Capitalist Investor

Unpacking Kamala Harris' Housing Initiatives and Their Potential Market Effects, Ep. 278

• Strategic Wealth Partners

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In the most recent episode of The Capitalist Investor, hosts Derek and Luke tackled several pressing issues impacting the housing market and broader economic landscape.

1. Government Interventions in the Housing Market
Luke and Derek dive deep into the implications of government intervention in the housing market, particularly critiquing a proposed $25,000 credit for first-time, first-generation homebuyers. Luke argues that government intervention often disrupts the delicate balance of supply and demand, leading to unintended consequences such as housing inflation and fluctuating interest rates.

2. Impact of Deficit Spending
A significant portion of the episode is dedicated to discussing the ramifications of the $9 trillion in deficit spending between 2020 and 2024. This massive influx of money, according to Luke, has fueled inflation and prompted the Federal Reserve to increase interest rates dramatically—from 0% to 5%. Derek and Luke explain how these changes reverberate across the economy, particularly affecting home affordability.

3. The Double-Edged Sword of Affordable Housing Initiatives
While the idea of building millions of affordable housing units sounds positive, Luke explains why it could lead to a deflationary spiral in the housing market. If the supply of homes increases faster than the demand, it could erode the equity that many middle-class Americans have accumulated in their homes—impacting overall net worth and financial stability.

4. The Role of Immigration in Housing Demand
Luke also makes an important point about the current demographics driving housing demand. He notes that population growth in the U.S. is increasingly reliant on both legal and illegal immigration. With younger citizens having fewer children, immigration has become a crucial factor in sustaining housing demand. However, this dynamic introduces complexities that need to be considered in any broad-scale housing policy.

5. The Disconnect Between Policy and Practicality
One of the episode's recurring themes is the apparent disconnect between well-intentioned policies and their practical implications. Derek and Luke lament that many policymakers fail to think several layers deep into the cause-and-effect dynamics of their proposals. They stress the importance of adopting a more philosophical and analytical approach when devising economic and housing policies.

This episode is a must-listen for anyone interested in understanding the complexities of the housing market and the broader economic policies that affect it. Whether you're a homeowner, prospective buyer, or just an economically curious listener, Derek and Luke's enlightening discussion provides valuable insights into the often-overlooked intricacies of government intervention and market dynamics.

For more detailed discussions and to stay updated with the latest economic trends, tune in to The Capitalist Investor and feel free to reach out with your questions or show ideas at info@SWPconnect.com.

Hello, and welcome to this week's episode of the capitalist investor. As always, you have me, diamond hands d, and back in better than ever. Cool hand luke. What's going on? What's up? I feel good. I feel good today. Excellent. I've had a lot of coffee. Well, tony still on assignment, so we're going to, you know, talk about something that's really kind of been brought to the forefront in the last week or so with, with kamala's new. Sorry, man. He's got the vid. This was starting over. Let's just start it all over. Hello, and welcome to this week's episode of the capitalist investor. As always, you have me, diamond hands. Djdehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehehe and back and better than ever. Cool hand luke, jacked up on coffee. Man, I feel good. Yeah. Let's do it. Let's do it. So today, I think we should talk a little bit about kind of the housing market in general, kind of how we see it going, especially with some of these new policies that we've been hearing kind of bandied about out there by the Kamala Harris campaign. So, you know, some of those things include, I believe it was about$25,000 credit for first time, first generation homebuyers, which seems pretty specific, and building affordable housing units, which is, you know, a take I haven't heard a lot about, but I, Luke sure has a take on it, and I think it's very interesting. So. So, yeah. What are your thoughts so far on kind of what we've heard and where could Elitos. All right, let's take a step back. So anytime the government gets involved, as we all know, they mess things up. So why is housing unaffordable in the first place? All right. It all comes back to the free markets haven't been able to operate correctly. They all haven't been able to work the way it was designed. Where you have some supply, some demand, you have a free market with interest rates going up and down depending on supply and demand, you had a flood of $9 trillion of deficit spending in four years from 2020 to 2024. Because of that, the Federal Reserve has had to hike rates from 0% to 5%. So now you had $9 trillion inflate everything, including houses, basically doubled in, like, four years. Now you have financing go from two and a half percent mortgages to 7% mortgages because of the Federal Reserve. So you have a double whammy happening because of one thing, government printing money, inflationary aspects. Because of the government. They messed it up. So now the solution that you're telling me is going to happen is the government's going to come in here and try to fix things a second time, which means break things more and make things more problem by making, giving out tax credits, whatever the $25,000 for first generation homebuyers, which basically just means giving illegals money because only first generation homebuyers now at this point are basically illegal immigrants and maybe a very few legal immigrants. And then you're also going to try to build new houses by incentivizing home builders or lumber with prices, whatever it be, in some sort of way. They're talking about like building 3 million new homes in the next couple of years. So the problem with this is essentially you built if you build more homes, and we do have a supply shortage, don't get me wrong, but if the government speeds it up and builds more home quicker than it should, you're actually going to have, like, the housing market apps like deflation, which most people think is like, okay, well, isn't that good if home prices come down or if my rent goes down? Like, isn't that good? No, because 70% of net worth in middle class America is basically tied to housing, is tied to their house. A house has been one of the best ways for people to save money because frankly, people are just really bad at saving money. They're bad at investing, putting money in their 401 ks, they're bad at pensions don't exist anymore, so they spend what they make. So when you have a mortgage, you know you have to pay that off. So the mortgage has been a great savings vehicle for a majority of middle class America for a long time. So the net worth that you've made in your house, if you're 50, 60, 70, 80 years old, and you have 500,000, 600,000, $700,000 of equity in your house because it's appreciated and you've paid off your loan over 30 years. Well, if you lose values in your home, that's not a good thing either. So basically your trade off is you mess up the whole generational cycle of wealth accumulation to then trade off to try to help the younger people, which doesn't work in the end either, because when, you know, when generation loses money, that's trade off somewhere else and someone else loses money. Yep. So it's shocking to me that you go online and this is kind of where I first saw it. Have you seen Mark Cuban posting these days? Yeah, he's a liberal. What happened to that guy? He got rich and now he just thinks that he doesn't remember his roots, I don't think. It seems, it seems like overnight he turned into a complete crazy person because I saw him arguing the other side of this. Well, why do you think? Because it helps make money somewhere else. If he becomes a huge Democrat, liberal, whatever it be outspoken, it just gets him more business. Like, you gotta remember like where he's, a lot of his money assets are located just how it is. But yeah, so, you know, specifically the free quote unquote $25,000 for, you know, whoever gets that right. Just giving that money away like Luke just described is going to mess up the free enterprise system where the free markets can't operate with things like that going on. And it's clearly going to, it's going to, is not going to fix the shortage. It's going to, is probably going to push it in the other direction. Well, here's the other thing is you have this economics Ponzi scheme scenario happening where younger people aren't having kids. So we have right now population increases in the US is being filled by immigration, legal and illegal immigration both. And that's helping fill the population growth in America. At some point in time. Immigration cannot continue to happen at the rate it is legal and illegal. If you aren't having kids in the country, you're born, then eventually the population does decline. Okay, so if you build all these homes, okay, and you don't have enough heads to necessarily fill the homes, then the Ponzi scheme doesn't work anymore. Okay. So you could say, oh, that's a good thing again, because houses are going to come down, there's more houses that we need that should be pretty cheap to live, okay? But if majority of net worth like trillions and trillions of dollars is tied into housing and that all gets wiped out, that gets cycled all through the economy, including the banks that collapse, including if you have money in the bank, you collapse with your savings because the banks can't lend out money. So all this stuff doesn't work anymore. The economic Ponchi scheme collapses, which is why the free markets are always best at dictating how many homes you should build, what is the price of a home, what is interest rates? Instead of the Federal Reserve controlling things, which is just another socialistic entity. That's the problem with the system. You said it right there. I don't even know what else to say. That's exactly, that's exactly what's going to happen. So hopefully these, hopefully going through puberty cracking your voice, hopefully these policies don't come to fruition. But we're in a very strange place where we just can't point out things that are dumb. I guess the one side is always going to argue that something is good, even if it's not. And for us, we're trying not to be in the political space. We're trying to be more in the market and economic space. But when these proposals are put out there, we have to comment on the absurdity of some of them. I guess it's kind of political silly season right now. They're, they're just, you know, spouting, spouting off and seeing what sticks. But, but, yeah, I'm not saying, I'm. Not saying I'm right about every. I'm not right about a lot of things, all right? I'm not the smartest guy in the room. I never will admit that I have the Socrates way of thinking. I mean, I know nothing, therefore I know more, ask more questions than anything. But my question is, do people in society not just take a step back and think about what are the repercussions, what are the cause and effect? What is five or six layers deep of this policy or this thing they're talking about actually gonna do? Does no one really think five, six steps deep? That's. Yeah, that's what I've started to realize, is no one is, no one does, is in depth. Very few actually take a step back and be like, hmm. Even one layer past the immediate, you know, results. Yeah. Yeah. Just, I think people just need to get more philosophical. Just take a step back and think. About things a little bit more. Just, yeah, sit down. Instead of watching tv and being told things like think for yourself and turn on your brain. So turn on the tv. Yeah, absolutely. So hopefully we help you do that every once in a while with these podcasts. So thanks for listening. If you guys have any questions, comments, show ideas, hit us up@infoconnect.com and we'll talk to you next time. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.