WHY 99% WILL NEVER OWN A HOME

The real estate bubble won't pop and millennials are financially ruined.

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Real estate is going through a price paradigm shift. In 50 years, the average home will likely cost upwards of $10 million dollars.

Since the 1950s, home prices have increased 12x and if the trend continues, the average home will cost $4.3 million in 50 years () and our incomes haven't increased in purchasing power since 1978.

HOW HOMES WILL COST $10 MILLION+ IN THE FUTURE:

1. The amount of people in this world is going up. There are roughly 7.89 billion people on earth and according to the United Nations that number is supposed to grow to something like 9.7 billion in just 50 years. That represents a growth of roughly 23%. Most of that growth will happen in all the big metropolitan cities ()

2. According to () about 4 billion people live in major cities today, and that number is expected to reach 7 billion in just 30 years, and most certainly 8 billion by 2050. That means double the amount of people living in cities today which means twice as many people are going to compete against each other for housing.

3. In the last 50 years, the amount of people that live alone has doubled and it’s going up globally () Studies show the richest countries experience this the most. This is partially because people that have the means to live alone choose to do so because they can afford it which means ultimately we will need more houses.

4. Americans are starting to own more than one home. There are roughly 115 million renters in the US and 23 million landlords that own more than one house () That means because of the 23 million who own more than one house, the 115 million don’t get to as easily because the wealthiest people own more than 1 and since they can leverage their wealth to buy even more real estate, it makes the shortage worse.

5. New housing is not keeping up with demand. 6 new homes are being built for every 10 new families needing it ()

Housing supply is at a historic all time low. According to RedFin’s data, there are roughly 6 new homes being built for every 10 families needing it. Even by today’s standards we are in short supply ()

6. It's becoming more expensive to build new homes due labor shortage and raw materials exponentially increasing. This has somewhat corrected but prices are still far above what they were at the start of 2020 ()

7. Inflation. According to the Bureau of Labor Statistics (), we had a shelter inflation rate of 2.1% which is not bad but Canadian real estate over the last year has gone up 26%. Both can be true, but the point is if we have runaway inflation even at the lower spectrum of those statistics, the 2.1% per year for the next 50 years means the average home will cost one million dollars. If it’s 7% inflation, that’s $10.7 million.

8. Leverage. Corporations can use leverage to their advantage. We leverage 5x in real estate. Corporations can borrow much more. In 2019 Lowes was leveraged 12x, Marriott Hotels 17x, and Colgate and Palmolive 72.5x. That means for every dollar they had on hand, they were borrowing $72.50. They have access to cheap money.

Once a corporation has enough real estate in its portfolio, it’s going to take the worst performing rental units, package them up, and sell them as investments. Hedge funds will buy those with even more leveraged money which will drive prices sky high.

If your home is worth $10 million, you'd need to pay $100,000 in after tax income for property taxes.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.