An August 26 CNBC column by Alicia Adamczyk, “‘They Were Snatched Up In 12 Hours’: First-Time Homebuyers Face Stiff Competition And High Prices,” should have raised eyebrows. Using the story of first-time home buyers David and Destiny Taylor, it described a phenomenon that is becoming more and more frequent: the rapid-fire sale of homes.
“If these houses were good, they were snatched up in 12 hours; if they were bad, they were snatched up in 36 hours,” David told Adamczyk. “You’re on your phone all day looking at Realtor.com, at Zillow, just waiting for something to pop up…People will pay $60,000 or more above the list price without batting an eye…Sellers know they will sell their house and do nothing to make it look appealing or updated.”
What’s going on?
In his great 2015 book, Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy, Michael Hudson described and predicted similarly discouraging developments. It was not his first correct prophecy. In a 2006 story for Harper’s Magazine, “The New Road to Serfdom,” he explained that there was a sub-prime mortgage lending bubble that would soon explode the economy.
Is Wall Street inflating a new housing bubble? Actually, it’s far worse than that and outlets like CNBC are failing to accurately explain the situation. A case in point was its this sycophantic August 26 story.
Working in tandem with the Federal Reserve, financial firms — led by Superpredator Blackstone — have engaged for more than a decade in a concerted scheme to vacuum up large swathes of housing stock, which makes it difficult for regular buyers to find properties at reasonable prices. Unlike the volatile subprime bubble, which banks and Wall Street firms deliberately created through fraud to rake in vast mega-profits while imploding the economy and putting millions of people on the street, this investment strategy is for the long-term.
The FIRE sector (Finance, Insurance, and Real Estate firms) have desired for a long time to consign the 99 percent to a rentier economy, a world where we mere peons pay our annual tributes to the Lords of Capital via rental, subscription, and service fees. If not stopped, they will convert the suburbs into an economy of home rentals rather than home ownership.
The 75-year legacy of the New Deal, which included low-interest mortgage lending and cheap credit for housing, is being foreclosed. The idea of inter-generational wealth being built and transmitted through property ownership could very soon be a thing of the past.
Hudson lays out these developments in an 11 Minute Interview. He also includes a policy solution in the form of a debt jubilee, which was given further detail in his excellent book …and forgive them their debts: Lending, Foreclosure and Redemption — From Bronze Age Finance to the Jubilee Year. Click, learn and enjoy.
Episode 30: Michael Hudson on the 2021 Housing Market