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The Looming Real Estate Crisis

The Looming Real Estate Crisis

By: Discover Crypto | July 20, 2022

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Today we’re going to cover land…and I don’t mean virtual Metaverse land, I mean IRL, hold that American soil in your hand’s kind of land.  For most of our country’s history, home and land ownership have been an essential part of the American dream.  Getting on the property ladder represented a transition to adulthood and was touted as one of the best investments money could buy. But what happens when the American dream is hijacked by billionaires, institutional investors, and foreign entities? Let’s look into it!

Land. Great way to diversify your portfolio, right?  Well, it would be if any normal people could afford to buy it anymore. Today, Bill Gates and Jeff Bezos are the largest known buyers of farmland in the U.S. and one in every five single family homes are being bought by hedge funds as future rentals. America is slowly turning into a country of renters while the privilege of ownership is hoarded by the elite.

To understand this, we have to go back to the housing crash of 2008. I’m not going to get into all the specifics that led to the mortgage crisis, but in a nutshell, you can blame hedge funds and banks for getting so greedy with their mortgage-backed securities. They took way too many risks in the mortgages they were giving out, then the Fed raised rates, and the bubble burst. An estimated 10 million people lost their homes between 2008 and 2010. Too bad there wasn’t some sort of unbiased, uncorruptible smart contract on a public blockchain that could’ve been vetting these potential homeowners…Most of us know what happened next. Instead of letting the free market punish these companies that threw caution to the wind in favor of quick profits, our government bailed them out to the tune of $700 Billion dollars. Because, let’s be honest, these hedge fund guys and the bank CEOs are the ones financing our politician’s campaigns. It doesn’t matter what side of the aisle they’re on, they’re all in bed with Wall Street.

Once the bubble burst, all of a sudden, our government was under water, holding thousands of foreclosed properties and defaulted mortgages.  That’s a lot of debt for a country that already has a debt crisis. So, what’d they do? They sold the homes to the exact same hedge funds that caused the financial crisis in the first place. That’s right, the same people who caused the 2008 financial crisis got first dibs on dirt cheap properties.  They came in and gobbled up discounted properties by the thousands, supposedly to “stabilize” the real estate market. We know hedge funds and big banks don’t do nothin’ for nothin’.  They didn’t buy up those properties out of the goodness of their hearts. There’s no altruism in this game. They saw an opportunity to make obscene amounts of money off the backs of innocent American homeowners whose lives had been ruined by the mortgage crisis. It was just a bonus our government was bankrolling it.

The plan, encouraged by our government, was to hold the properties until the real estate market recovered, and then sell them back to the American people, making a profit on rising home prices.  But that wasn’t enough for these real estate vultures, who saw a new opportunity to bleed the American people dry: single family home rentals. Previously single-family home rentals weren’t a huge market. Mostly mom and pop investors, not a huge inventory. But then, corporations like Blackstone started Invitation Homes, and J.P. Morgan: American Homes 4 Rent. Blackstone is often confused with their bigger, uglier brother, Blackrock. Blackrock, you may remember them from the Luna attack, used to be a division of Blackstone called Blackstone Financial Management. When their CEO, Larry Fink, branched out, he chose the name Blackrock, either to stay within a familial theme or to completely confuse everyone.  All you need to know is that Blackstone is the company behind Invitation Homes, which is buying up a ton of single-family homes, and Blackrock denies doing the same.  Although Blackrock does admit to being heavily invested in new construction of single-family homes built for rent as well as multifamily units.

Oh yeah, I totally believe what Blackrock says.  They denied being involved with Luna too…

These companies saw an opportunity to do the exact same thing they did in the mortgage industry: they started Single-Family Rental Securities that they sold around the world. This outsources their debt to investors, so they look better on paper. Then these companies went public, and places like Blackstone majorly cashed out. We’re talking billions here.

The funny thing is, even after buying houses from the government so cheaply, Blackstone got a One-Billion dollar loan backed by Fannie Mae.  So basically, taxpayers keep paying for Blackstone’s shenanigans over and over again, while we get priced out of the market. These days, institutional investors are buying one in every five homes in America and keeping them as rentals. We all know the policies of hedge funds like Blackstone: squeeze as much profit out of an investment as humanly possible…they’re essentially slum lords. You can look up stories of kids getting sick because Blackstone’s Invitation Homes refused to remediate black mold, and other wild tactics they’ve used to transfer the upkeep of their rentals onto their renters. Maybe that’s why both Blackstone and Blackrock have “black” in their names. Maybe they just love black mold…But the health and safety of your tenants doesn’t matter when you get to brag to your shareholders about record profits, right?

Disney is also getting in on the residential real estate game by creating a venture called Storyliving by Disney. They’re building a planned community outside Palm Springs called Cotino with condos and single-family homes as well as shopping, dining, entertainment, a hotel, and a beach park. They previously owned a community called Golden Oaks that was close to Disneyworld, and the entire town center and golf club of Celebration, Florida. Disney ended up selling both communities, leaving the residents of Celebration to deal with a cheap landlord who allowed various properties to fall into disrepair.

Disney says Storyliving developments are “for fans who are looking for the Disney approach to detail and experience implemented in everyday life.” Before you ask, maybe it’s worth it to have a discount to Disneyworld. No, you don’t get any perks for Disney products. Nothing better than paying astronomical housing prices and HOA fees so that Disney can pump you full of advertisements for their media and associated products, right? Why does this feel like something out of a creepy apocalyptic future?

If it isn’t giant American corporations price gouging us, then there are the foreign investors, mostly from China, Canada, and Mexico, who make up 20% of the real estate market in our country. In certain states, it’s even worse. In California, 25% of residential real estate goes to foreign investors. Texas and Florida have it bad too.

So why isn’t the free market taking care of this? More demand for housing should equal more building, right? Well, the market in this country isn’t exactly free, no matter what those people in Washington want you to believe. Our government is in the market of making money for their campaign contributors. So, they’re constantly getting in the way of builders keeping up with housing demand. Unless they’re builders financed by Blackrock. I’m sure they get all the permits fast tracked. We need more attractive land use regulations and zoning restrictions so builders can build denser housing in areas that need it. These days, most builders are doing home remodels or teardowns that don’t add inventory to the market. And we wonder why we have a national housing crisis on our hands…because The Fed is raising rates again, and the mortgage industry is experiencing crazy amounts of layoffs. Keep in mind, higher mortgage rates negatively impact regular Americans. They don’t impact investors coming in with all cash offers. With the current state of things, most regular Americans can’t compete with institutional and international investors. And so, the great transfer of wealth from the American people to the likes of Blackrock becomes a more and more vicious cycle.

All the while, those huge institutional rental companies deny the problem they’re creating, saying that millennials just have different values and aren’t as interested in home ownership.  You know millennials would rather buy avocado toast instead of their first home.  It’s about values, right?  We’ll just ignore the fact that millennials came of age during the financial crisis these huge financial institutions caused, and now can’t afford to buy homes at astronomical prices due to government policies that only benefit their friends on Wall Street.

What about you?  Have you been trying to buy a home in this market? Leave a comment below and let us know how your experience has been.

So, we know who’s buying up all the houses in America, but there’s a similarly insidious buy up of farmland going on. Did you know Bill Gates owns more farmland than the entire acreage of New York City? Jeff Bezos owns double that. They say it’s a way to diversify their portfolios yet real estate doesn’t fluctuate like other markets do. It’s a great hedge against inflation, which is probably why there was a 2.4 million acre increase in foreign-owned farmland in 2020. They knew the government would print more money to pay for all that pandemic spending…

When institutions and big investors buy up farmland, it hurts farmers. They’re getting priced out of their own communities. There are already way fewer farmers than there were back in the day. Meanwhile, are Jeff Bezos and Bill Gates going to roll up their sleeves and get to work hoeing and sprinkling seeds?  No. They’re going to rent out the land at astronomical prices to farmers who are already having a tough enough time as it is. So, that means that farmers shoulder all the risk associated with their harvest, like droughts or whether their food sells, but the landlords are guaranteed profit, from both the rent and the increase in land prices.

But farmland… That’s a very specific buy. I don’t know about you, but I don’t like the idea of Jeff Bezos controlling a bunch of farmland on top of owning Whole Foods and Amazon Fresh.  Because whoever owns America’s farmland, owns the food supply, and the water rights associated with those properties. Our population is slated to increase by 10 billion in the next Eighty years, and current food production will have to increase by 75% in the next 30 years to keep up with that growth.

Any of the mega-wealthy farmland owners could decide it’s more profitable to sell food oversees versus contributing to the agricultural needs of local communities. Say Bill Gates needs the Chinese Government’s assistance with a business deal. What’s to stop him from offering crops grown on his land in exchange for their cooperation? He could easily hold the American food supply hostage to increase his business interests. What’s to stop Jeff Bezos from deciding it’s actually more profitable to leave his farmland fallow, thereby decreasing the costs of harvesting and taking food to market, while artificially inflating food costs at the same time.  An artificial food shortage would mean higher prices at Amazon Fresh and Wholefoods and a sweet rise in stock prices of Bezos and his shareholders.  Consumers would be on the hook for covering the increase in prices, and the communities surrounding Bezos’ land could potentially experience a negative impact on their local jobs and businesses.

Remember, anything they can do with food, they can do with water as well.  All this land they’re buying has water rights. The more water that’s hoarded by people and corporations at the top, the easier it is for them to manipulate the price and availability of water. They could easily hold America hostage to make water futures skyrocket. Meanwhile, the government continues to legislate water to support the rights of the largescale holders. It may come from the sky freely, but the government believes it belongs to someone else: namely the corporations funding their campaigns. You have to wonder how much of the increase in current food prices is actually due to inflation and a Russian-Ukranian war “food shortage.”  Pretty convenient we suddenly have both a housing crisis and food shortage on our hands at the same time huge institutions are coming in and buying it all up at an exponential rate.

America is supposed to about freedom, being able to make your own luck and your own destiny. A majority of the most successful people I know came from absolutely nothing, myself included. But I just can’t help but wonder if companies like Blackrock would’ve preferred that we stayed with nothing. Sometimes I think they want to send us back to the Dark Ages. They want us all scraping for crumbs like serfs while they rake in billions and laugh it up with their Washington cronies.

But I’m not scraping for nothing, and I will continue to tell the truth of what’s going on. So, if you want to stick it to the hedge funds and everyone else fleecing the American people, do everything in your power to educate yourself. Knowledge is king, and that’s one of the few things they can’t take from us. Ignorance and silence are just fuel to their plans.

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