15 years after the peak of the Housing Bubble, home prices in the US have hit a new record high:
However, unlike last time around, where an outsized number of mortgages were handed out to subprime borrowers (people with low credit scores) and subsequently securitized into highly risky assets that ultimately blew up and nearly destroyed the US banking sector once the foreclosures began, today’s surge in housing prices is largely driven by the prime borrowers (people with high credit scores).
We can see here from this chart that unlike the 2000s, today’s housing market is utterly dominated by borrowers with credit scores of 760+:
Subprime mortgages (dark blue and yellow) are nearly nonexistent today, while close to 2/3 of mortgages originated are among people with the highest credit scores.
We can see that in the 2000s, the housing bubble was broad-based, and participation was distributed across all income levels. Obviously, credit score distribution among borrowers is not a perfect proxy for income distribution among borrowers, but it’s reasonably close. The better off one is financially, the more likely one is to have a higher credit score.
There is a distinctly different flavor to today’s housing market bonanza in that it is primarily dominated by wealthier prime borrowers.
Now, it’s possible the credit ratings agencies have rigged the game in order to get more people approved for mortgages. After all, the credit ratings agencies were cooking the books during the housing bubble back in the 2000s, giving triple-A ratings to mortgage-backed securities and collateralized debt obligations that were in reality filled with dogshit subprime loans that deserved junk ratings.
It may just be that Wall Street has found another way to cook the books and make it seem like there’s nothing to worry about with today’s housing bubble–because hey, it’s mostly prime borrowers today!
I wouldn’t put it past them. They made a shit ton of money off of the MBSs and CDOs back in the 2000s, and then got bailed out when they crashed the global economy. I can’t imagine they’re content with just giving up on that whole scheme–after all, they barely got a slap on the wrist for it!
However, it’s also possible that this is truly a “prime bubble” in the housing market.
It reflects the fact that over the past 12-13 years, the gains of the post-Great Recession “recovery” have gone to a select few, while the broad majority of Americans have been left behind.
The question of “who is driving this housing bubble?” has a much different answer than it did back in 2006.
Back then, it was, essentially, everybody.
Today, it’s a new breed of wealthy Americans who have emerged as the ascendant and de facto ruling class: rich white liberals.
The “Laptop Class” of Americans, so to speak. Or the “Zoom Class.”
They now do most of their work from home and from a laptop. Their meetings are conducted over Zoom.
You might also call them, “Peloton Americans.”
These people are highly educated. They’re flush with cash. They work very good jobs that pay handsomely.
But they’re ultimately not very bright, and as a result they’ve contributed to yet another housing bubble.
The New York Times recently profiled a sampling of them–the new class of upscale liberals–most white, but some not–driving the current housing bubble. The article is entitled, “They rushed in to buy in the pandemic. Here’s what they would change.”
The pandemic has turned out to be a historically miserable time to buy a home. Many buyers entered the market looking for a home to solve some of the problems the pandemic created. They wanted more space for Zoom rooms and home gyms. They wanted bigger and better backyards to entertain outdoors.
These expectations ran headlong into the reality of shopping in a frenzied sellers’ market where the pickings were slim and the prices astronomical. Surveys by the WAV Group and Zillow found about three quarters of recent buyers expressed some regret. In the Zillow survey, released on Feb. 4, the findings paint a picture of homeowners second-guessing the choices they made and wishing they’d had more time, more patience or considered living somewhere else. About a third of respondents regret buying a house that needed more work than they anticipated, 31 percent wish the home they bought was bigger and 21 percent thought they overpaid.
But now they’re about to either be trapped in these homes, or forced to sell them at a loss.
Because they bought at the top.
Let’s meet the first couple, who bought a farmhouse and a couple of cows out in rural Florida about an hour south of Orlando because Instagram made them want to be farmers:
Celeste Mohan and Zach Flynn did not set out to buy a farmhouse with a barn and two cows. But after they lost a bidding war for a rundown house in Boca Raton, Fla., the couple jumped on the 2,660-square-foot house in Lake Wales, a town of 16,000 about an hour from Orlando. They bought it last July for $349,000.
Ms. Mohan, 25, and Mr. Flynn, 29, a teacher, felt pressured to buy because the rent on their one-bedroom in Boca Raton was about to jump 22 percent, to $1,900 a month. With their $400,000 budget, their options were restricted to fixer-uppers, with fierce competition. After their bidding war defeat, the couple headed for the country. The farmhouse, set on five acres on a lake, seemed like an ideal alternative: quiet, pastoral, and charming.
“There really wasn’t much hesitation at that point. We’re defeated, we’re exhausted, we’re anxious,” said Ms. Mohan, a curriculum developer for an educational company. “We really just wanted to own a house.”
As everyone knows, the best financial decisions one can make are those driven by impulse, desperation and FOMO.
Almost immediately, the couple regretted their decision. The property felt eerily quiet and isolated, and maintaining five acres and two cows was more work than they anticipated. “You see these people on Instagram with their farm life,” Ms. Mohan said. “Nobody tells you what actual hard work that is and how time consuming it is.”
Before the summer ended, the couple had given the cows to the neighbor, moved back to Boca Raton and rented a new apartment. Rather than try to sell the farmhouse, they hope to turn it into an Airbnb. “Right now, we’re paying rent and a mortgage, which is really uncomfortable,” Ms. Mohan said. They married in December and are expecting a baby in March, adding to their financial stress.
That farmhouse is getting unloaded for a steep loss, guaranteed. They are not turning it into an Airbnb. That’s a pipe dream. There’s no way they’d be able to maintain it from 2.5 hours away with a newborn baby. They’d have to hire a management company to do so, and I just don’t think you’re going to get nearly enough volume out in Lake Wales, Florida to justify the cost of a management company.
These people are still in the bargaining phase. “Well, maybe we could turn it into an Airbnb…” No, you can’t. You’re screwed. Who the fuck wants to rent an Airbnb in Lake Wales, Florida?
Okay, get ready for this next one. This is the crown jewel. This is why I wanted to bring your attention to this article in the first place.
Buckle up because it’s about to get Kareny up in here
Three months into the pandemic, Stephanie DiSantis felt claustrophobic working from home in her 800-square-foot townhouse in the Queen Anne neighborhood of Seattle.
AKA: not enough room for a Peloton.
So, like millions of other Americans, she started looking for a bigger space. She set her maximum budget at $900,000, but soon realized that if she wanted to stay in the central neighborhood, she would have to pay more. She pushed her budget up to $1.3 million, reassessing her priorities.
“I decided, I’ve done a lot of traveling, I’ve had a lot of fun. I’ve done the thing where I’m like, ‘I’m hungry for pasta, I’m going to go to Rome for three days,’” said Ms. DiSantis, 47, who works for Amazon. “I can stop doing that. I can afford to be a little house poor.”
I can’t believe this is a real person.
By all indications she’s single (“Dog Mom!!!!” 🤪). She’s 47. She has an incredibly well-paying job at Amazon. (Doing what? We’re not told. But presumably something in HR or customer relations. If this is her LinkedIn profile, she is “Head of Global Sports Marketing Partnerships at Amazon Web Services.” So, customer relations.)
And when she feels like having pasta, she goes to Rome for a long weekend. Somehow, she finds enough time off of work to do that despite her employer, Amazon, being a notoriously brutal and unforgiving place to work. Maybe that’s just for the peons that work in the warehouses.
In October 2020, while she was in Massachusetts visiting family for a month, a 2,570-square-foot house dropped the list price to $1.45 million, over her maximum budget, but within reach. After her friends, her broker and an inspector vetted it in her absence, her offer at full asking price was accepted.
Oh, I guess my budget is $550,000 higher than I originally thought. That’s fine! I’ll take the house sight-unseen.
She returned to Seattle in November, seeing the house she’d only seen on video in person for the first time. “When I first saw it, I cried,” she said of the house with views of the Puget Sound. “I fell in love.”
The house gave her more space, but at a significant financial cost. In 2021, her priorities shifted, and she suddenly felt the burden of a huge mortgage. “I got super burned out at work,” she said. “I remember thinking, ‘Man, if I was still in that townhouse, I could just quit my job for a year and be fine.’ The mortgage was so low, I could take a year off, I could relax, I could refuel and now I really can’t. ”
This woman makes more money than at least 95% of Americans and works as head of the sports marketing partnerships department at Amazon, and she’s complaining about being burned out? She has a job that allowed her enough time off that she can jaunt to Rome anytime she feels like having pasta–and she’s just not really feeling it anymore.
Most Americans can’t even afford food and gas right now. Inflation is decimating their personal finances. And this lady is upset that her multimillion-dollar home with views of the Puget Sound now prevents her from traveling to Europe on a whim–or just quitting her job entirely to fuck around and do God knows what.
What she learned: When Ms. DiSantis calculated her budget, she did not anticipate how a large mortgage would limit her future options. “I wish that I would have been able to foresee a couple of years down the road and waited it out,” she said.
I don’t think she understands the concept of “calculating a budget.” Ever hear of a spreadsheet?
When I calculated how much this house would cost me, I didn’t realize how much it would cost me!
“I could have taken a big break or been that person who’s like, ‘OK, I’ll move to Montana and get a house that is everything I want for half the price.’”
Oh, I’m sure they’d love you up in Montana. Everybody in Montana regularly flies to Rome for a long weekend just ’cause they’re in the mood for some spaghetti aglio e olio.
One tweet in response to the NYT article just about summed it up:
And just like the French Aristocracy of the 1780s, America’s New Aristocracy has no idea how out of touch they are. No idea at all.
After reading about Ms. DiSantis, I now understand modern America. The reality of post-Great Recession America is crystal clear.
There are three major forces at work that have converged to produce a person like Ms. Stephanie DiSantis:
- The monopolistic dominance and staggering wealth of the tech sector. They offer out ridiculous salaries for just about any job…
- …. predominantly to people in groups perceived as “oppressed minorities,” including white women because of the famed (but mythical) “gender pay gap”–which we absolute must remedy! People in these “oppressed” groups are given preferential treatment in the hiring process for the best jobs on the market, and then lavished with compensation and benefits by woke tech sector employers.
- The growing gap between women and men in college enrollment: men are increasingly declining to go to college, while women now represent nearly 60% of college students. And this is not a recent phenomenon, either: it’s been trending this way since the 1970s at least, when the gender ratios on campus were flipped. Women have outnumbered men by at least a 55-45 margin for nearly 20 years now. On top of this, women today early 59% of Master’s Degrees, massively numbering the men in higher-higher education. We are witnessing the real-world results of today, where the professional class is now dominated by women.
It is, quite literally, the Karenization of the US economy.
Women go to college, get degrees, and then get hired by prestigious companies to high-paying jobs where they do mostly nothing of any real value for society.
For example, Stephanie DiSantis has coworkers at Amazon who are in charge of logistics and distribution; people who are responsible for maintaining the Miracle of Amazon, which is to say the incredible system that allows us to order literally anything we can think of and have it in their hands within 2 days, or sooner.
Her job, on the other hand–“Head of Sports Marketing Partnerships”–could be eliminated tomorrow and the country would be just fine. Amazon itself would be just fine. She works a “bullshit job”–a high-paying bullshit job that allows her to be a jetsetter, and the owner of a $1.4 million home, but tragically not both at the same time. But it’s a bullshit job nonetheless.
Certainly, there are many millions of people in the country who work bullshit jobs, and not all of them are women. But I think most of them are women, if I had to guess.
Women simply tend to gravitate toward jobs in softer, more “people-focused” fields–PR, marketing, HR, education, etc. Women are by nature caring, nurturing and sociable, and they are drawn to careers that value those three traits.
The big exception is nursing, which I would never say is a “soft” line of work, but it is the #1 college major for women, and it is, outside of motherhood, the ultimate “caring” job there is.
I’m not one of those people who thinks women don’t belong in the workplace at all. I actually believe there are plenty of non-bullshit jobs out there that women are better suited for than men.
But typically, the more consequential fields like engineering, surgery, programming, farming, architecture–those are male-dominated fields. Men’s brains are in general wired for that kind of thing. Building, creating, planning, procuring, selling, trading, researching, analyzing, transporting, protecting–these are the things men are primarily drawn to.
Again, I am not saying that all women work bullshit jobs. I absolutely do not think this is the case. But I do think most of the people working bullshit jobs–this could be anywhere from 51% to 70%, or perhaps even higher–are women.
Part of this is through no fault of their own, either. Corporations feel political and societal pressure to promote “diversity, equity and inclusion” so they create bullshit jobs just to give them to women (and minorities) so they can say, “Look at how many women (and minorities) we have on payroll!” A lot of it is a product of corporate virtue signaling.
But the end result is that a lot of women–like Stephanie DiSantis–work bullshit jobs.
And that’s why I don’t hate people like Ms. DiSantis. She simply took advantage of a system that is designed to benefit people like her. She herself is not the problem. She didn’t create this system. Anyone in her shoes would live like her if given the opportunity.
But then women like her hit 47, they’re unmarried, they feel “burned out” and they don’t know why. Not even buying a beautiful $1.5 million home with views of Puget Sound can make them happy.
It’s obvious to everyone else, but not to them: they chose to pursue a bullshit career over becoming a mother, and doing so comes at a terrible price. You buy into this ideal of the “career-oriented woman” and forgo marriage and motherhood, but what they don’t tell you beforehand is that you’ll have profound regrets and feelings of emptiness down the road–often after it’s too late to change course.
Many of these women become angry, and instead of blaming feminism and the “female empowerment” movement for selling them a bill of goods, they get angry at men, because of this idea of the “patriarchy.”
I think some form of a “patriarchy” still exists in most of the Western World, at least in name only. Simply consider how many of the most powerful positions in politics and business are held by men. But “the patriarchy” is nothing compared to what it once was. But even then, it wasn’t this deliberate and insidious “patriarchy” designed expressly to exclude women. It was simply a reflection of the natural order of things, and how they have always been.
Somewhere along the way–probably the 1960s–the natural order of things became “the patriarchy.” Instead of being the natural order of things, it became a deliberate and malicious evil perpetuated for centuries by men at the expense of women. And it had to be destroyed.
Since then, “the patriarchy” has been bullied into submission, and even to a large extent taken over, by the wokes and the feminists.
I mean, think about it: if society were really run by the type of “patriarchy” that the feminists say it is, how come there are so many women in the workplace instead of in the kitchen? How come higher education is 60% female and 40% male?
This is not the work of the patriarchy. This is the work of the feminists.
Don’t get me wrong, certainly the push for women in the workplace was probably spearheaded by shrewd, male business executives back in the 1960s (more or less “the patriarchy” personified) who realized they could cut down on labor costs by essentially doubling the size of the labor pool.
I mean, look at the chart of real wages dating back to the early 1970s:
Flat.
And when did women start entering the labor force?
Basically, once women started flooding the workforce, real wage growth ceased. Coincidence? Maybe, but probably not.
But then this is not proof of a “patriarchy” that is out to keep women down, is it? I mean the whole point of encouraging women to join the labor force en masse was to suppress the wages of men, wasn’t it?
This is proof of an oligarchy, not a patriarchy.
But don’t try to tell the Karens any of this.
That’s mansplaining.
They want to be angry about the Patriarchy and Misogynism, and nothing is going to stand in their way.
Because God forbid they admit they were sold a bill of goods and that “focusing on their careers” was a terrible mistake.
This is where a lot of the Karen Energy that is so influential in American politics today comes from.
It’s a deep-seated anger that stems from them being lied to.
It’s not all middle-aged single women, though. It starts earlier in many cases. Way earlier:
In one of the most revealing studies in recent years, a 2016 survey of 137,456 full-time, first-year students at 184 colleges and universities in the United States, the U.C.L.A. Higher Education Research Institute found “the largest-ever gender gap in terms of political leanings: 41.1 percent of women, an all-time high, identified themselves as liberal or far left, compared to 28.9 percent of men.”
The institute has conducted freshmen surveys every year since 1966. In the early days, until 1980, men were consistently more liberal than women. In the early and mid-1980s, the share of liberals among male and female students was roughly equal, but since 1987, women have been more liberal than men in the first year of college.
While liberal and left identification among female students reached a high in 2016, male students remained far below their 1971 high, which was 44 percent.
The Reagan Revolution, I’d say, was what turned men to the right. That’s why you saw the rightward shift start in the 1980s.
But the craziest thing about this whole study is that it was conducted among freshman–meaning before the Higher Education System™ had even been able to get its hooks in them, and still the women were 41% liberal or far-left. That doesn’t mean the other 59% were conservative, it just meant they weren’t self-identifying liberals.
Along parallel lines, a Knight Foundation survey in 2017 of 3,014 college students asked: “If you had to choose, which do you think is more important, a diverse and inclusive society or protecting free speech rights.”
Male students preferred protecting free speech over an inclusive and diverse society by a decisive 61 to 39. Female students took the opposite position, favoring an inclusive, diverse society over free speech by 64 to 35.
Majorities of both male and female college students in the Knight survey support the view that the First Amendment should not be used to protect hate speech, but the men were more equivocal, at 56 to 43, than women, at 71 to 29.
Women go into college already likely to be liberal, and most of them come out of college as dyed-in-the-wool, hardcore liberal feminist Democrats.
The chief export of America’s higher education system is Karens. The ones who aren’t radicalized by the universities are eventually radicalized after about 15-20 years in the workforce.
And now they represent a large majority of the Democratic Party:
The data on college students reflects trends in the electorate at large. The Pew Research Center provided The Times with survey data showing that among all voters, Democrats are 56 percent female and 42 percent male, while Republicans are 52 percent male and 48 percent female, for a combined gender gap of 18 points. Pew found identical gender splits among voters who identify as liberal and those who identify as conservative.
And this is why I keep saying: The Democrats are the Karen Party.
Why is the Democratic Party now against free speech? Because the Karens are against free speech.
Why is the Democratic Party anti-white male? Because the Karens are anti-white male (the “patriarchy,” plus most of the guys they’ve ever been dumped by).
Why do you think diversity, equity and inclusion are the highest virtues of the modern Democratic Party? Because those are the highest virtues of the Karens.
Okay, but what does any of this have to do with the housing bubble and the economy?
It’s simple: a large part of the new housing bubble has been driven by Peloton Americans, and Karens like Stephanie DiSantis, who are some of the biggest beneficiaries of the explosion of profits and revenues at tech behemoths over the past decade or so–other than the billionaire founders and owners of the companies, that is.
Why have these Karens been the big beneficiaries? Wokeness and affirmative action-oriented hiring standards. So these large tech companies are handing out lucrative, but bullshit, jobs to Karens.
But when the economy enters a downturn, which jobs are the first ones to be cut?
The bullshit jobs, obviously.
Companies can only afford to virtue signal and be Woke during boom times, when profits are shattering records and interest rates are at 0%.
This is all completely unsustainable, and it is going to blow up in a major way at some point.
This Karen economy is a house of cards.
The consequences of this all blowing up are likely to be profound, and I can’t even begin to predict how it will all play out.