(Last) Weekly Roundup: The Last Act Of The Locusts Edition

Brood X is buzzing in my backyard. Their thousandfold screeching can be heard over everything short of a cranked guitar amp, they pitter-patter my office window like horizontal, substantial rain. Already their bodies litter my driveway, their mysteriously separated wings on the hood and roof of cars that haven’t moved in weeks. I confront them alive outdoors, the size of my thumb and yellow-eyed.

Thankfully, cicadas are not locusts, despite what some people think. There are no more locusts swarming in America. They were bad for commerce, while cicadas are little more than a hassle. Some people are actually excited about these fat flying bugs, you know. How To Snack On Brood X! Lot of discussion in the media about the pleasures of eating a cicada, their nutty, chicken-like taste. The notion that “they want us to eat bugs”, like the notion that COVID-19 escaped from a lab or the agitation regarding secret pedophile islands, is one of those right-wing tropes that perpetually embarrass our society by being more or less true. Could you eat locusts, if they returned? I’m sure you could. I’m sure I wouldn’t.

Ah, but who needs the Biblical insects when we have the modern equivalent of the locust swarm, namely the aging investor class?

One out of four new homes in Houston is sold to an investor, not to an individual or a family. It will only get worse from here. Let me break this process down to you in a way that will annoy my more financially-savvy readers but will, I hope, make sense to everyone who reads it.

Traditionally, the housing market has been largely inhabited by individual owners, who buy and sell their homes according to what other, fundamentally similar, sellers and buyers will accept. The law of supply and demand works reasonably well, although the economic upheaval attendant to our national decision to stop making tangible items and enter a Shoe Event Horizon of selling online porno advertising to each other has, as you might expect, lowered home prices in most of America while drastically raising them in California and the East Coast. Buyers of new homes are typically competing against other people in the same financial situation: if you are looking for a $300,000 home, then you’re generally bidding against people who earn between $100k and $200k a year.

America was supposed to be a nation of homeowners, which is why the federal government is so deeply involved in the issuance, guarantee, and regulation of residential mortgages. Home ownership is the keystone of most Americans’ net worth. If you play the game the way it was meant to be played, you arrive at retirement age with a paid-off home that can be sold to pay your health expenses or given to children who will in turn look after you.

The modern world works a bit differently. You’re no longer bidding against other people just like you. Instead, you’re bidding against investment firms that have access to a literally endless stream of cash. They can borrow it at essentially zero cost. As Yarvin explains, inflation is an engine to steal from the poor and give to the rich. These firms are on the receiving end of all the inflation, all the free money, all the stolen money. So that house that caught your eye might be worth $280,000 to you, and $300,000 to a family that has a little bit more income, but to an investment firm it’s worth… well, gosh, it’s worth whatever they want to pay, because they can borrow the money for free, knowing that eventually inflation will make whatever price they paid look silly. My father sweated over the purchase of a $90,000 house when I was a pre-teen. It’s a $644,000 home now. In central Ohio. Not in Van Nuys or Brooklyn or Austin.

Just wait long enough, and your mortgage payment will be a joke. This is no comfort at all if you’re a real live person trying to make ends meet right now — but for an investment firm, it’s license to outbid you at will. In the long run, the perspective most pension funds have (this is not a coincidental mention), it doesn’t matter if you paid $90k, $180k, or $270k. You’re still “making money”. Let’s return to our scenario. So the house sells for $400k to the investment firm, instead of to you. Now, where are you going to live?

You need to live in a certain place, because you’re one of the suckers who still shows up for work in 2021 rather than monetizing a grievance of some sort, but there’s no home inventory, because all the homes get sold to investment firms as soon as they are listed. So you… rent the house on which you were just outbid, from one of those same firms. When you do that, you balance their books and encourage them to buy other homes. They do that, turning more owners into renters as they do so, which accelerates the process.

It’s a wicked business model, isn’t? The Fed gives the Investors (capitalized in a nod to Bruce Sterling) free money to outbid home buyers, corner the home market, and force those private buyers to rent from them on their own, highly profitable terms, at which point they borrow more money and buy more homes.

Probably one of the top five blatant transfers of wealth from the middle class to the one-percenters in human history, and it’s happening right in front of us. If you think the government will stop it, then you should inquire as to the possibilities of having the government look after you while you’re at it, because you’re clearly too naive to be allowed outside without supervision.

I should emphasize that the federal government is also basically committed to the success of this rapacious policy, because it is rapidly becoming a favorite strategy of the “too big to fail” crowd. Blackrock has nine trillion dollars under management. If their home-rental division catches a cold, you think Aunt Kamala will let them hit the bricks at terminal velocity, the way you’d be allowed to personally fail, go bankrupt, and commit suicide? Of course not.

So there we have it. The battle lines are drawn. On one side we have you. On the other side we have Blackrock and the federal government. Ask Malcolm X (or Randy Weaver) how that scenario plays out.

Obviously this is a disaster for normal Americans, who will spend their peak earning years building equity for Blackrock instead of on their own behalf. But it’s worse than that. Every statistic I could find suggests that the owner/renter ratio of a given neighborhood is directly correlated to crime rate, neighborhood cohesion, quality of life, you name it. It’s more complicated than “poor people rent, and also trash their homes.” Even well-off people who rent feel less connected to their neighbors and their neighborhood than they would if they owned. They behave differently, vote differently. Why worry about the quality of the local schools when you can always rent in the better district next door?

The notion of pension funds getting involved in this strategy is particularly noisome to me, because it represents the increasingly common locust-like strategy of stealing from the future in order to support the present. The vast majority of pension funds are concerned with the welfare of people who are older than Gen X. So they outbid young people, putting them on the back foot for the rest of their lives. Along the way they siphon off the profits to take care of the old.

I don’t want this piece to degenerate into a “Boomer rant”, but you have to appreciate the tenacity of that generation, at least as expressed by certain of its members. They benefited hugely from historically unprecedented growth in home and investment values, but it’s still not enough to fund the stereotypical lifestyle of post-retirement Carnival Cruising nine months a year while their grandchildren wear thrift-shop clothing. So their pension funds dip their beaks in the well of residential housing, thus ensuring that their party will continue to the end while the next generation gets nothing.

What’s the solution? Why, it’s a simple one: rent control. While it’s far from a perfect strategy — look at how it gets abused in New York — it would, if enforced correctly, massively disincentivize the practice of gobbling up residential real estate. Fix it at something easy for people to understand: a dollar per square foot of living space in single-family homes. Apply it to any entity, or person, who controls more than five, or even three, rental properties. If you need to, you can excerpt a list of high-value areas from the rule. Maybe use the FHA jumbo mortgage county list, if you like. Who cares? If you want to rent a house in Westchester County, presumably you’re a big enough player to not worry about bidding against Blackrock.

This rule would set an upper bound to the economics of home rental, effectively removing the vampire-squid financiers from the equation. It would also encourage home ownership, rather than renting, in most American communities. This, in turn, would increase community cohesion and reduce crime. You don’t even need to pass a big sweeping federal law to make it happen. Handle it at the state level. Make it a bit of guidance issued by the SEC or IRS or something like that. All that stuff has the effective force of law.

Now, if you have even a sliver of functioning brain tissue, you probably laughed at the last two paragraphs. Why, you’d have to be an idiot to think that the Federal Government would intercede on behalf of regular-Joe homeowners! Sure, there was the TARP business, but the real purpose there was to keep the banks alive, not to keep people in their homes. We’ve all internalized the idea that the government will do precisely nothing to help the average constituent even as it bends over backwards to protect the interests of major corporations.

Something feels desperately, tremendously off about this. Isn’t there a Democrat majority in both houses, plus a Democrat executive branch, plus a largely Democrat judiciary? Who, precisely, could stop a policy designed to stop this predatory home-buying in its tracks? Lindsey Graham? Ben Shapiro? Surely this is why American voters delivered a “blue wave” in 2020.

You can keep dreaming about that, if you like. The Uniparty is in control, and it has just one priority, namely transferring wealth up the chain. Every policy it espouses, from the rainbow-flag stuff to the way it calculates income tax, is unflinchingly bent towards that priority.

“Well, surely this ride will come to a halt at some point, probably when there are no Americans left who can afford the rental prices of Blackrock homes.” Oh, dear reader, I truly treasure your naivete. Whose problem will it be when the investors own 50 million homes with no American customers? It will be the American government’s job to fill those houses with paying customers. Where will those customers come from, if not from right here? Contemplate this, if you will: eighty percent of $100 bills are being held overseas.

So, let’s follow the chain all the way through. The Fed sells T-bills to subsidize the low-interest loans used by Blackrock to chase you out of the home market and turn you into a renter. Eventually, those bills come due and the foreign investors are in possession of tremendous currency reserves. Which, in turn, makes them ideally placed to rent homes in America, possibly in exchange for citizenship (the micro play) and/or buy Blackrock’s home stock to distribute as they sees fit (the macro play). In exchange for selling out a whole generation of Americans, the investor class makes a few bucks to cash out its Boomer/Gen X investors, who will nod along and lend their weight to the legitimacy of the proceedings.

The people who could stop if it they tried hard enough, the Millennials and Zoomers, have already internalized the idea that they’ll never own a home or have much in the way of net worth. So they aren’t going to fight it. They rent as naturally as they breathe. It’s Housing-as-a-Service (HaaS), and it makes as much sense to them as a Netflix bill. They’ve all been steeped in the language of protest and revolution, and it will occur to a few of them that Blackrock could be brought to its knees by a coordinated rent strike on a nationwide basis. But they won’t do it, because it’s scary and because the media will tell them it’s more important to eliminate the last vestiges of racism from toothpaste advertising.

History teaches us that the devastation from a plague of locusts is never permanent, but it usually lasts long enough to cause a lot of problems for a lot of people. That’s what’s coming. Hear that sound? It’s not my cicadas.

* * *

Last week, I answered a reader question and dreamed of a slightly bitter alternate history.

84 Replies to “(Last) Weekly Roundup: The Last Act Of The Locusts Edition”

  1. NZDan

    Rent controls are most definitely not a good solution. There are all sorts of unintended consequences and distortions, starting with likely rental shortages, houses being left empty, houses not being maintained etc. Where do people who can’t afford a house live when no-one wants to rent out a house?
    And it doesn’t deal with the real reason investors buy houses which is for capital gains.

    The real fix is to ditch restrictions on land use, so if you can’t buy a house at the right price you buy a small patch of land and build one. Eventually there will be more houses than people and the prices will come down.

    Reply
    • Disinterested-Observer

      I think you missed the point of the whole piece. In the US at least, Boomers have manipulated tax law, financial markets, and the real estate market such that values are essentially fiat rather than intrinsic, so younger people are being turned into renters or homeless.

      Reply
  2. Mike

    The other side of this housing coin is, what happens when all these boomers eventually become owners of a much smaller home, of the “buried in the Earth” style? Their homes will pass on to their kids- Gen Xers, mostly. Most of the Gen Xers (myself included) already own a home or two, so what ends up happening to Mom and Dad’s place? If they were smart enough to protect those assets from the nursing home and estate taxes, that is…

    There’s tons of houses for sale in our area, now. Prices went zooming, though I wonder what the point of selling a house is when you still need a place to park your shoes at night. So you get a good price for your place…you still need to buy another one. The realtors and moving companies are the ones who make out. Oh, I guess if you have 200k in equity in a 300k house, you can go buy a 500k house and make the mortgage payment on 300k. Seems like a bit of a scheme, but I guess that’s how it works. I do know when I bought my first house, the mortgage payment was barely doable on my paycheck, to the point where I took in boarders for a bit. Now, that same mortgage payment seems like peanuts. That’s the inflation effect you pointed out. Inflation helps all debtors, though of course the more you owe, the more it benefits. Who owes the most money in this country, right now?

    The problem is something I started calling “Getting into the Game”. I figured it out about 20 years ago- coincidentally right when I started looking for my first house. That’s the hardest part- Getting into the Game. Once you’re in, it all starts to work for you, provided you don’t do anything stupid. But making that leap, getting on that ladder, that’s always been the most critical part. And yes, it has been getting harder. 50 years ago, the ratio of median home price to household income was something like 1.5:1. Now its more like 3:1- and getting worse. Maybe if the government wasn’t subsidizing loans and otherwise driving up demand with limited supply…

    Reply
  3. LynnG

    Never to disagree with the host but what case would support the concept of rent control. Time and time again where rent control has been implemented in the US it has had a negative impact on the community and city and pointed out by NZDan. Owners of rental property in a rent contoled enviornment have not incentive to maintain the property, The value is in the location. Additionally, while a deep pocketed investor organization can out bid retail buyers of houses, they are not incentivized to pay more then the going market rate. A prime example was during the Obama Recession, multiple investment companys came in as cash buyers of foreclosed property in Florida and saved many neighborhoods from becoming abandoned. True they made money once the values increased, as is occuring today, but that is the reward for taking the risk. Also, even during that Obama Recession, Fanny May and Freddie Mac preferenced owner occupancy over investment buyers. For example, a home that sold for $150,000 in 2007 was only worth $45,000 in 2011 with a mortgage balance of $120,000, was forclosed, an investment company offered $45,000, an individual offered $42,500, Fanny Mae accepted the $42,500 as the policy was to preference individual buyers over investment groups. Not saying it happend all the time but that was the policy and it keep some neighborhoods owner occupied. This is not a defence of investment companies but sometimes they are the only buyers, but they typically are the buyers of last resort. My 21/2 cents worth….

    Reply
    • Jack Baruth Post author

      You’re always free to disagree with the host!

      What I’m trying to put across here is that the combination of subsidized loans and “too big to fail” mentality has removed the risk from residential investment and made it basically a sure thing, which is why my house has jumped $110k in assessed value since December.

      Reply
      • LynnG

        Jak true, some risk has been removed from home loans, think back, when you father purchased his home, if it was in the early 1960, the typical down payment was 25-50 percent of sales price, the idea of significant down payment both protected the buyer and the bank ( if you have more chips on the table you will think twice before you walk away). As government chose to promote homeownership, over the years the requried down payment dropped and risk shifted to the banks (mortage companies, credit unions, fincance companys , community savings and loans, but we use banks as a catch all term). That was a society choice, that government determined homeownership was in the national interest.
        Now on “to big to fail” I totally agree that the consolidation of the banking industry had unintended consequences. However the term “to big to fail” is a missed used. The real term is “systemic important financal institutions” and there are not a huge number of them and some most people may have never heard of. The defining characteristic is that they are transnational and therefore tied to and significant components of the world’s financial system. So it is true the US Government and most western governments keep a close eye on these institutions because of the interconectivity of the world financial system. As a result of the financial crisis of 2011-2012 these institutions based in the US are now required to keep trillions in accessable capital, which was not true before 2010. Likewise there investment arms are not allowed to engage in/invest in diratatives (sp) as was the case before 2010. Now this was one of the issues with the financial deregulation that occured in the late 1990’s prior to “banking deregulation” the commercial banking division had to be fire walled away from the investment division. When deregulation demolished the firewall, the 2011-2012 events was a result. The firewalls have been rebuilt. This is a complex topic and tends not to be condenced to a paragraph or two.
        But I think Jack would agree that when we went from having two or three community banks in every town of everysize, where the bankers and loan officers knew their customers it significantly increased risk. Anyone any where can use Rocket Mortgage and all they care about is your FICO score. But that is a topic for another day…..

        Reply
      • trollson

        Yeah but you didn’t really follow the thread about how renters put a ceiling on prices. In order to rent, you need to show income at a certain multiplier of rent. Renters are obviously working people and their salaries are what sets the cap on rents.

        Importing rich people won’t do anything to increase rents, unless they come here for jobs, in which case the market limit still applies.

        I think this blackrock thing is definitely an inflation gamble, but I don’t think it’s a particularly good one since home prices compete with other speculators, including many from overseas with a similarly unlimited money supply. At the same time the job market sets the market rate on rentals.

        Reply
    • John C.

      Remember Lynn it is possible to structure rent control that charges a separate maintenance fee that is allowed to rise over time to keep the building maintained. That is how an apartment building I inherited in Germany years ago was structured. The rent control meant for some super long term renters, over 40 years. New renters got completely redone apartments and the old renters were still stuck with one common bathroom per floor, as was common 100+ years ago in Europe. The building had been a good investment, well located with a restaurant on the first floor. When I sold there were many private buyers as there was then a tax dodge that if the building was bought for heirs it was not part of the estate of the buyer, but of course they got the income for life.

      Reply
      • yossarian

        “Remember Lynn it is possible to structure rent control that charges a separate maintenance fee that is allowed to rise over time to keep the building maintained.” actually nyc has something similar in it’s rent stabilization guidelines (actual rent control is almost completely phased out). the rent is adjusted to pay for maintenance and improvements when an apartment has a change of occupancy. it’s still a crap corrupt system.

        i actually live in the craziest scenario. my apartment is grandfathered in to stabilization rates but if i move out they can raise the rent to market. good for me but much better for my landlord: assessed value of the complex increased ten fold.

        Reply
  4. KoR

    Some time ago, Jack, I brought up the idea that despite us being on the opposite ends of the political spectrum, I often see things you write that I wholeheartedly agree with. Something to do with the horseshoe theory and it’s relation to American Politics

    This is one such thing, where despite me being a dues-paying member of the SRA, and a lifetime Dem voter (trust me — I hate them as much as you do, but for different reasons) we are in lockstep.

    And I know you normally make fun of them, or point out their flaws, and so on, but credit where it’s due: Antifa and some anarchist groups are juuuuust about the only people actively fighting against this. If you remember, back in December there were activist groups who put up actual barricades in the street to protect a family home in Portland. In LA, they straight up fought the police to protect a houseless community in Echo Park.

    It’s not exactly a one-to-one comparison to the issue you bring up, but it’s really about the only action on the ground taking place that would combat the problem you see. Please believe me I’d join arms with any group regardless of political ideology if they did a similar action for similar reasons. This is an anti-capitalist idea that you propose, and it sure as hell as the backing of those far left of center here.

    Reply
    • Jack Baruth Post author

      The long-time Adbusters reader in me completely agrees with you, and the rest of me doesn’t disagree much.

      Reply
      • Panzer

        First up, Fuck Adbusters.
        I’ve hated those cunts since I once saw them justify terrorist attacks on subways in Europe as just retribution for Drone strikes and pretend that ISIS is fighting a legit social and political cause rather than for the dominance of their religion of barbarians.

        Secondly, Maybe Antifa did have a legitimate point barricading those houses. But that good act is drowned by the river of blood on American streets they unleashed, all those conservatives murdered and all those working class businesses burned to the ground – not really the heroes of the proletariat are they?

        Reply
        • Jack Baruth Post author

          If Antifa EVER had an independent existence, it’s long since been co-opted by corporate overlords, most of whom want to push the same radical social agenda for the purposes of profit. They are foot soldiers in this unwanted race war.

          That being said, in both the cases of Adbusters and Antifa there are certainly people in the organizations with a genuine populist spirit. It’s just much less than what it used to be.

          Reply
          • Panzer

            Nah dude, with all due respect, I gotta disagree. In both cases of Antifa and ISIS, these people genuinely believe this shit. It is as real to them as gravity is and they are willing to kill over it.
            The notion that this is all window dressing for the real power play is just a projection by normal, sane people to whom it is incomprehensible and terrifying that anyone could really believe things will be improved once the right heads are chopped and society is burned down during the ‘revolution’.
            So I don’t think the corporations ‘run’ or even have co opted Antifa or BLM, I think at the moment they’re in an alliance of convenience (big business is happy to launder their image and sell to new markets and the lefties are happy to take their money and abuse their institutional power) and once this alliance stops being useful, whoever loses the ensuing fight between Goldman Sachs and Antifa will have been the ‘useful idiots’.

          • silentsod

            Jack included in a recent round up that he met with an antifa adjacent person who at the very least intimated they are being used as pawns by power players.

            I’m sure there are some true believers amongst the ranks; I think most of the kids involved are looking to party/cause trouble/do drugs after the riot. Looking at the arrest photos – most of them look like dweebs/rejects of society/unstable. Misfits who might not be as intelligent as they think they are make for a very good recruiting pool if you want to get up to no good. I can’t recall the name of the person who did this work but there was a mighty amusing study on the types of people who make up these revolutionaries and it still seems to fit 80+ years later.

  5. CliffG

    Janet Yellen recently remarked that higher interest rates would be fine for the economy. I’m excited to see her next “budget” proposal reflecting 3% interest rates rather than .5%. Naturally the Wall Street suckup that almost always is the Fed Reserve chair thinks we can monetize our deficits forever. Germany’s bank has opined that rapid inflation is coming to America. Remember CMOs? Somehow a collection of crappy mortgages was fine because there were a whole lot of them in a basket. At 2.5% $1500/month is a $400K house. At 4%, $300K. My point is simply that all of these investment firms are sure prices are only going to go in one direction and that rental customers will always outstrip supplies, etc. Extrapolation isn’t a strategy, it is a wish. Last time around, Paulson was there to protect his pension, and his buddies, on the backs of the taxpayers. But we’ve doubled our debt since then. These firms are acting as if they have lots of cushion, when in fact they have none. There are still lampposts and rope. Don’t piss off the peasants too much.

    Reply
    • stingray65

      All the models in 2007-08 said home prices would only go up. Highly leveraged house flipping and remortgaging (i.e. take cash out of your home equity to buy a boat or take that European vacation) were big businesses all built on the idea that home prices were sure to go up, which “surprisingly” turned out to not be true. The current jump in housing prices is driven by low interest rates, which means everyone with access to credit can afford to go into big debt to buy a house, and when demand is high and supply is constrained prices go up. Throw in the large amounts of money on the side-lines earning zero percent but afraid to go into the current stock market bubble, and housing “investments” start to look attractive because God isn’t making any more land and Democrat policies make lumber, energy, and building expensive to constrain supply, which means we have another housing bubble developing. Rising inflation and interest rates are going to make a lot of bubbles pop, because as you rightly point out the house you can afford at 2.5% is not the house you can afford at 4 or 5%, but furthermore the money that was earning zero percent in the bank is now earning something and bonds start to look more attractive which removes some speculative money from the housing demand side at least until prices hit rock bottom.

      The other side of the equation is government deficits, because the amount of debt a government can afford is a lot less at 4 or 5% interest than at .5% interest, which might constrain another 2008-9 style bailout of over-extended banks and other investment groups.

      Reply
  6. Mike

    Some other thoughts about this:

    Local governments are a secondary beneficiary of the increasing property values, as this increases taxable valuations and, in turn, property tax revenue. Also, many places have a Homestead Tax Credit or something similar, which limits property tax increases for owner-occupied dwellings. But, investment properties are not exempted, so if a property value goes up 100k in a year, the owner must pay the property taxes on the entire new valuation. This equals a big bonus for municipal coffers. Trump eliminated the deduction for property taxes over $10k/ year, which affects the high-property tax area. But I am not sure of the situation when it comes to rental properties.

    Second, real estate investors enjoy a benefit that owner-occupied properties do not: depreciation. Real estate is depreciated over (I believe) 30 years, and that depreciation is used to offset income taxes owed. Not to mention, interest on loans is also a business expense. So you end up with a sort of “double dipping from both ends” situation, which makes it very advantageous to invest in real estate. Rather than rent controls, perhaps eliminate the depreciation deduction for single-family rental properties?

    Reply
    • stingray65

      Does anyone except Libertarians ever consider that crazy housing prices are caused by too much government “help” in the housing area rather than too little? Mortgage interest deductions on taxes (including on 2nd or 3rd homes), property tax deductions on federal taxes (including on 2nd and 3rd homes), depreciation allowances on housing investments, Fannie/Freddie home loan guarantees, foreign buyer tax breaks, zoning restrictions, solar panel mandates, low income housing mandates, rent controls – what do they all have in common? Answer: they either artificially increase demand for housing, or the artificially decrease supply for housing, which means all this “help” for the real estate sector only increases housing prices.

      Reply
      • JMcG

        I’m no libertarian, but it’s plain to see that every single market that the government has gotten its greasy hands into has been destroyed. Education, energy, health care, housing. They’ve even figured out a way to tax the f**king air we breathe.
        The funny thing is, the rich still get richer.
        Joe Biden’s salary as a senator went from the mid 40k range in the early 70s to 175k or so lately. He has four houses on that kind of money?

        Reply
    • Peter Voyd

      Yes, investment real estate is typically depreciated nicer 27.5 years. However, this needs to be repaid when the property is sold, at a 25% minimum rate – depreciation recapture.

      Reply
  7. NYCFinanceGuy

    The situation is so much worse even than Jack described.

    One of Biden’s tax proposals is to eliminate the 1031 exchange, but give a break for $500k in capital gains per property. So blackrock’s investors won’t pay any capital gains taxes on the single family homes the way an investor in large multi family developments would. This is a huge giveaway to Blackrock’s investors if Biden’s tax plan becomes law.

    Also, foreigners who own U.S. real estate get different (and often favorable) tax treatment relative to Americans. The plan is for foreigners to own our homes and we pay rent to them. To paraphrase Warren, we are becoming a nation of sharecroppers.

    Reply
  8. silentsod

    LOL at the thought of Ben Shapiro riding to the rescue.

    Either he’s a dolt or he’s getting paid to defend the corporations judging from what he’s proclaimed on the blue bird site.

    I find the tolerance of the Right to allow a market which is supposed to serve individuals/families/small holders to be abused and distorted distasteful at the least and a betrayal at the worst. If the market which underpins the American Dream becomes inaccessible to Americans why are we supporting the dynamics that make it that way? I can’t come up with a great reason other than muh free markets propaganda without thinking and kowtowing to big companies and lobbyists.

    Beattie’s touched upon some of the latter in this piece: https://www.nationalreview.com/2017/06/economic-nationalism-21st-century-free-market-ideology-cold-war-era-20th-century-individual-liberty/

    Reply
  9. Eric H

    I suppose a lot of this could be fixed with local zoning bylaws.
    No more than X% of housing in a detached dwelling area can be designated rental, with preferences for local owners.

    Set X where you like, 5%, 10% or something totally different for designated areas.

    If they’re not allowed to rent it out, they’ll sell the asset

    Reply
    • JMcG

      No, Blackrock will hire lawyers to overturn the local zoning laws. They’ll prove disparate outcomes. It will be easy. Toll Brothers bankrupted my township 25 years ago over our zoning laws, and they’re pikers compared to Blackrock.
      For whatever reason, the crony capitalists aren’t worried any longer about the mask slipping.

      Reply
  10. Daniel J

    As a libertarian, I generally don’t have a problem with this. Property has been an investment and has been treated as such for a very long time. If “corporations” want the risk of over paying, that’s on them. This would be for private corporations.

    Where I disagree is when companies such as Black Rock, who are entrenched with the Federal Reserve, are doing this. They will be the first to get bailed out again when the market crashes. They know this. I don’t know if Trump could have stopped this, but this is what we get when the Uniparty running the show.

    Reply
  11. Daniel J

    “Traditionally, the housing market has been largely inhabited by individual owners, who buy and sell their homes according to what other, fundamentally similar, sellers and buyers will accept”

    I think you’ll need to define “traditionally’ for me. Even during the early days of colonialization, corporations owned homes and farms that were eventually sold to individuals or leased out. In may cases no one really owned their homes and drove the “western” expansion. The “traditional market” wasn’t like it is until after WW2.

    “The people who could stop if it they tried hard enough, the Millennials and Zoomers, have already internalized the idea that they’ll never own a home or have much in the way of net worth”

    Millennials and Zoomers around here, in a highly red state, want nothing to do with home ownership. It’s not that they don’t think they can’t own a home or buy one as an investment, it’s just they have zero interest in dealing with all the issues that come with home ownership.

    Where I live, we are seeing prices skyrocket with housing. Most of it is being driven by an influx of new government personnel from high cost of living areas (DC, Seattle, Norfolk..) and the price of lumber. However, rent is a whole different story. It has doubled in the past year. They can’t build apartments fast enough. I’m a millennial (gen x border) and all my friends are zoomers or millennials. Some that own homes now are wanting to go back to renting for various reasons.

    Just as we were sold on the college myth, we were also sold on the homeownership “investment” myth.

    For example, my folks purchased a house in the early 70’s. If you count for inflation, the total mortgage, the number of roofs put on, the number of ACs put in, and all the other maintenance, they have lost money on the home, big time. Most people I know eventually lose money on a home. That’s fine, but lets not promote it as some sort of investment.

    Reply
    • Power6

      I ran the numbers on our home purchase (2012-2021). A dumb comparison of course, we need a place to live, but just in general I was wondering if it was a good place to put money independent of practical reality. So I took simple terms: what is we invested the down payment, and the mortgage payment per mo into SP500 index ETF. Compared to the theoretical value of our home, minus all the maintenance and upkeep we have spent, including the 40k we just wrote a check for to re-side. The home did come out ahead, slightly by 1.4% or so. So we’ve done OK and we live in the house. The leverage of the mortgage is what offsets the lower appreciation and upkeep costs vs stocks. We live in a desirable area not too far outside Boston, that may help. And the market is nuts right now so this math could easily change out of favor with the house, with a little Interest rate rise.

      Not a big difference, for each situation this could go either way I think, a “good” investment or a “bad” investment. There is so much to this discussion, like the behavior modification of having to make that big mortgage payment to the “investment” vs when I was renter I blew so much more money! I wasn’t disciplined or smart enough to have invested. But I got no choice with the home, we gotta make the mortgage payment.

      Reply
      • stingray65

        With 20% down and several years of payments and built up equity, most people will move heaven and earth to make their next mortgage payment to avoid losing their investment, which means buying a house is a forced savings program. In contrast, if someone found a nice place to rent with a reasonable monthly rate that was cheaper than a monthly mortgage payment + maintenance and property taxes, and put the monthly savings into a S&P 500 index and let it ride over 30+ years, most people would come out ahead by renting. The BIG if is that they have the discipline to use their savings from renting and putting it into a real investment vehicle over an extended period of years without doing something stupid like skip investment payments in order to buy a new luxury car, or fancy watch, or round-the-world trip, or expensive daily double latte caffeine treatment, etc., OR getting scared and selling the portfolio after a market crash and then jumping back in at the bubble peak, OR being risk adverse and putting most everything into a low return bond fund or savings account, which could mean that the renter ends up facing retirement with no significant assets. A paid off house (or house with significant owner equity) is the primary asset of most people as they hit retirement because most people are terrible about saving money and investing and hence lose the value of compound interest over an extended period of time.

        Reply
        • yossarian

          @stingray65 the problem is most of the people that i know who bought ended up using their house as an atm when things were tight so they are in the same situation as a renter who didn’t save enough.

          Reply
          • stingray65

            yossarian, I’m sure you are right, but some equity is still better than no equity.

    • JMcG

      I’ve been saying this exact thing for years. Historic mortgage rates and a thirty year loan equals paying back three times the amount borrowed. That’s not been the case the past few years, but the Gods of the Copybook Headings won’t be denied.
      Maintenance, insurance, and taxes all add up pretty quickly. In my lifetime, ownership has just been the least-bad option.

      Reply
  12. John C.

    It would be nice to get back to the old savings and loan, local based home buying system that worked so well and allowed young adults to marry and raise their own family in the place that they were from. It would of course mean much higher interest rates. The old rule of thumb in finance to properly price a loan was three percent plus the expected annual rate of inflation for the term of the loan plus the default risk. Thus it would be hard to see how a loan rate could be under 8 percent. For an entry level full time worker making 40k, he will qualify for a mortgage payment of $790 and a circa $130k house with 20% down, easily possible with the cheap house and help from both sets of parents and a year of savings before marriage. This really calls for the young man choosing to raise his family in a small town. The nice thing is that the small town savings and loan was more likely to approve him starting out from the family relationship. The 8 % percent the savings and loan charges allows the older folks to earn a risk free 5-6% on their savings deposited in the bank and then directly invested in the town’s young people. The most wonderful part of this is how it allowed a complete disconnection from Wall Street and the blood sucking. The system gradually collapsed with the quasi government agencies setting the rates much lower to counteract big city home prices and the result is that the local bank just passes the current uneconomic loan to them and collects fees. With no 8% loans on the balance sheet, out the window goes the CD rates.

    I am not sure it could really be recreated. Would young people be satisfied marrying young, living in a modest house with security and children around family but little money or time left over for video games, porn, and the other time wasters? The young men truly had a lot of pressure on them, and the community was all around them hoping for their success. Something now reversed.

    Reply
    • stingray65

      Expectations have greatly expanded over time. The post-WWII Levittown PA housing project built houses that were about 850 square feet and a single bath with no garage, no A/C, no cable connection, no marble counter-tops. By 1970 the average new house was about 1500 square feet, but today the average is almost 3000 square feet which is the size definition of a McMansion. Today, the typical Millennial or Zoomer is much less likely to have a spouse and 3+ children of the Levittown returning GI, but would turn up their nose to living in such a small spartan home which are often still around and very affordable. Wall Street innovations and regulatory requirements have made cheap financing more widely available than ever, which is part of the reason that more people can “afford” to buy more expensive, larger, and more luxurious homes than their grandparents, and this “affordability” and higher expectations are ironically what make attractive housing unaffordable. The days of 3/6/3 banking are over (i.e. 3% interest on deposits, 6% interest on loans, 3 PM on the golf course).

      Reply
      • John C.

        The old system was better, even if you start your married life at 24 in a 1400 foot new build house in a small town as I did. I haven’t noticed the current 24 year olds bubbling over with happiness at their situation.

        Reply
        • stingray65

          You mean being 38 and single with a $100,000 degree in victim studies and living in a 3000 square feet suburban home with a huge mortgage payment (or 500 square foot city center apartment for the same price), and 27/7/365 social media access in a large blue city full of “racist” cops, discriminated against people of color, and day and night “peaceful” protests doesn’t bring happiness and contentment?

          Reply
          • John C.

            That victim studies degree sounds like just the ticket. With Cigna Insurance and Iheart Radio announcing they are only interested in diversity hires, thankfully the government hasn’t yet admitted to the same policy, that degree sounds perfect to present best foot forward.

            Do you think the white man of tomorrow is best off in future wearing a dress, going in blackface or perhaps just having a Jewish sounding pseudonym. I think Lindsey Graham will discover carrying a “More for Israel” sign is not adequate enough debasement, though even Netanyahu looked embarrassed.

          • yossarian

            @John C. – i don’t know why i continue to fall for your trolling but in case you haven’t noticed the diversity departments haven’t exactly been favoring jewish hires for awhile now.

  13. DougD

    The run up in the Toronto area housing market makes your $644,000 house look quaintly inexpensive. People who live closer to the city center can sell out for two million, move two hours away, buy a bigger house for a million and another to rent out. Then work remotely.

    I don’t believe the big bad government is out to get you on this, partially because I don’t think they can plan ahead that far. Pent up demand from the pandemic and the realization that you don’t have to live in the city to do your professional job seem like big factors. Though, it does seem awfully convenient for retiring boomers, and no doubt the banks appreciate being able to charge interest on the better part of a million dollars to young families (!!)

    Reply
    • John C.

      The scenario you talk about is also quite profound in Vancouver with all it’s empty, overseas owned high rise condo and regular Canadians living ever farther out. At least in Vancouver the housing stock was newer so it was less a matter of pushing out long term residents. One might have hoped the Ford brothers might have slowed the process in Toronto. Too much time in the basement with the crack pipe, I guess.

      Reply
      • Eric H

        It’s getting better here in Vancouver.
        The empty home tax is putting a lot of them into the rental market.

        Reply
  14. TL

    “Brood X is buzzing in my backyard. Their thousandfold screeching can be heard over everything short of a cranked guitar amp, they pitter-patter my office window like horizontal, substantial rain. Already their bodies litter my driveway,”

    As a west coaster who has never seen or heard a cicada, I initially translated “Brood X” as “the children of Gen X”. Until the mental correction occurred that paragraph was REALLY dark.

    Reply
  15. Keaton Lamle

    A few months ago I jumped in and caused a ruckus by critiquing what I perceived as Jack’s over-generalized comments on the conversation about race in America right now. I want to balance that negative energy by just dropping in to give credit where it’s due. This is a fantastic piece, and I’m in on the proposed solutions. One quibble:

    Reply
    • Keaton Lamle

      (accidentally hit ‘post’ early)

      My quibble is with the following:

      “The people who could stop if it they tried hard enough… won’t do it, because it’s scary and because the media will tell them it’s more important to eliminate the last vestiges of racism from toothpaste advertising.”

      As I’ve mentioned in the past, I teach writing and literature at a large public university (saying this for context, not kudos, as I recognize that with this crowd sharing my profession is like admitting you euthanize veterans for a living), and I think you’d be surprised just how cynically the average younger millennial/older Gen Z student views the corporate co-opting of the social justice agenda, ergo the pop culture emphasis of the past few years. As we saw with grunge and emo, nothing kills a cultural moment faster than advertisers who pick up on the lingo. Meme culture on twitter and Tik Tok is now dominated by precisely the kinds of cynical jokes about corporate Pride regalia that you’d normally see in this group.

      Not saying that’s gonna translate to sustainable action on the rent front; American cynicism never does! But the good news is that “the kids” seem to hate it all as much as most of the folks here at the Green do. From the conversations I’m having with undergrads, there seems to be pretty widespread agreement among emerging adults that this country has a serious systemic racism problem, but that being a resentful doofus who doxes people for buying the wrong toothpaste doesn’t do anything good for the world. Now that the protest culture of the past few years is increasingly seen by the 18-25 crowd as ‘belonging’ to the overly earnest cohort of soccer moms and Crossfit dudes who graduated college during the Obama years, there’s some stranger, more nihilistic consensus brewing. Too early for me to tell what it is, but I know it hates skinny jeans and Lin Manuel Miranda (quoth the teens: “a neoliberal shill!”) and yard signs about progressive values. As with all movements, I’m sure there’ll be affordances and limitations that aren’t discernible until it’s too far past the moment for anyone to care.

      Reply
      • CJinSD

        Systemic racism is called affirmative action. I don’t think the kids have a grasp on reality even if they don’t believe Coke really wants to end whiteness.

        Reply
        • Keaton Lamle

          Re: the existence of systemic racism, I could wall of text you with data comparing the fates of black and white defendants who have committed the same crime, a rundown of how redlining eroded black generational wealth and business ownership throughout the 20th century, etc, but you seem pretty committed to opposing this idea, pretending it is somehow a threat to your own achievement, so let’s just agree to disagree.

          Reply
          • CJinSD

            That must come as a great comfort to the seventeen year old white prom queen staring at multiple felonies for extracurricular activity election fraud while black teenagers are getting counseling for murdering an immigrant Uber driver. Leave your campus some time. There’s a whole real world being destroyed by the idiocy you cultivate.

          • stingray65

            Keaton, please explain the systemic racism that has Nigerian and Ghanaian Americans earning more than the average US white household, not to mention the Indian, Taiwanese, Filipino, Indonesian, Syrian, Iranian, Chinese, Japanese, and Korean Americans who also earn more than whites? You might also explain why the systemically racist US criminal justice system much more rarely arrests, charges, and jails Asian Americans than whites. Can you also explain how refugees from Cuba, Vietnam, Somalia who have arrived in the systemically racist US with little or no wealth and poor English skills, but have been able to attain much more education, entrepreneurship and wealth than US blacks during the 50 years that redlining has been banned? It would also be interesting to hear your explanation on why people of color all over the world seek to come to the systemically racist USA, or why there is virtually zero emigration of US blacks to “less racist” black ruled countries?

          • Keaton Lamle

            Given the fact that you both (CJ and Stingray) seem to be throwing wild haymakers at an opponent (me) you don’t care to understand (the way you’re using “systemic racism” here for instance is a dead giveaway that we don’t have any shared definition of the term), I’ll pass. But only because it seems like you’re more interested in dunking on the dumb lib than actually engaging me here. Which, fine. I’m fun to dunk on! That said, I do want to point out that your string of random anecdata and “discomfirming” stats here pretty much represent the greatest hits of right-wing arguments on race that even conservative sociologists and economists started lampooning thirty-five years ago. Whether you wanna troll through McWhorter or Bradley whoever, a lot of those lines of inquiry you threw at me here are pretty boilerplate, and don’t necessarily challenge the idea that the post-colonial racial binary of white/black has caused some serious problems. I sincerely enjoy chatting with people who don’t share my perspective. But that’s not possible when you assume my motives are, “destroy society by cultivating idiocy!”

          • stingray65

            Keaton – so in other words you don’t have an answer to how in the land of “white privilege” and “systemic racism” that so many groups of color are doing better than whites? Have you ever considered that your anecdotal stats on black “racism” are cherry picked by dumb Libs (to use your term) and that Right Wing arguments and stats actually represent the real world? As for the lampooning “conservative” sociologists – they no longer exist and I’m not sure they ever did, which makes their use in an argument the very definition of strawman.

          • Keaton Lamle

            Stingray: It’s not that I don’t have an answer, but I think the counterarguments to your line of thinking are pretty publicly available at this point (iby reading Israeli economist Daniel Kahneman’s work on the tyranny of small samples and the process of reverse-engineering partisan talking points from demographic data you could clear up the fallacies that produced your list of stats, plus maybe scan a couple pieces from Cornel West on the origin and deployment of the “model minority from Asia” trope identify the errors in your reasoning on what “systemic racism” actually means). The point is, I’m not interested in re-litigating this argument for the 1000th time and I’m guessing you aren’t actually, either.

            That said, I would like to ask you a couple of questions, and please know that I’m being sincere on this: In your mind, how does the fact that immigrants from Ghana or Korea earn more on average than white households negate the existence of systemic racism? Or why would the notion that people all over the world actively seek citizenship in a flawed but opportunity-rich country somehow preclude that same country from having persistent post-colonial problems? If your argument is “systemic racism can’t exist because a lot of people still want to come here,” that just… doesn’t seem super persuasive to me? Yeah, it’s one of the richest, most liberal countries in the world.

            And if you’re reluctant to answer my questions, here’s why I ask: I’m baffled by your conclusion that successful non-white groups somehow represent a challenge that I must “account for.” That fact that you would use that as evidence kind of indicates (from where I’m sitting) a shallow understanding of what sociologists mean when they discuss “systems.” You seem to think that systemic racism is some kind of linear, unitary hypothesis stating that one demographic group is more or less guaranteed success while others are almost *prevented* from succeeding, and thus any example of a non-white group succeeding somehow disproves the hypothesis the same way it only takes one disconfirming example of a black swan to disprove the phrase, “all swans are white.”

            That’s not the case at all. That’s not what any of us mean when we discuss racism on an institutional level.

            In fact, many writers on systemic racism cite the very facts you list here as evidence of its existence– for instance the fact that newer immigrant groups are often able to sidestep the larger patterns of wealth and opportunity distribution that plague native minority populations. Or the fact that immigrants represent a self-selecting population of ambitious people who tend to out-perform their fellow citizens in both their original and new contexts. Or the fact that the Africa-to-US immigration network often unfortunately consists of a ‘brain drain’ dynamic whereby the wealthiest and highest achieving students and workers are most likely to come from Ghana to the US, etc… etc… all this to say that the “counterpoints” you presented don’t accomplish the task you claim they do. So I would like to throw my above questions back at you.

      • yossarian

        @Keaton Lamle – “But the good news is that “the kids” seem to hate it all as much as most of the folks here at the Green do.” i’ve noticed that, too. even in nyc, the tide is changing. people of all stripes are done with this sh*t.

        Reply
        • Keaton Lamle

          You always hear about how it went from cool to uncool to have psychedelic signifiers in rock music over the course of like eight months in 1968-69. Funny to see similar trends in self-presentation happen as fast in our own time.

          Reply
        • Keaton Lamle

          In what context are you using the term? W/r/t, for instance, the lending patterns of banks in Atlanta broken down by race + income over the duration of the 20th century (upshot: low income white applicants received more frequent and generous loan approvals than high income black applicants)? Or more explicit efforts at blockbusting in places like Houston? Identifying a singular, articulable motive for the white homeowners’ councils of west Atlanta *and* the zoning commission of Houston three decades apart, for instance, seems difficult. But I think we could probably concede that in all cases it’s pretty easy to identify a common result: a more powerful group impeding a less powerful group from obtaining property.

          Reply
          • JMcG

            I mean the original redlining. The red lines drawn around certain neighborhoods as part of the due diligence resulting from the creation of the Federal Housing Administration in the thirties. It was part of the new deal.
            What is your view of the purpose of that redlining?

          • John C.

            Doesn’t this discussion diminish the work of black owned savings and loans back in the day. Surely you must understand that if it was important to the minority community, they would have at least tried it within. Relying on liberal whites doesn’t cut it. It happened with Carver State Bank here in my hometown. It should be remembered their capital requirements were then low.

  16. Vladimir Berkov

    I’m going to have to disagree with you here, Jack, a bit.

    I’m not sure the concept of home ownership has ever been really a fundamental aspect of American life nor an essential one. Nor of a home as an asset in general.

    For most of American history a house was something you had on your land as an improvement because you needed somewhere to sleep/live. You had a farm so needed a tent, a shack, a cabin, or a house, somewhere to store your things and live while you worked your land. A lot of these were built by the owner or by the owner with some extra labor. It was never intended to be something to appreciate in value, in fact the opposite. An old house was just that. An old house. If you got more prosperous you might add onto it, or tear it down and start over, better.

    People who lived in cities were different of course. Unless you were married you likely lived with your parents (if a girl) or in a boarding house or hotel or perhaps an apartment (if a boy). Married people and families had houses, and even into the 20th century a lot of those were owner built to some degree particularly as cities expanded into early suburbs and housing tracts. Financing basically didn’t exist. You had to have almost all the money to build or buy the house at the time unless you were of a certain class, which most weren’t.

    Where this seems to change was the great compression period especially after WW2. You saw the start of the big suburban expansion starting in the teens, but the depression and the war ended that. After the war there was now some political idea that everyone needs, nay, deserves their own house. Perhaps with increasing financilization you also had new ideas on how to profit on this along with the govt. policy and subsidies. Hence we got mortgages. As inflation became a thing suddenly houses HAD to become an assett and an increasing one. A house that was worth $100k ten years ago better be worth more now else you have literally lost money by doing nothing.

    Houses became like stocks or sharks. Either you are swimming forward or you are dying. But that was never the original idea, nor is it the same in all countries. Japan for instance doesn’t have that concept even today.

    Anyway, this stuff fascinates me and its odd to see how in a lifetime its changed so much. A neighborhood I used to live in from the early 1920s for instance is very typical in that many of the craftsman bungalo houses and colonials have little back houses/garages. Going into many that haven’t been remodeled you’ll find what amount to tiny apartments, toilets, in addition to a garage, workbench, etc. This is because many first time homeowners could afford the land (again there’s basically no finance) but not the cost of the house at the same time. So they built the back house, then built the front house and the back house became a garage/workspace/extra little granny apartment.

    Reply
  17. Jim

    A little more than 10 years ago the narrative was that there was too much single family home inventory. Alan Greenspan went so far as to assert that the only way of saving the housing market was to destroy the excess home inventory to balance supply and demand.

    Now the narrative is that there is too little single family home inventory and generations of people will be locked out of home ownership.

    The investing class is not as smart as you give it credit for being. One merely needs to look at all the imploding REITs to understand that the future is unpredictable. Demographics suggest that in another 10 years McMansions in the exurbs will be dirt cheap as boomers downsize or die. I plan to trade up when that happens.

    Ain’t nothing new. Live where you want and stop worrying.

    Reply
    • Keaton Lamle

      Good context I had not considered, Jim. A lot of pessimism (my own included_ operates on an inverted version of the “historians fallacy”– the flawed idea that powerful actors in the present tense can accurately predict the consequences of their own actions and use this knowledge to act in their own future best interests. They seldom can, and the chaotic course of history usually foils their best efforts to game the system in their future favor. Or maybe that’s just my wishful thinking.

      Reply
  18. Dirty Dingus McGee

    “Fix it at something easy for people to understand: a dollar per square foot of living space in single-family homes”

    Out here, in the rural area I live, I and almost any other rental property owner would be ecstatic to get those rental rates. I have 3 small, 1,100 to 1,250 sq ft, rentals and the best I can get is $900-$1,000 per month. Yes they are an investment and as each becomes empty, at least one will in a couple months, I will likely sell them. As I age, currently on my 64th trip around the sun, I have less need for the income/deductions, not to mention the headaches of the repairs.

    Reply
    • stingray65

      DDM – You mean that being a landlord isn’t just “free” money coming in every month? You mean you have to fix their clogged toilets, repair damage from their negligence, and regularly find new tenants who will hopefully pay their rent every month? I suppose now you are going to tell me you also have to pay property taxes, insurance, and even some utilities on your rental properties?

      Reply
  19. Keaton Lamle

    As in, like what were they trying to accomplish with the Housing Act of ‘34? Or what specifically were the private consultants who drew the lines trying to signify?

    Reply
    • stingray65

      Redlining was about protecting property values. An influx of blacks moving into a white neighborhood always lowered the property values that bank loans were based on and hence put the loans in jeopardy (aka underwater). While there were almost certainly racist elements to the practice, as with most government economic policies it was mostly about protecting banks. White flight in such cases was also about keeping built up equity before property values dropped (i.e. the $25K in equity you have on your $100K home suddenly becomes 0 when the house value drops to $75K). Was racism the reason the property values dropped? In the early days racism certainly played a role, but statistical evidence also points to rising crime rates, lower standards of property upkeep, and later on when such things were measured lower school test scores when a large influx of blacks move into white neighborhoods – so it wasn’t just “irrational” racism but also very rational observation of what actually happens when neighborhoods become more “diverse” that led to practices such as redlining and phenomenon such as white flight.

      Reply
    • JMcG

      The Federal government wanted to stop the foreclosures that were becoming legion as the result of the Great Depression and the associated bank collapses. They decided they would provide insurance to those institutions that lent money into the mortgage market. (I’m wildly oversimplifying here, I’m on my phone.) At that time, the Government still treated public money as belonging to the US Taxpayer, not to be wasted.
      Since the Feds now backed up lenders, they had an interest in protecting their collateral.
      So they steered loans to those neighborhoods where risk was minimal, or at least well understood. The minute a black family moved into a white neighborhood, values plummeted and the Feds were left with no collateral on the loans they had guaranteed.
      The people who steered blacks to white neighborhoods at that time did them no favors. The first black to buy in a white neighborhood set the peak value there, often for generations. The instant he settled the title, his house dropped in value, often precipitously. Real estate agents made their fortunes as did many lawyers and the top guys at the NAACP. The working class black guy, along with his working class white neighbors, took it in the shorts. One has to break eggs to make omelettes though, doesn’t one.

      Reply
  20. stingray65

    Keaton Lamle – this is an answer to your questions above about systemic racism in the US. If we define systemic racism as the formal or informal “rules” of society or particular institutions that take away the opportunities and rights of certain groups based on their racial identifiers, then evidence of systemic racism would based on any set of racially discriminatory formal rules or customs AND/OR by the absolute dominance of the dominant racial group within the high status/power positions of society to the near or complete exclusion of other races. In other words, if systemic racism exists in the US in 2021 you would expect whites to be the most successful racial group in terms of high status/power/wealth, and all other racial groups to generally be excluded from not only entering the country, but also regulated to lower status/power/wealth positions so as to maintain “white privileges”.

    Is that what we see in recent US history? Immigration into the US since 1964 has also been dominated by people of color, and as I pointed out in my previous answer there are a fairly large number non-white racial groups (i.e. Indians, Chinese, Filipinos, Iranians, Nigerians, Koreans, Japanese) in the US who are easily identifiable as non-white and yet earn more money on average than whites, have higher education attainment/achievement than whites, and lower arrest rates than whites on average. None of these facts on the ground should happen in a country with rampant systemic racism intent on perpetuating the power, status, and wealth of the white race. There are also many individual examples such as Oprah Winfrey, Berry Gordy, Denzel Washington, Barack Obama, and Michael Jordan (and 80+% of the NBA) who are visibly members of the supposedly “discriminated” against black race, but who have never-the-less attained great wealth/status/power/respect by appealing to a mostly white audience, which should not happen in a systemically racist USA. So how can these “anomalies” to the systemic racism narrative be explained? Answer: these successful non-white groups and individuals have generally worked hard, worked legal, and have the intelligence and talent to be accepted and welcomed as value creators by whites and other races in the USA, which is something that is also known as meritocracy. In fact, all members of non-white groups have probably benefited from anti-racism racism that has dominated US culture over the past 50+ years as most whites in order to avoid being ostracized as “racist” give their money, time, votes, and positions of status and power to minority racial members to prove they are “liberal”, “open-minded”, and “not racist”. You certainly don’t see any respected and powerful members of US society bragging about their KKK membership or support for Jim Crow since at least the early 1960s.

    In fact, if we use the systemic racism definition above, the only racial group that is formally and informally discriminated against today are white male heterosexuals. No highly selective school or university has quotas for white male heterosexuals in their classrooms while most teach their students about “white privilege” and “toxic masculinity”, no corporations have special recruiting and mentorship programs at help attract and retain white male heterosexuals while many train their employees to be “less white”, and virtually every TV show, movie, or commercial reserves the roles of the idiot/clumsy fool/failure/criminal exclusively for white male heterosexuals. So after 50+ years of systemic racism against white male heterosexuals and 50+ years of affirmative action and racial quotas favoring blacks and other non-white/male/heterosexual groups, why are blacks (and to a lesser extent Hispanics) still at the bottom of so many economic and social status statistics, while other formerly discriminated against non-white groups (i.e. Asians, Iranians, Jews, Italians, Irish – yes Jews, Irish and Italians were once considered non-white) risen to high positions?

    Such a question should lead social scientists to be skeptical about the systemic racism explanation for racial disparities and consider other explanations for black under-performance that are more viable and explanatory, and yet they generally do not. For example, one alternative explanation is IQ, because all low performing racial groups have IQ averages well below 100, which means that most members do not have the cognitive ability to perform well in high paying/status fields of a modern economy (i.e. medicine, law, science, business), while high performing non-white racial groups and black individuals (such as Obama, Oprah, Thomas Sowell) all have IQ levels above 100. Or how about considering the crippling effects of Leftist welfare and immigration policies whose implementation in the 1960s coincide almost perfectly with the destruction of the black traditional family and stoppage and reversal of the black-white achievement gaps that were rapidly closing during the Jim Crow and closed border era? Should we consider whether teaching black people they are victims and deserve reparations and special favors, while opening up the border to millions of unskilled and skilled workers might not be the most effective path in helping them achieve their full potential? Or how about US black culture that is partly a product of low average IQ and Leftist social policies as an explanation for their poor economic/social performance? Is the low value placed on education, hard work, two-parent families, and following the law that are stereotypically or statistically large parts of black culture conducive to high achievement in a modern society? Are there any black dominated/ruled countries in the world that are successful economically, that have low levels of criminality and corruption, and high levels of educational attainment, social capital, traditional family formation, and successful entrepreneurship, which would suggest that it is US discrimination against blacks and not black culture that is to blame? Are there any sizeable black minority populations in countries outside the US where blacks have achieved the high economic and social status over and above the dominant race that Indians and Chinese have achieved in the US, which would suggest that it is US discrimination against blacks and not black culture that is to blame? I’ve just laid out 3 alternative explanations to systemic racism that offer much more explained variance, and yet the Left ignores of dismisses them as “racist”, but why? My explanation is simply that the Left are incapable of admitting they are wrong about any “good cause” they support, which is why they also still promote Communism after it has killed 100+ million people in the vain hope of achieving anti-capitalist utopia.

    Reply
    • Snavehtrebor

      Spot on. I’ve always thought that indoctrinating black students in the religion of “you are disadvantaged, the system is rigged against you by Whitey, you can never hope to succeed” might not be helping individuals break out of the cycle of failure.
      Growing up in the Deep South, my black friends who did well in school and participated in sports/student government/community involvement activities were actually resented and shunned by the black kids who did not achieve as much. Called Uncle Tom, and worse. I suspect it’s a class thing, not a race thing.

      Reply
      • stingray65

        I suspect that the black resentment and shunning of black academic achievers is a race thing and not a class thing. I’ve heard many people criticize black culture for not valuing education and educational achievement as a possible explanation for their poor performance on economic measures compared to other cultures that value education (i.e. Asian and Jewish), but why would a racial group with an average IQ of 85 value education as mechanism to catch up or surpass other racial groups with average IQs of 100+? No matter how hard someone with below average IQ studies because of their “supportive culture”, or their “Tiger Mom”, or because of “better teachers” they are never going to master difficult material as quickly and easily as someone with an IQ of 115 or 130 (including other people of their own race with high IQ who master difficult material easily), which means all their effort will still put them towards the bottom of any racially diverse classroom. This is very likely the reason that black culture does not value education, because I’ve never seen any evidence that racial groups with below average IQ are ever noted for widely valuing education and educational achievement.

        Reply
  21. Ronnie Schreiber

    Keaton,

    You twice referenced the term “post-colonial”. Other than its use as a signifier that you’ve been indoctrinated at a contemporary university (I suppose you could have used “semiotic”, or is that now passe on campus?), could you explain what “post-colonial” means? While you’re at it, please explain how it might apply to historical empires established by the Chinese, Japanese, Indians, and Muslims.

    Reply
  22. Keaton Lamle

    Ronnie—

    While slavery is as old as time and the pan-African slave trade had been active in the Middle East for centuries, I am using post-colonial w/r/t US culture as a catchall to refer specifically to the dynamic that exists after the European colonial empires began collaborating with African warlords to traffic human beings for labor, specifically the social hierarchy this created in the americas, birthing a “black/white” race binary (and power dynamic) that had not previously existed. The term absolutely applies (with probably different connotations) anywhere one group colonized another, including each of the examples you cited.

    Reply
    • Ronnie Schreiber

      birthing a “black/white” race binary (and power dynamic) that had not previously existed

      Why make a distinction between European and Arab colonial empires?

      The colloquial Arabic term for dark skinned folks of African descent is Abid/Ebed, which translates as slave, and its usage predates the Atlantic slave trade so that race binary and power dynamic in fact previously existed before American chattel slavery.

      Reply
  23. Keaton Lamle

    For instance, there’s obviously a lingering post-colonial dynamic between South Korea/Japan, or say, between many of the disparate people groups gobbled up by the contemporary Chinese regime. For what it’s worth, I share your disdain for fuzzy academic buzzwords and appreciate you calling me out on my own deployment of one, here. That said, it’s hard to find another term that carries all the same implications and flavor.

    Reply
  24. Danio

    Check out our prices in Canada. It’s absurd, and people are going to get burned. I have to agree with others in this threat that rent control regulation isn’t the answer. With values increasing, so will supply, as long as it is allowed to. It’s that side of the issue that should be focused on.

    Ensuring the raw materials, labor and land is available for development to satisfy the need for housing. There are currently a few issues in that area right now, some recent and perhaps temporary, and others fixed. With remote work becoming more popular, developing more remote areas becomes attractive.

    People are crruently behaving as if housing supply is fixed and are acting with a scarcity mindset / FOMO. Institutions are capitalizing on that wave. I don’t believe the institutions, for the most part, want to be permanent slum lords. If you’ve ever had to deal with bad tenants, you know what I mean. Now imagine having a million of them.

    What I fear rather than becoming part of a permanent renter class is yet more financial crisis caused by institutions overloading on these assets and being handed the bag when the bubble pops. It’s almost as if everyone forgot about 2008. Then again, I capitalized heavily on the panic of March 2020, which was an opportunity of a generation. Be versatile.

    Reply
    • stingray65

      Major policy decisions should never be made to solve a problem caused by a bubble that is about to explode, because the bad policy will remain long after the problem disappears. NYC rent control was an “emergency” policy to deal with WWII housing shortages and here we are well into the next century and the temporary rent control remains.

      Reply
  25. hank chinaski

    Commentary elsewhere likens this practice to blockbusting back in the 70’s and the argument holds water. That and the Obama Section 8 policy reversed by Trump but reinstated by Dementia Joe’s handlers. It shows a real contempt for safe, pleasant white suburbs and a desire to destroy them in retaliation for the audacity to flee the cities in the first place. Move back, and you’re a gentrifier. There’s no winning.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.