By Raiam Santos
Yesterday, I wrote about the upcoming market bubble from the perspective of a tourist in Times Square, New York.
Today, I write as a son.
My adoptive father is an extremely successful man: he marched with Martin Luther King in Detroit, fought in the Vietnam War, and became the director of the Good Samaritan Society, one of the largest hospitals in California.
With the money from his executive salary in the wealthiest state of the wealthiest country in the world, he bought several properties in the 1970s and 1980s and spent about 40 years paying off the mortgage.
A year ago, the old man sold a house he had bought in 1981 for $80,000 in the middle of a ghetto dominated by criminal factions for a whopping $2 million.
It’s worth noting that the ghetto gentrified and turned into a “white neighborhood” about ten years ago.
Who bought it? A real estate developer that is turning that old house into a student housing complex for the University of Southern California, with 30+ studios for young people.
The larger the house, the harder it is to sell. My old man got lucky because the USC campus expanded into the ghetto. But overall, it’s getting worse.
Generations Y and Z don’t have families or money.
And those who do have neither the patience nor the desire to maintain a gigantic house built by the Boomer generation.
I know many heirs here in the USA who 1) didn’t want to live in the house their father left as an inheritance, 2) had difficulty getting rid of the house, and 3) are struggling to pay for the maintenance costs and taxes on those white elephants.
Why is it difficult to sell a mansion?
Simply because there are no longer families in the market. There’s too much supply and too little demand.
In our generation, those who are wealthy are usually single. And they prefer to rent.
On the rare occasions they do buy something, they prefer “serviced apartments” with a rooftop pool, a fully equipped gym, and hotel-style Alfred service.
And the few families that do exist are immigrants… and they can’t afford to pay 2-3 million for a house, let alone get a loan from a Wells Fargo or any other bank.
Now things are really tough. Remember when I mentioned that my adoptive father has multiple properties?
Ask if he’s managing to sell them. We set a price X. Today it’s listed at 50% of X and still hasn’t moved.
And it’s a pain to deal with maintenance and tax issues with properties in three different states… at 76 years old and having to go for dialysis every other day.
There are millions of owners over 60 who can’t sell their houses to finally retire.
They spent their whole lives paying a mortgage to have some liquidity in 2023. But where’s the buyer?
The newspapers may downplay it, but the USA is going through a damn housing crisis.
Just look at what happened to the prices of construction commodities like wood.
No one was buying anything because of the behavior of Generation Y. Now that interest rates have risen to 5% in the USA, that’s when things have really gone down the drain.
Can you see in your city what I see?