With the exception of the Ferguson police story and the usual stuff going on in Russia & Ukraine, it’s a pretty uneventful news day.
Tech real estate driven mania: San Francisco median rent is $3,200 and typical home now costs $1,000,000: The hollowing out of the middle.
This is good and bad news. It’s bad for renters and good for landlords. My home keeps going up every day and is 40% higher than in 2007. It’s good for the economy to have higher rents because the increased spending goes into GDP. The same liberals who say the rent is too high also say the Bay Area housing market a bubble, so maybe when the bubble bursts the rent problem will be lessened? However, due to fundamental factors such as the web 2.0 boom, the strong Bay Area and national economy, private equity and an unending influx of foreign buyers, I am confident we’re not in a bubble, prices will keep going up, and there’s nothing anyone can do about it. Sorry. For example, Blackstone Group has spent $1 billion to become the biggest U.S. investor in single-family rental homes. In 2012, foreign buyers plowed $82.5 billion into U.S. homes for the 12 months ended in March, up 24 percent from $66.4 billion the year before.
The Silicon Valley economic environment and culture that gives rise to companies such as Facebook, Google and Snapchat also makes its real estate extremely attractive. As liberal America seethes at congress not doing anything, real estate in Washington DC is on fire because, like Silicon Valley, that’s where the money and economic influence is at.
You cannot go a week without liberals either whining about rent being unaffordable or housing being a bubble. Between 2004-2008, it was the left that wanted the housing market to fail so that the home flippers would lose money, while republicans, such as Rush Limbaugh and Sean Hannity, dismissed such doom and gloom as part of the drive by liberal media. Almost a decade later, liberals are still attacking the housing market by calling it a bubble and blaming the rich for making rent unaffordable. Unlike the last housing boom which involved the mass production of many low-end affordable homes that could be acquired with little credit, this recent, huge housing resurgence is mostly concentrated in high-end markets such as the Bay Area, London and Manhattan, further adding to liberal rage because in many metropolitan areas, rents have gotten so high that people are being displaced and or cannot find anywhere affordable to live.
The left wants housing to be affordable, or no one can benefit from rising prices. Just like IQ, they want to believe the differences between scores is meaningless, which defeats the purpose of the IQ test. Exceptionalism at the individual level is prohibited unless everyone can be brought to the same level or the exceptional person is brought down to the same level as everyone else.
Another example of American exceptionalism: record demand for bonds is keeping yields low.
This is why the debt binge is sustainable and why America doesn’t have a debt crisis.