#housing bubble

[alpaca-clouds]

A Reminder of the Fact, that Billionaires are not Real

I know. I know. Most people right now expect me to do more historical write ups. But please listen to me for a moment. This is kinda important. Because with Trump trying to make himself a fucking god emperor or some shit, I need y'all to understand this one thing.

This is a reminder: Billionaires are not actually real. As in: There is not a person who has a ten-figures amount of money on their bank account or anything like that. Nobody. Not Elon Musk. Not Jeff Bezos. Not Zuckerberg. Nobody. They are valued in the billions, but they are not actually billionaires. In fact some of them might not have so much as a million on their bank account from all we know.

So, why are they billionaires?

Because they own assets. Everyone who is really, really rich does not own money, but assets. Those assets are:

Real Estate and land

Luxury vehicles, yachts, private jets etc.

Art

Investment portfolios

Shares in companies

Stuff like mines and natural ressources

Patents and Copyrights

General stuff Marx would call: "The means of production"

The "net worth" that gets thrown around is just what people estimate the stuff those people own is valued at. But again: Very for of them have more then a few million actually on their bank accounts. And this also is the reason why right now we have so many billionaires.

Because since the entire bullshit in 2008 (for those who just turned 18: The real estate bubble burst and what not - watch "The Big Short" for more context) something has been happening called "the asset inflation". Basically the worth of all those assets has shot up in price BY A LOT, which made people who had been "just" multimillionaires before into billionaires suddenly.

But what you need to understand is, that this is just... It is fictional. It is a mirage. And if we all could just agree on that, they literally would have nothing. Because you cannot eat a yacht. You cannot eat company shares. You cannot do shit with any of that. You cannot even buy something with that.

You know how billionaires buy stuff? They go to a bank and go: "Hey, look at all this shit I have. I want to buy XY, so if you give me the money to do that, I will tots pay you back. And if I don't, you tots can take some of my shit, fair?" And the bank will go: "Yeah, whatever. Here. Have 20 billion fantasy dollars."

But all of this just works, because everybody agrees that if the billionaire or the bank sold whatever assets the billionaire offers up to someone else, they would actually get the money.

I wrote about this before: This is why we cannot get away from fossil fuels. Because right now everyone who has the money to invest in energy has not actually real money, but just valued assets - and those assets are oil pumps, and coal mines, and gas plants. And if we all agreed that we no longer want oil, gas and coal, those would be worthless - and those investors would no longer have money. Because their "money" is just the worth that those mines, pumps, and plants have.

And that is also, why they are so much against the "capital gains tax". It is more than it appears to be on the surface. See, a capital gain is, when those assets you hold gain in value. Which currently happens at an alarming rate. Some of them gain literally 20 or more percent in value each year. So if you implement proper capital gains taxes, those "billionaires" would have go give some part of the theoretical monetary gain they made each year from the inflation of those assets - and obviously newly gained assets - as money to the government.

Just look at our most hated billionaire: Elon Musk. In 2023 he had a net worth of 180 billion, in 2024 he ended the year on 410 billion. That is a gain of 230 billion. Almost all of it falls under "capital gains taxes". Now, let's say we implemented a really, really soft capital gains tax of just 5%. Which is nothing in terms of tax. You and I pay more taxes on our salary. But 5% of 230 billion is 11.5 billion. And because you cannot pay taxes in assets, Elon would need 11.5 billion to actually pay his taxes. And he does not have that. Nobody does. Again, I doubt that there is really anyone who has more than a billion in liquid assets (= actual money or anything that can be used as flat payment). In fact I doubt that most billionaires have actually a billion in liquid assets. Some might have several hundred million, sure, but nothing more. Again, this is basically monopoly money.

And if they would implement a capital gains tax this entire fantasy construct would come down. Because, yeah. Nobody actually has the liquid assets to pay the taxes. And they would have to admit that.

Right now their influence is build mainly on the fact that most people do not understand how "rich people economics" work. Which is why you need to understand it.

They do not have money. They have just assets. And those only are worth billions, because people let them get away with claiming this.

You know. We can just... adjust for that.

[porterdavis]

[crackdteacup]

At 18 I was a military wife. By 22 I was a single mom of two toddlers in the Great Recession of 2007.

I was a military wife at age 18. I graduated in 2003 in the top 10% of my class with a 3.8 GPA and a state scholarship. Before a year had passed, I was married and had moved across the country from Goose Creek, SC to Colorado Springs, Colorado.

We only had one car and didn't want to work opposite schedules as newlyweds, so we planned to buy a second car ASAP and find work for me then. We’d originally planned to wait on kids, but after a pregnancy scare, we realized we felt ready after all. Less than six months into our marriage, I was 19 and pregnant.

It already sounds like a trainwreck unfolding, doesn't it?

We bought two cars and a two-bedroom townhome in an up-and-coming neighborhood. My ex drove a red Pontiac Sunfire, while I had a dark green soccer mom minivan. I found a part-time job at a local marketing agency and greeting service that let me bring Corbin along (until he got too mobile).

I started writing. That made me really happy because it was what I always wanted to do. I mastered SEO, rose to the highest pay grade at the primary site I wrote for, and was featured on the front page more than once. I even taught new writers and caught the attention of a few respected voices in niche fields.

I believed in attachment parenting. We coslept from day one. I breastfed Corbin until he was two but stopped short of tandem nursing. Orin was born a few months after Corbin weaned. By then I'd switched to cloth diapers (and cloth TP for myself), couldn't wait to homeschool, and was caught up in the natural living craze. I made very different health decisions, like that Orin was born at home.

I also ran a home daycare, serving military families and low-income single moms. Between parenthood, babysitting, and writing, motherhood became my whole life and identity. Sometimes I'd have up to six kids in the house and work as many as sixty hours in a week. I never came close to earning what my husband did, but I felt like I worked constantly.

Friends and family back home had little idea what went on behind the scenes, but my ex's alcoholism wasn't some well-kept secret through all of this. It wasn't plastered all over social media, but it was very public locally. There were other issues, too--personality clashes, communication breakdowns, lifestyle incompatabilities.

I've been asked, "Was it really that bad?" I don't know. Whatever it was, I left before Orin's first birthday. I was 22 when I packed my kids, my dog, and whatever would fit into a Dodge Caravan and drove from Colorado back home to South Carolina.

My birthday was a few months later. At 23, I was a low-income single mother of two toddlers with only a high school diploma and limited work experience. That was in 2008--during the "Great Recession." The bank took the townhouse. I guess it wasn't much of a home anymore by then anyway.

[bitchesgetriches]

A Brief History of the 2008 Crash and Recession: We Were All So Fucked • Bitches Get Riches

A lot happened ten years ago. We’d just voted Barack Obama into the White House. Billy Mays was here and alive and selling us Hercules Hooks

A Brief History of the 2008 Crash and Recession: We Were All So Fucked

Keep reading.

If you found this helpful, consider joining our Patreon.

[socialistsquirrel]

I’m 23, I’ve just become a homeowner, here’s how I did it

I guess you’re expecting this to be like every other article on young homeowners (I am so young, I don’t even appear on statistics that break home ownership down by age), that tells a story of how a young adult worked their socks off to buy a house at a stupidly young age, but manages to ignore all the factors that were out of their direct control that contributed to them being able to do it.  This is not going to be that. 1. There’s two of us. People are settling down at older and older ages, making buying a house a bit trickier. I was lucky that I found someone at my age that I did want to make that massive commitment with, most people in their early 20s don’t quite have that luxury. Technically, if I was on my own, I would have manged to buy something, but it wouldn’t be a nice 3 bedroom semi in an nice quiet cul-de-sack, it would have been a small 1-2 bedroom flat, likely in a worse area.  2. We both have full-time jobs.  Although neither of our jobs have the best pay in the world, we do have two full-time incomes from stable permanent jobs. More and more young people are working in the gig economy that doesn’t give that guaranteed income, making them a massive risk to mortgage lenders even if they do usually earn enough to be able to pay their mortgage.  3. We live in a cheap area. Although we have moved from an even cheaper area to where we are now, for the sake of halving the commute, house prices are still reasonable. Thank you North East of England! I remember after we’d had our offer accepted, my little brother had shown his southern university friends the house I was buying and asked them to guess how much they thought it was worth. One of them said in her area she would guess it would be three times what was paid, but guessed in the north east it would be cheaper. Her guess was still nearly double the asking price. A lot of young people do not have the benefit of living in a cheap region and moving away from friends, family and their support network for the sake of being able to buy really is not the best option for them. 4. My partner lived at home. Until about a year before we bought our house, my partner lived at home. He didn’t go to university, so he had about 6 years of working full-time and barely paying any board to his parents. Although his salary isn’t the highest, his living costs were incredibly low, allowing him to save at least 60% of his salary each month. 5. My parents saved for me. Although my parents didn’t give me a big lump of money when we started looking for a house to put towards a deposit, since I was born, my parents put £20 a month a way for me. My grandparents put away a similar amount, so when I turned 18 I had a good amount of savings. Part of it was used to live on at university, but a mixture of my parents contributing to my living costs, going to university in a cheap city and a scholarship I qualified for, all meant I didn’t have to dig into it too much. Then, towards the end of university, a relative died and I received some inheritance which partly replenished the savings I had spent at university.  6. Deposit contributions. Although between us we did have enough for a 10% deposit for house in our budget (based on what the bank would lend us), we got and additional £5,000 from my partner’s parents, £10,000 from my grandparents and my parents and his grandparents gave us another few thousand to pay for any work that needed doing. This meant our budget increased by that much, making a big difference to the type of houses we could afford and the option of taking on a house which wasn’t perfect because we knew we’d have the cash to sort things out. I can’t remember seeing any story of a young person buying their first home not ticking any of these boxes. It might be as simple as they lived with their parents until they moved into their new home, thus not paying extortionate private rents and making it much easy to save. It is not to belittle their achievement, but even that would be a luxury to many young people.  If you are young, don’t have family to help you out financially (e.g. deposit contributions, subsiding you while you save), and/or don’t live in a cheap area, and/or have to do it on your own, getting on the housing ladder is very very difficult.  I would much rather not be a novelty, I would much rather other people my age were able to buy their first home in their early 20s if they wanted to, but in order for that to happen, house prices need to come under control. 

[vulgartrader]

The “Nightmare Scenario” for China and the World

Almost all middle class wealth in China is in real estate. When the Chinese housing bubble finally bursts, it will be absolutely catastrophic for the world economy.

From Zero Hedge:

According to Bloomberg, soon-to-be-published research will show that roughly 22% of China’s urban housing stock is unoccupied, according to Professor Gan Li, who runs the main nationwide study. That amounts to more than 50 million empty homes.

...As Bloomberg notes, the "nightmare scenario" for Chinese authorities is that owners of unoccupied dwellings rush to sell when cracks start appearing in the property market, causing a self-reinforcing downward price spiral.

There’s no other single country with such a high vacancy rate,” said Gan, of Chengdu’s Southwestern University of Finance and Economics. “Should any crack emerge in the property market, the homes to be offloaded will hit China like a flood.”

It’s only a matter of time before that happens. The downward pressure is already there in mass:

“There are people who bought multiple homes who are now trying to sell one to pay off the mortgage on another,” said Ran Yunjie, a property agent. One of his clients bought an apartment last year for about $230,000. To find a buyer now, the client would have to drop the price by 60%, according to Ran.

For now, the central bank is bailing everyone out.

China has been able to maintain the illusion of stability to preserve social order. However, should the housing slowdown accelerate significantly and tens of millions in empty units suddenly hit the market, then the "working class insurrection" that China has been preparing for since 2014 will become an overnight reality, with dire consequences for the entire world.

[whatareyoureallyafraidof]

  Sure, it’s not like Barack Obama had to deal with an economy on the verge of collapse after the house bubble burst, or anything like that.   But, you know, go on listening to ManChildTrump tell you what a great job he’s doing, and how he’s going to bring back coal, and American steel, and save the US automotive industry, and keep Carrier in Indiana, etc, etc, etc...

[mcmansionhell]

McMansion Hell: Ireland Edition

Hello, friends! Until recently, I had no idea there were even McMansions in Ireland. I admit, I am not an expert on Irish architecture in the least, so, Irish compatriots, feel free to correct any mistakes I make. I’m also proud to say that this post is completely free of jokes about Bono. 

Irish McMansions (called “muck mansions” there) are particularly interesting because of their links to Irish economic and housing phenomena, as explained below.

The “Celtic Tiger”

During a period lasting from the mid-1990s to the mid-2000s, the Irish GDP growth rate ranged between 7.8 and 11.5% (slowing to 4.4 - 6.5% in 2001-2007). This was known as the “Celtic Tiger” era. 

Reasons for this growth are as follows:

Low corporate tax rate and industrial subsidies drew foreign companies (especially tech companies such as Dell) to Ireland.

These corporate taxes favored non-tradable goods and services such as construction projects.

Low European Central Bank interest rates led to to inexpensive borrowing by Irish banks. 

Poor supervision and regulation of banking activities led to the growth of illicit trading and hidden loans, resulting in a controversy that ousted the director of the Anglo Irish Bank in 2008. 

The Housing Bubble

Table Source: Wikipedia Data Source

During the Celtic Tiger era, construction employed a large number of unskilled laborers. From 2000-2006, housing prices doubled as tax incentives drove speculative development, especially in the areas immediately surrounding Dublin. 

In 2008, foreign borrowings by Irish banks reached €110 billion. Most of this money was borrowed to fund speculative building projects that wouldn’t go on the market for a considerable amount of time (because, well, speculation.) This led to an oversupply of houses, causing (in simplistic terms) a fall in demand. 

As a result, house prices deflated and projects were left unfinished, unoccupied, or abandoned. Other contributing roles to the housing crisis were subprime mortgages similar to the US, and a disproportionate percentage of the population (12.5%) being employed in the construction industry. When the bubble burst, this same population became unemployed.

“Ghost Estates”

The National Institute for Regional and Spatial Analysis defines a ghost estate as developments of "ten or more houses where 50% of the properties are either vacant or under-construction". 

Ghost Estate in County Wexford, 2012. Public Domain.

As prices inflated in Dublin, tax incentives were offered to build heavily in rural areas outside of the city limits, leading to enormous speculation and development. In the aftermath of the 2008 collapse, bankrupt developers who had borrowed heavily from foreign and domestic banks alike began to abandon housing starts. 

In 2010, there were 300,000 vacant homes in 621 ghost estates. By 2015, these numbers, through efforts of the Irish government, were cut by 75%.

What is so upsetting about the ghost estates is that they were built mostly in rural communities with little economic development or access to infrastructure such as hospitals and schools. Despite the large homeless population in Ireland, the estates cannot be adapted for reuse as affordable housing stock because they are too far from employment, education, and health care. In addition, Ireland imports the majority of its fossil fuels from foreign agents, and as such, the cost of commuting or owning a car is much higher than in other countries, thus leaving these communities stranded. 

The Ugliest Muck Mansions in Ireland

Throughout the week, I searched through over 200 pages of Irish real estate sites in order to really get an idea of what a Muck Mansion looks like. Often, they look rather similar to a McMansion, as we will see. 

County Kerry

It turns out that even Ireland cannot escape the phenomenon that is the Beigehaus. I’m quite partial to the random bench on the right, helplessly trying to conceal the fact that the developer forgot a window. 

Dude, even if you EQ the heck out of everything below 500Hz, it DOESN’T EVEN MATTER BECAUSE YOU’RE PLAYING YOUR MUSIC THROUGH YOUR TINY MACBOOK SPEAKERS. Acoustics rage! 

How that mass with the shed roof got there is one of Ireland’s greatest mysteries. 

County Louth

To be fair, munch_the_scream.jpg is how I feel pretty much all the time these days. 

County Waterford

(Obligatory Rest in Peace beloved postmodern dining hall from my alma mater. #GoneButNotForgotten)

Addendum: the detached garage is def a mythic rare McMansion Hell trading card. 

County Offaly

What an emotional transatlantic journey that turret must have made. Rest easy, brave soul.

County Clare

Persian architecture reference: The building of the Ministry of Foreign Affairs, Bagh-e Melli (The National Garden, Tehran, Iran)

Photo by blondinrikard (CC-BY-2.0)

There’s precedence for everything, friends!

County Cork

If you type two spaces after a period you are wrong. Don’t send me emails defending yourself. This is a religious belief of mine and it will not change as long as I walk this earth. 

Malahide, County Dublin

Someone write a sick guitar solo for that sick roofline. 

County Dublin

It wouldn’t be MMH without at least 1 one-liner. Also, has anyone done a The Big Short x Lord of the Rings Crossover fic yet? I’d 10,000% read that. 

County Silgo

This could equally be in New Jersey for sure. 

And, finally:

County Tipperary 

Standard Wannabe Emo Band Track List™:

The Edge of My World Zombie Love Vampires are Inside of Me Like Blood On My Lips Erase the Sun

Well, that does it for Ireland! I hope you’ve enjoyed this somewhat educational (if depressing) tidbit! Stay tuned for Wednesday’s Certified Dank™ Connecticut special, which I can guarantee will be rather painful. 

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Copyright Disclaimer: All photographs in this post are from real estate aggregate myhome.ie, and are used in this post for the purposes of education, satire, and parody, consistent with 17 USC §107. Manipulated photos are considered derivative work and are Copyright © 2017 McMansion Hell