The Trainwreck That is Real Estate in the USA!

Because Mrs. Denmarkguy and I are planning to move from our fairly large house — expensive and energy draining to maintain — to something far smaller and more economical, I have recently spent more time than usual looking at real estate listings.

As I've alluded to before, part of the challenge in moving to smaller place is that fairly basic and reasonably affordable housing is becoming a scarcer and scarcer thing to find.

The "Gentrification" Problem

At least in our area, existing smaller houses are either being torn down and replaced with new construction of larger ”luxury” dwellings, or they are being purchased and renovated so that they can be transferred from ”affordable” to ”upmarket.”

Yesterday, I caught a fairly stunning example of how that happens, and how much it affects affordability.

A house popped up in my alerts, and it fit our specs on every mark except price. $675,000 is basically outside our price range for a 1500sf, 2 bedroom house. But I decided to look at some of the history on the house, and discovered that it had actually been listed and sold for $335,000 in February of 2023. Because it was not that long ago the listing (and photos) from that particular sale were still available and archived online.

The 2023 listing was basically for a decent, basic and in some respects dated house that was perfectly livable and had nothing significantly wrong with it. However, comparing it to the late 2024 listing it was obvious that somebody had bought it, ”luxuryfied” it was a bunch of modern high tech amenities, automation and countertops hand polished by Tibetan anti-bacterial virgins using organic yak spit so as to be able to take the same dwelling and now pretend it's worth... a bunch of money.

In comparing the two listings — purely from the perspective of livability — I would say that the upgrades that were made might be worth enough to make the house worth $425,000 or something in that range. Which basically means that there was some $250,000 worth of ”ego crap” added to the mixture.

Having been born and grown up in Denmark, and otherwise lived in about a dozen countries, I can't help but observe that there's no place I have ever been — aside from the United States — where the idea of ”luxury” carries so much weight, as to almost being an obsession/addiction.

And I'm totally aware that making such a statement is to a large degree cultural, but I look at all that "fluffery" and I can't possibly arrive at any tangible reason why it would make my bacon and eggs taste better in the morning, or how it would give me a better night's sleep.

From where I'm sitting, the old Shakespearean quote (from Hamlet) ”there's something rotten in the state of Denmark” seems more apropos if you apply it as ”there's something rotten in the United States!”

At least when it comes to housing, anyway.

As far as I can tell the problem isn't related to where we live, nor how we live. Instead, it can be tracked squarely to the fact that ”a house” here is no longer a place where we live; instead it is a commodity to be traded. Accordingly, it feels like the whole idea of ”having a home” has pretty much been thrown out the window. What I mean by that, is that there is a large number of people who no longer by real estate with the intent of it being their place to put down roots; instead they buy it as a place they can park themselves until they can sell and make a profit.

I'm not entirely sure what drives this particular paradigm — maybe it's just greed or a compulsion to find "instant riches" — but I'm pretty sure it is not sustainable in the long run.

If you extrapolate where we are now to a point some 20 years out in the future it looks remarkably like you could end up with a world in which a bunch of millionaires and investment companies trade houses with each other much like you trade stocks, while the actual people live in tents on the sidewalk outside the houses — which are empty — because the number of individuals who can actually afford the price of living in one of them is trending towards zero.

Yes, I realize that all sounds rather Orwellian... but these are front line observations that suggest that we may be heading down an unfortunate road...

Hive would have to go to $30 before I could even begin to make the economics work... and I doubt that's about to happen... although I'm open to being proven wrong!

Thanks for stopping by, and have a great week!

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Created at 2025.01.06 21:50 PST
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