It’s not actually here. That’s a lie.
You may have noticed reports stating that real estate prices rose dramatically in 2013. That’s not because consumers are out buying homes, like one might expect. Like in any other market, real estate prices are market driven. Unfortunately, after the collapse there was a huge amount of unsold inventory on the market. This generally reflected the unwillingness of investors to buy homes as well as a glut of supply in foreclosed or distressed properties.
What happened is a small group of investment firms, such as Blackstone Capital, moved into certain areas and purchased the bulk of the distressed properties in bulk from banks. Some of these homes were torn down and others were rented out — the final result was a market controlled largely by speculative forces, price fixing and cartels. Prices are now artificially controlled. The ultimate design of this is to maximize profit for the investment groups at the expense of those seeking to purchase a home.
One might ask why this is bad — it’s not bad for everyone. Public investment funds that invested big in synthetic debt instruments attached to mortgage payments won’t see further declines in their investments. Home owners can sell their houses without taking a huge loss. And artificially high prices also allows home owners to borrow against the value of their house. However, real estate is a poor investment. It doesn’t produce economic growth through technological innovation. Also, high prices for homes raises the cost of living for many individuals as it translates into higher rents and less money being used productively in the economy. It ensures low economic growth and a declining standard of living for years to come.
And government and media are content to maintain the illusion of stability at the expense of our standard of living.