Subscribers ask about investing in single-family real estate – A clarification

Investors have accepted QE, so I have been bullish on residential real estate for the past decade. Will there be future restrictions on ownership?

Note to reader: I wish to clarify my recent comments on the rental real estate sector and its longer-term viability as a profitable investment class (I actually still recommend it, but within the confines of certain important constraints, with which I will list below).

In many areas of the world, single-family real estate prices are up between 15-20% year over year, and if the central banks continue their accommodative policies, I look for more of the same. Clearly, many people have been increasingly shut out of home ownership at the expense of investors and landlords. With left-leaning governments moving into the reins of power, I have been coming across more calls for investment limitations.

While we have been very correct in our housing predictions, and anyone who has purchased single-family rental properties in affordable areas (single-family dwellings below the median price) has been amply rewarded, how long will these government powers let this price rise continue to benefit single-family home investors? Landlords who have been holding investment rental housing have stumbled upon the most effective means for the average person to stay ahead of this manufactured COVID crisis.

Unfortunately, it seems that property and asset expropriation is on the way, as is the standard for the Satanic communist system, although we don’t know exactly when this will happen. And I think you are absolutely correct that the elites will use the race card to hold a gun to our heads to give up our lands and assets as the excuse for executing this massive theft.

As for real estate investment, you are suggesting halting purchasing rental real estate, especially in working class areas (although that’s kind of a vague descriptor), but what about purchasing real estate in which to live yourself?

Timothy

The preface: As monetary policy loosens, house prices worldwide skyrocket
metro-home-prices-q3-2020-ranked

 

Concerns about New Zealand’s runaway house prices are escalating, with politicians across the board weighing in on what’s to blame.

Real Estate Institute data released Thursday shows that October’s national median house price, of $725,000, was 20 per cent higher than it was at the same time last year.

Ten regions hit record median price highs, while Auckland’s median price grew by 16.3 per cent year-on-year to hit $1 million for the first time.

It is a sharp turnaround from widespread predictions earlier this year of a house price crash in the wake of Covid-19.

Politicians point finger over runaway housing market, Stuff.co.nz, November 13th

 

But the demand side could be dampened with various measures to limit property investors and meet the urgent need to wean New Zealanders off property investment by:

limiting the number of properties that individuals or household trusts can hold

limiting the number of trusts that individuals can hold

incentivising divestment of property holdings (in favour of selling to first-home buyers, for example).

The elephant in the room is a capital gains tax on secondary and rental properties — something the current government backed away from during its first term.

Ultimately, though, given a choice between helping first-home buyers into housing or limiting cost-effective property investment, a left-leaning government will likely side with social need over optimising capital formation. To do otherwise would be unacceptable to its voter base.

With house prices soaring again the government must get ahead of the market and become a ‘customer of first resort’, The Conversation, November 8th

 

Tenants of Hillside Villa demanded that the City of Los Angeles use power of eminent domain to purchase the building from the landlord and keep the building within the “Affordable Housing” system permanently. While the landlord would receive fair-market rate payment for the building, it would end any further speculation around the building. More importantly, such a move would have the potential to establish a precedent citywide, prompting the tenants of those 11,771 units with expiring covenants to insist that the city do the same for their buildings. To date, the city has not acted.

Along similar lines, tenant organizers across the world have demanded local governments expropriate properties to take them off the speculative real estate market. Seizing private property for the public interest is a meaningful, aggressive way to fight back against slumlords, speculators, and scofflaws. For example, if the Los Angeles Housing Department receives more than a certain number of complaints and cites an owner with more than a number of code violations, then the city should move to take possession of that building and convert it to public housing. If someone’s privilege to drive a car or practice law can be taken away, why can’t their involvement in real estate speculation be rescinded as well?

Affordable Housing is a Scam!, City Watch, October 26th

How investors should proceed in the future

While the casual partisan reader may dismiss this as hyperbole, I see something brewing. As the global central banks continue to accommodate with massive stimulus, and with left-leaning governments taking control, greater calls for investor restrictions will grow. Why? House prices will continue to climb, while at the same time, many citizens will get poorer from the COVID lockdowns. The pressure for restrictive measures is just common sense.

While the MSM and populist politicians will portray the single-family rental investor as the strawman villain in these cases, it is really the governments and central bank cartel themselves that are fully responsible for these runaway costs of living.

  • I agree with Timothy in this regard; he sees expropriation over racial divides as increasingly likely in the future. This is especially true in the U.S.
  • We may think this expropriation risk may be far into the future, but if Black Lives Matter decides to take up the mantle for an affordable housing mandate, we could begin to see a movement to expropriate non-minority investors from minority areas.
  • As house prices increase in step with monetary inflation and suppressed bond yields, younger folk will demand better access to working-class (affordable) housing at the expense of people like me.
  • As the above mentioned article theorizes, I have to conclude that there will initially be restrictions placed on the number of single-family properties individuals can own. I am concerned that investors may be forced to sell, and forced sales are always far below fair market value.
  • I contemplate the promulgation of disadvantageous investor tax policies as well as the institution of onerous ownership restrictions.
  •  The globalists know that rental property ownership has been the most effective way to stay ahead of all these manufactured crises. How long will they let this continue?
  • I am adjusting my longer-term investing plans with these recent observations in mind. First, I am no longer going to invest new money in any area that I deem racially sensitive or attractive to first-time home buyers. Second, over time, I will begin to sell out of these areas and use tax-friendly policies to purchase in more expensive, non-minority areas. Third, these actions will allow me to maintain my investment equity, while lowering the number of properties I own. Unfortunately, this method will decrease my future cash flows, but will still allow me to maintain my sector exposure.

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5 thoughts on “Subscribers ask about investing in single-family real estate – A clarification

  1. The MSM has turned the central banks into our saviors. Will it continue? But then again they have been doing QE for a long time now and investors aren’t really complaining. Thanks. I guess we will see more of the same.

  2. Thanks for the analysis, Chris.

    I think regarding buying property for myself (I don’t plan on buying more rental properties), I will stick to predominantly white, conservative areas, which means the furthest north I can go ;). Minorities (and probably liberals) don’t like the cold and can’t handle it as well as we Westerner tories. 😉 The land thieves will eventually come for us, but I think heading further north buys more time (and distance). What do you think?

    Also, in dire/survivalist situations, we know the north and wilderness better than minorities (and city slickers).

  3. Interesting observation. I imagine that res rental REITs and the Blackrock’s of the world will be exempt from such programs on the premise that they provide access to these investments through their funds. Something to keep in mind.

    1. They may not. They may have many restrictions placed on these REITS. They are also sitting on huge cap gains, but could get excellent exit deals from the government. It could work out well for them as they sell with a privilege. That I wouldn’t have. Any restrictions placed on them would be more easily handled by them, too. Onerous taxes and rent controls, etc. could work in their favor as smaller and over levered investors are forced out. Big institutional ones are left. Joe-six pack sells.

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