage is $34,248.45. Assuming robots don’t take your job and you somehow get a 2% pay raise every single year, you’ll be earning $92,182.72 in 50 years. But land tax is currently 1–2% per year and rising… and it’s based on the over-inflated price of your house.
Where are you going to come up with $100,000–$200,000 in after-tax income per year to pay for it?
The new economic paradigm is designed to make you a nightly renter of a bed or bedroom in a shared unit with other victims of rent-trapping.
Just today I saw an ad asking $950/month, not including utilities, to rent a mattress on the floor of a kitchen without a stove in a 300-square foot basement unit.
I’m regularly being sent rentals ads for houses where the land-lorders have converted the dining rooms into two rooms and the living rooms into two rooms, and are now renting 2–6 beds per room in their “eight”-bedroom house.
Fifty years from now, hellbound land-lorders will be charging $3,000+/month per bed x 2–8 beds per room x 4–8 rooms per unit.
“You will own nothing and be happy,” remember?
Have you noticed a massive increase in new condo towers that are lease-only?
That’s on purpose.
Expect nearly all builders to partner with lenders to do this going forward.
It’s all part of the macro-economic trend toward subscription serfdom.
Predicted average house price in 50 years: $7.5+ million
9. Institutional investment
When you allow speculation and investment in residential real estate, you end up where every other capitalist sector ends up — with a handful of monopolists owning all the assets in the industry.
If you study history, you see this happen with steel (Carnegie), railroads (Vanderbilt), oil (Rockefeller), banking (JP Morgan), online retail (Jeff Bezos), luxury goods (Bernard Arnault), web search (Google+Youtube’s Larry Page and Sergey Brin), and so on.
Spread the word: Monopolists will not stop until they are stopped.
Obviously, up until this point in history, real estate has been a far harder market to corner because of the high upfront investment costs, but that recently changed (see Price Factor #10.) The game of Monopoly will soon have one winner and eight billion losers.
Predicted average house price in 50 years: $8+ million
10. The $100 Trillion Gorilla: Outrageous Leverage
This is where things get truly ugly. Once monopolies form, they utilize the power of financialization to drop an economic atomic bomb on their competition.
We’re not in a bubble — we’re in a seismic pricing paradigm shift, the biggest in human history:
A house’s price used to be the maximum amount that a local buyer could afford to mortgage over 25–40 years.
Now, a house’s price is the maximum amount of nightly bed-by-bed rental income that can be extracted from it by a global investor, multiplied by maximal institutional leverage.
At moderate inflation rates for the next fifty years, Airbnbs will go for $1,000 per night and only the top few percent will be able to afford to rent them.
When a $10 trillion predator like Blackrock partners with a corporate-controlled government that prints ultra-cheap money and lets them create credit out of thin air, they can leverage their positions to an absurd degree. (Prior to the 2008 crash, Lehman Brothers was leveraged a whopping 31X.)
And it gets worse.
Just like the banks spun off millions of mortgages as CDOs during the 2008 subprime debt crisis, the new real estate monopolists will take thousands of their underperforming vacation units, bundle them into shiny-looking investment packages, and get their brokers to sell them to the derivatives markets for even more leverage, skyrocketing house prices to astronomical heights.
The transition from local buyers to leveraged institutions is the biggest paradigm shift in the history of human shelter, and it’s the reason why the vast majority will never own a house in the future.
Predicted average house price in 50 years: $10+ million
(Don’t for a second think this can’t happen, friends. Even without any of the other price-rise factors on this list, if real estate inflation averages just 7.5% for the next fifty years, it will send the average house price over $10 million.)
But there will be a crash, right?
Sure, but it won’t benefit you and me.
Look at right now — house prices are falling slightly, but no one can afford to buy because the interest rates are so high that they can’t make the monthly payment.
When the Big One hits, tens of millions of people will lose their houses, creating a cascade that will crush the stock market and wipe out at least as many jobs.
Banks will then do what they always do in times of crisis — stop giving out loans. Meaning if you’re currently waiting to get into the market, there’s a strong chance they’ll deny your mortgage application, even if you somehow manage to hold onto your job.
Then, once their privately-owned Federal Reserve bails them out and cuts interest rates, the banks will take all that dirt-cheap taxpayer bailout cash and use it to buy up millions of homes, like a bigger version of what they did in 2008.
The solution is simple
We need to make it illegal to turn a passive profit off basic human necessities like shelter.
There, I said it.
We need to ban for-profit residential real estate investment.
Commercial real estate is another topic of conversation (but it’s a large part of the reason why bookshops and cinemas are closing and restaurants are getting more expensive — gotta support those greedy land-lorders.)
Not-for-profits are great. After all, even in a society with full employment at living wages (not going to happen) or a society with sustainable universal basic income (not going to happen), the bottom 10% will likely never own their own home for myriad reasons — mental illness, physical impairments, or just chronic rootlessness.
But for-profit residential real estate investment? It has to be made illegal.
Illegal to be a for-profit landlord.
Illegal to Airbnb a non-owner-occupied house.
Illegal for hedge funds to buy up residential neighborhoods.
Illegal to financialize family homes as tradeable bulk commodities.
While it’s tempting to give little landlords a pass, even this must be eliminated — because financialized investors have an advantage over contributive families, and the latter should always be prioritized in a civil society. The working class can no longer afford to support the land-lording class.
But don’t expect such bans to stick, of course. Hedge funds and Airbnb will continue to sue cities, states, and nations — and “lobby” (bribe) and “help elect” (select) puppet politicians to do their corporate will.
There’s only one thing we can do:
Make real estate investment wildly unprofitable
There are many ways to do this:
Charge an eye-watering premium on second-house purchases. Start at 300% and keep raising it until investors give up and invest in anything but residential real estate. Why should anyone be allowed to own a second house until everyone has the opportunity to buy their first? Why should a fund be able to passively extract wealth from active societal contributors?
Issue outrageously priced landlord licenses and zoning permits for those bent on running a commercial business in a residential neighborhood. Break them or they will break the economy and the nation.
Drastically increase tenant rights, safety standards, maintenance standards, and cleanliness standards so landlords have to continually invest more than they extract.
Zone all residential neighborhoods as owner-occupied only, so real estate investors have no choice but to allocate their capital to commercial holiday properties in commercial zones.
Start not-for-profit city, state, and federal banks that loan directly to housebuyers without the need for middle-man credit-printing banks.
Tax passive extraction income at 95% and use the revenue to build owner-occupied houses.
Encourage young entrepreneurs to start blitz-building affordable, eco-friendly owner-occupied houses by the millions. We need to build one billion new houses in the next decade just to keep up with population growth, so we should invest heavily in innovative startups that can help crush the house-as-investment market.
Bring a class-action lawsuit against Airbnb in every jurisdiction where they’ve stolen even one unit of housing.
We can debate estimated future prices and the exact methods by which we can eliminate for-profit residential real estate speculation, so long as we understand the fundamental need to do so.
We need to scrub culture clean of the notion that a house is an investment or a savings account. Houses can’t be commodities. They need to be homes.
I don’t know about you, but I don’t want to live in a world where people are forced to be homeless because they can’t afford to live in a society that’s economically engineered to impoverish them. In a civil society, human necessities like shelter wouldn’t be commodified. If we keep on our current course, 99% of the global population will be housing insecure within two generations.
I subscribe to the radical belief that safe, healthy, adequate, and affordable shelter is a universal human right. Yes, a human right. I am aware it’s not a constitutional right. This proves America still has room to improve. Because if hyper-elites retaining obscene wealth matters more than the majority being able to afford shelter, it’s time for a revolution.
At present, a new hyper-commodification paradigm is emerging that stands in direct opposition to the human right to shelter. Housing-as-investment is a deeply anti-social belief that needs to be destroyed if we are to thrive as a global family.
Homes or hedge fund investments.
Democracy or civil war against the hyper-rich.
What’s it going to be?
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