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https://doctorow.medium.com/house-sales-are-cratering-but-inventory-is-soaring-20b1a971d16e>
"When I moved to the UK in the early 2000s, nearly everyone I met fancied
themselves a real-estate investment genius. Young people all had plans to “get
on the housing ladder.” Each of these schemes was more crackpot than the last —
the most plausible involved buying minuscule flats, “doing them up,” and
flipping them. The weirder ones involved buying unbuilt holiday homes in Spain
or Croatia — places these people couldn’t afford to visit, especially not after
assuming crushing debt to buy these homes — waiting for them to “go up in
value,” and selling them.
No amount of debate or discussion could dissuade these young people from
pursuing these highly speculative, highly leveraged bets. They had been
subjected to a yearslong barrage of assurances of the inevitability of house
prices rising, including no fewer than three public TV shows about
house-flipping — that is, publicly funded propaganda to make risky, speculative
financial bets look “safe as houses.”
But as weird as my conversations with young people were, they were nothing
compared to my conversations with people of their parents’ generation. Without
exception, every older person I talked to about the housing crisis — for that’s
what it was! — was convinced that they were the second coming of Warren Buffet,
a genetic sport born with the mutant power to unerringly spot underpriced
homes.
Their evidence for this? They had bought homes in the 1970s and 1980s for less
than £100k, and now those homes were worth £2m. For them, this was a sign that
they had “bought well.” No amount of debate could convince them otherwise, not
even discussions of how the surreal, high-risk bets their children were making
were feeding a bubble that saw
all homes soaring in price.
Buying into a bubble doesn’t make you a genius — it makes you a gambler in a
rigged casino. Now, lots of people make money in a rigged casino, and not just
the casino’s owners. Marks who luck out on their entry and exit can walk out
with some of the loot, too. In fact, it’s to the casino’s advantage to have a
pool of satisfied marks walking around in the world, boasting of the incredible
(and fair) opportunities to be found at the casino’s tables."
Cheers,
*** Xanni ***
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mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
