This Housing Collapse Is WAY Worse Than 2008 — And They’re Hiding It

The Collapse of Home Affordability [00:00]

• In 2009, the median US home price was $28,400; by 2024, it reached $420,000, an all-time high, with real wages remaining flat for five years.
• Over 99% of US counties now have homes classified as unaffordable for the median worker.
• Saving for a 20% down payment has increased from 5 years in 1985 to 13.5 years today.
• Mortgage payments have surged 113% since 2020, marking the fastest affordability collapse in American history.
• Boomers hold approximately $12 trillion in home equity, often locked in by low mortgage rates.
• Institutional investors have acquired over $60 billion in homes.
• For the first time, a majority of adults under 40 believe they will never own a home, signaling a collapse of opportunity rather than just prices.

A society where 70% of future adults will never own property is not a stable society.

Systemic Causes of the Housing Crisis [02:56]

• US home building has declined 39% since the 1970s despite significant population growth, leaving an estimated shortage of 3.2 million homes.
• Private equity firms now own one in six single-family homes in many major cities.
• Decades of near-zero interest rates allowed existing homeowners to lock in low rates and benefit from appreciation, while pricing out younger generations.
• There are fewer homes for sale per capita now than at any point in recorded US history.
• Homes now cost roughly 6-7 times annual income for young people, compared to 2-3 times in the 70s and 80s.
• The crisis is a result of policy, incentives, and political inaction, transforming housing into a scarcity machine.
• Key contributing factors identified are: the era of cheap money, housing as an investment, restrictive zoning, globalization, and corporate consolidation.

The formula that originally built the middle class, the very American dream, get a job, buy a house, build equity, not only stopped working, it just outright died.

The Role of Money Printing and Inflation [05:45]

• The creation of a central bank in 1913 allowed for money printing, fundamentally changing the economy.
• Breaking the tether to gold in 1971 opened the door to increased money printing, which accelerated after the dot-com bubble and the 2008 financial crisis.
• Excessive money printing has led to inflation, destroying savings and driving up housing prices.
• Fixing previous economic issues with printed money and low interest rates created new bubbles, particularly in housing.
• Printing money causes inflation, which necessitates either wage increases matching inflation or ownership of assets that appreciate with inflation.
• Globalism has made it difficult for real wages to keep pace with inflation over the past four decades.

Printing money causes inflation. Inflation causes prices to rise.

Asset Ownership and Generational Wealth Gap [08:14]

• The top 10% of Americans own 93% of assets.
• Homes, being an intuitively understood asset, were purchased by the wealthy after the 2008 crash, but lending was scarce for others.
• Boomers voted for policies that made home building difficult and property values increase, benefiting from their early entry into the market.
• Zoning restrictions, density limits, and opposition to new construction by existing homeowners have artificially restricted supply.
• The number of homes built has not kept pace with population growth, exacerbated by immigration and corporate acquisition of homes.
• Younger generations have struggled to compensate for housing costs through financial markets due to low financial literacy and the inability to live in digital assets.

When supply is restricted, prices rise. And for existing homeowners, that is awesome.

Blame Allocation: Politicians, Boomers, and Wall Street [15:07]

• Politicians: Made decisions at local, state, and federal levels to restrict housing supply to appease homeowners and secure re-election, framing it as protecting neighborhood character. They have consistently printed money to fund unbalanced budgets, driving up prices.
• Boomers: Benefited from early homeownership, rising wages, affordable mortgages, and supportive government policies. They continued to vote for policies that appreciated their assets, and their low mortgage rates disincentivize selling, further locking up inventory.
• Wall Street and Institutional Buyers: Have invested billions, using algorithms to outbid families and acquire entire neighborhoods. They treat homes as financial products, profiting from inflation and scarcity, further increasing competition for scarce housing stock.

Politicians may not have set out to intentionally break the housing market, but that was the end result nonetheless.

Strategies for Navigating the Crisis [28:07]

• Homeowners hold over $32 trillion in home equity, significantly outperforming renters in wealth accumulation over the long term.
• Historically, buying during affordability crises has led to substantial long-term returns, with scarcity acting as a tailwind.
• The system is designed to make entry difficult, so individuals need to find paths to asset ownership, not necessarily just homeownership.
• Thinking like a capital allocator means focusing on whether money is outrunning inflation, not just monthly payments.
• Assets like housing, stocks, land, gold, and Bitcoin can keep pace with or outpace inflation, unlike cash.
• Step One: Think like a capital allocator, recognizing inflation as an invisible tax.
• Step Two: Acquire entry-level assets. The goal of the first move is to get into ownership and protect money from inflation, not necessarily buy a dream home. House hacking (buying multi-unit properties, renting rooms) is a powerful tool. Co-ownership and fractional ownership in REITs are also viable options.
• Step Three: Position for distressed opportunities by understanding what a "deal" looks like in advance.
• Step Four: Lobby local politicians to end "nimbyism" (not in my backyard) to encourage more housing construction.

You don't control Washington. You don't control the Fed. You don't control boomers, Wall Street, or zoning boards, but you control you.

The Path Forward: Individual Action and Understanding the System [36:21]

• While systemic changes are difficult to control, individuals can control their own behavior and asset accumulation strategies.
• Investing does not require permission or vast sums of money; it requires knowledge and creativity.
• Understanding how the economy and money work allows individuals to capitalize on opportunities and mitigate the effects of government policy.
• The video suggests that while the game is rigged, it can still be played well by understanding its rules and adapting.

You're not going to end up financially well off by accident.