patrick.net

aren't REITs based on rental income? those will probably be going up even if housing goes down.

The best way to bet against housing is in the housing futures market.

REITs own MFH communities and enjoy location and service monopolies.

While rents may be coming under pressure, I'm already short the overall housing market so I don't need to add to my position.

I was actually moving massively into REITs in 2008-2009 as a hedge : )

I believe we will be a little down and flat for a while

I'm curious as to what you see will be bringing a recovery.

My thesis sorta centers on the baby boom and what they did for the economy, 1950-now.

The US had a very broad baby boom, more like a wave that peaked in 1955 but was ~7 years on either side.

This can be seen in our population pyramid.

Right now the leading edge of the baby boom is turning 65. There are ~12M in the 65-69 cohort now and this will rise to ~22M in 2025.

Seniors vote so it will be very difficult for politicians to cut the promises that have been made to them. We can't inflate our way out of these promises because they are future obligations not past debt.

Seniors are going to be consuming more of the national weal, via their retirement checks, capital drawdown, and socialized health care.

But this is all consumption in the economic sense, we won't be getting any productive growth from this expense, just the happiness that comes from seeing our elderly taken care of.

All this coming expense is going to be layered on top of a national economy that has been running on fumes since 2008. The current national debt is $9.5T. This time in 2008 it was $5.2T. Over $4T of debt taken-on in just 3 years, with no end in sight.

I lack the education, intelligence, and/or crystal ball to see where this is all going, but "recovery" just doesn't look to be in the cards to me.

Seniors are going to be consuming more of the national weal, via their retirement checks, capital drawdown, and socialized health care.

But at least that national wealth will be spent here, instead of on commodities speculation abroad. I also think that they (boomers) will be spending much of their accumulated personal wealth on health care. Basically liquidating their shriveled pensions and home equity into pills, nurses/doctors salaries (hooray inter-generational wealth transfer!), and other expensive life-prolonging health treatments.

These expenditures could be a plus for the future US economy (not in a real, sustainable and productive sense mind you).

...unless the bankers figure out a better way financializing the process, of course... maybe like bowel movement futures contracts???

Residential (apartment) REITs didn't go through a bubble like single family homes did.

Troy says

REITs own MFH communities and enjoy location and service monopolies.
While rents may be coming under pressure, I’m already short the overall housing market so I don’t need to add to my position.
I was actually moving massively into REITs in 2008-2009 as a hedge : )
I believe we will be a little down and flat for a while
I’m curious as to what you see will be bringing a recovery.
My thesis sorta centers on the baby boom and what they did for the economy, 1950-now.
The US had a very broad baby boom, more like a wave that peaked in 1955 but was ~7 years on either side.
This can be seen in our population pyramid.
Right now the leading edge of the baby boom is turning 65. There are ~12M in the 65-69 cohort now and this will rise to ~22M in 2025.
Seniors vote so it will be very difficult for politicians to cut the promises that have been made to them. We can’t inflate our way out of these promises because they are future obligations not past debt.
Seniors are going to be consuming more of the national weal, via their retirement checks, capital drawdown, and socialized health care.
But this is all consumption in the economic sense, we won’t be getting any productive growth from this expense, just the happiness that comes from seeing our elderly taken care of.
All this coming expense is going to be layered on top of a national economy that has been running on fumes since 2008. The current national debt is $9.5T. This time in 2008 it was $5.2T. Over $4T of debt taken-on in just 3 years, with no end in sight.
I lack the education, intelligence, and/or crystal ball to see where this is all going, but “recovery” just doesn’t look to be in the cards to me.

I see the wealth being tied up in the boomers. They will die off. They will either spend this wealth or pass it along. Granted their homes will be liquidated at discounts or maybe their children will inhabit them. Nonetheless this will open up(gradually) liquidity that currently isn't being spent now.

Our days as a military hegemony are over. We can't afford it. Now that we've discovered that spending trillions on military is gratuitous and not necessary, I think(or maybe hope is the right word) we'll be able to cut back freeing money that will be better spent than the dead end that is the military. Historical empires that have cut back(England, France, Germany, Rome, Greece, Netherlands, Japan) still exist today. We will too.

Also. I think our anti immigration policies will lead to a deficit in new blood. This trend will eventually reverse leading to people immigrating to the U.S. Who will come to America? Chinidians with money. Is it better to spend deflating dollars in Chindia or to buy cheap assets in America? This will bring money to America. Will we have the same kind of pseudo prosperity that existed during the RE bubble, of course not, but we won't have the collapse of the U.S. that the Ron Paulists think also. And this will occur over decades.

burritos says

I think(or maybe hope is the right word) we’ll be able to cut back freeing money that will be better spent than the dead end that is the military

BRAC in the 1990s maybe saved $5B and caused significant economic hits to the areas it affected.

We've got to cut around $500B/yr in defense spending just to get it back to 2000 levels + inflation. That's (naively) around 5 million jobs @ $100,000 per.

I said this before but the dominant problem in the US is that our political system is completely broken. The moment it broke was probably November 1994 when the electorate threw out the Dems for (I guess) raising taxes in 1993.

You can't have a middle-class minarchist economy when 10% of the country controls 90% of the wealth, but that's what the Republicans are running and winning on.

My thesis is that we're still in a massive bubble and if we don't start paying for it via high taxes it all may just blow up on us in a very unpleasant manner.

"High taxes" isn't going to get anyone elected in this country though.

burritos says

Who will come to America? Chinidians with money.

They may buy here but they won't be exposing their wealth to the IRS by moving here.

if i could short the RE market for just the peninsula i would double down.

^^Syphilis says

if i could short the RE market for just the peninsula i would double down.

you can if you know how to trade futures. You can short housing just for San Francisco.
Here you go

http://www.macromarkets.com/csi_housing/documents/cmehousing_brochure.pdf

How do I short (beg against) the market in Los Angeles? I live here, to me it looks like this thing is going to go bust sooner or later. It's very inflated.

I actually think the peninsula will do OK. If this nation divides into a 10% vs 90% thing, the top 25% (ie college-grads) of the economy will all desire to live in the 10% fortress neighborhoods and not the outer warzones.

As long as we have Prop 13/58 protecting longterm owners there will always be an immense impedance mismatch between demand for the fortress (high) and supply (low).

But perhaps I am overly influenced by having seen Soylent Green at an impressionable age.

bob2356 says

burritos says

Who will come to America? Chinidians with money.

They may buy here but they won’t be exposing their wealth to the IRS by moving here.

If they buy here. then their wealth(property) will be taxed. Their income will not, unless they earn it here in the U.S. I have no problem with a rich Chinese guy a 3 million dollar San Marino home who then pays for 1/2 the salary of a teacher. Sounds like a good deal to me.

toothfairy says

^^Syphilis says

if i could short the RE market for just the peninsula i would double down.

you can if you know how to trade futures. You can short housing just for San Francisco.

Here you go
http://www.macromarkets.com/csi_housing/documents/cmehousing_brochure.pdf

SF is not the peninsula.