Another Housing Bubble is Starting

[Sbane]

Part of the bubble is because of cash investors who then rent the properties.  Instead of an "ownership society", we're looking at a tenancy society due to increasing home prices with no employment changes.  Home price increases without corresponding wage increases is terrible.

Could you expand on that a bit? What do you mean by a tenancy society existing while people keep buying homes?

People who own 6-8 homes and then give them out for rent. This is especially true in the poorer parts of America where homes sell for less than a new car.

[Sbane]

Part of the bubble is because of cash investors who then rent the properties.  Instead of an "ownership society", we're looking at a tenancy society due to increasing home prices with no employment changes.  Home price increases without corresponding wage increases is terrible.

Could you expand on that a bit? What do you mean by a tenancy society existing while people keep buying homes?

People who own 6-8 homes and then give them out for rent. This is especially true in the poorer parts of America where homes sell for less than a new car.

I remember going with dad back in the day - I guess it was the early to mid 1990s, before the big upswing - to look at 'packages' of houses for sale.  Older white slumlords, in the mood to retire, selling of 10-30 houses in black or mixed neighborhoods for about the price of one or two houses in a 'good neighborhood'.  These were typically rented 'section 8' by the government, and were good investments, but my father just couldn't make the leap - he was only into trailer park slum-lording, which to his mind was much safer, though the return was far less.

It's funny how my uncle, who is into this business as a second job, loves section 8 housing even though he is anti-government in other cases. These days he is especially interested in buying houses in South Atlanta suburbs...for obvious reasons. I have been to these neighborhoods, in many cases looking the same as any other well off suburb....except for the fact that they are filled with Blacks. And houses are cheap as a result....

[Sbane]

Part of the bubble is because of cash investors who then rent the properties.  Instead of an "ownership society", we're looking at a tenancy society due to increasing home prices with no employment changes.  Home price increases without corresponding wage increases is terrible.

Could you expand on that a bit? What do you mean by a tenancy society existing while people keep buying homes?

People who own 6-8 homes and then give them out for rent. This is especially true in the poorer parts of America where homes sell for less than a new car.

I remember going with dad back in the day - I guess it was the early to mid 1990s, before the big upswing - to look at 'packages' of houses for sale.  Older white slumlords, in the mood to retire, selling of 10-30 houses in black or mixed neighborhoods for about the price of one or two houses in a 'good neighborhood'.  These were typically rented 'section 8' by the government, and were good investments, but my father just couldn't make the leap - he was only into trailer park slum-lording, which to his mind was much safer, though the return was far less.

It's funny how my uncle, who is into this business as a second job, loves section 8 housing even though he is anti-government in other cases. These days he is especially interested in buying houses in South Atlanta suburbs...for obvious reasons. I have been to these neighborhoods, in many cases looking the same as any other well off suburb....except for the fact that they are filled with Blacks. And houses are cheap as a result....

If they've been rented section 8 for any amount of time, I doubt their condition is good compared to a comparable house in another suburb. You know the deal. Tenants don't pay their rent and the landlord never repairs the place.

The government pays their rent but yes there are many problems like the tenants not cutting the grass and maintaining the house. But the neighborhoods I am talking about actually have a lot of people who own their houses. Property prices have fallen a lot in these areas though, and a lot of investors are moving in. Who knows what will happen after 10-20 years.