His administration is squeezing Americans out of the property market
As inflation continues to soar in America, few things have become more precious than hard assets like property. And with the stock market as unsteady as our political leadership, big dollars from Wall Street are pouring into real estate, snapping up both multi-family and single-family homes.
Rents are on a wild binge, up near 20% in the past year, while home prices have hit a record high. As people can no longer afford to buy homes, they have been forced into the rental market, driving up prices towards absurd levels in fashionable cities like New York, Los Angeles and San Francisco. Like a pestilence of its own, high rents are spreading to the realm of the “wannabe” places where the “creative class” types are moving to: cities like Miami, Austin, Nashville, and Las Vegas as well as more prosaic places such as Tampa and Memphis.
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As urbanist Richard Florida has demonstrated, the dynamic of the coastal hubs is spreading out to at least some cities in the interior, hurried along by footloose tech workers who bring with them economic stimulus and higher prices. Consequently, many are looking at a long life as a rental serf, and perhaps a greater delay in their ability, or confidence, to build a family.
For young people, the situation is even more dire. By and large, their only hope is inheritance, the key to what one writer calls ‘the funnel of privilege’, with those in Generation Z are three times as likely as Boomers to count on inheritance for their retirement. Among the youngest cohort, aged 18-22, over 60% see inheritance as their primary source of sustenance as they age.
Yet, President Biden’s administration seems determined to push rent-focused California-style densification across the US. The president’s plans include such things as forcing racial diversity on suburbs, even though 96% of all suburban growth in the last decade was from non-white people. He also has chosen to spend massively on rail, buses and transit rather than on roads, which are used by the vast majority of Americans. One might be inclined to ask why, if transit constitutes less than 1% of passenger travel in the US, does it represent 28% of the funds Biden proposes to spend on transportation? The answer is clear: to make it easier for people to live in deep blue, high density areas.
Thanks to the Government and companies like BlackRock, where investors accounted for roughly one out of five US homes bought in 2021 — a 50% jump from 2020 — ordinary Americans have been locked out of the housing market. The grand vision embraced by Wall Street, the greens, and the Davos set is a post-ownership “rentership society” where homes, as well as furniture and other necessities, become rentals funnelling endless cash upwards to the oligarchs. This is now the reality of America in 2022 — and don’t expect it to get better any time soon.