Real Estate Valuation Quotes

The problem with fiat is that simply maintaining the wealth you already own requires significant active management and expert decision-making. You need to develop expertise in portfolio allocation, risk management, stock and bond valuation, real estate markets, credit markets, global macro trends, national and international monetary policy, commodity markets, geopolitics, and many other arcane and highly specialized fields in order to make informed investment decisions that allow you to maintain the wealth you already earned. You effectively need to earn your money twice with fiat, once when you work for it, and once when you invest it to beat inflation. The simple gold coin saved you from all of this before fiat.

The case for bitcoin as a cash item on a balance sheet is very compelling for anyone with a time horizon extending beyond four years. Whether or not fiat authorities like it, bitcoin is now in free-market competition with many other assets for the world’s cash balances. It is a competition bitcoin will win or lose in the market, not by the edicts of economists, politicians, or bureaucrats. If it continues to capture a growing share of the world’s cash balances, it continues to succeed. As it stands, bitcoin’s role as cash has a very large total addressable market. The world has around $90 trillion of broad fiat money supply, $90 trillion of sovereign bonds, $40 trillion of corporate bonds, and $10 trillion of gold. Bitcoin could replace all of these assets on balance sheets, which would be a total addressable market cap of $230 trillion. At the time of writing, bitcoin’s market capitalization is around $700 billion, or around 0.3% of its total addressable market. Bitcoin could also take a share of the market capitalization of other semihard assets which people have resorted to using as a form of saving for the future. These include stocks, which are valued at around $90 trillion; global real estate, valued at $280 trillion; and the art market, valued at several trillion dollars. Investors will continue to demand stocks, houses, and works of art, but the current valuations of these assets are likely highly inflated by the need of their holders to use them as stores of value on top of their value as capital or consumer goods. In other words, the flight from inflationary fiat has distorted the U.S. dollar valuations of these assets beyond any sane level. As more and more investors in search of a store of value discover bitcoin’s superior intertemporal salability, it will continue to acquire an increasing share of global cash balances.

A major culprit is the valuation and financing of real estate. Banks are lending for real estate on the basis of the real estate’s value. They typically lend, according to where we stand in the real estate cycle, between 80% to 100% of the value. This is because real estate is allegedly a “safe” asset. This is by itself extraordinary. First, the historic volatility of real estate prices and the history of economic cycles reveal that real estate is not a safe, but a risky asset. Its physical nature does not guarantee its value. This over-lending to real estate buyers comes at the expense of lending to small business, which necessarily captures a smaller share of lending.

Mortgages on smaller properties like single-family homes are almost always guaranteed through the buyer’s own personal earning potential and wealth. You may be surprised to learn that larger investment property loans are secured by the asset itself. In other words, instead of the $2 million building riding on your own wealth, it is riding on its own valuation. This already is less risk to you.

First, the key to our prior success had been an inefficient market. The real estate industry had always been fragmented, with valuations and projections that often varied widely.

So that’s where to look for the bursts in the next real estate crash. It’ll come from those cities where foreign buyers and wealthy speculators have driven prices to the extremes, specifically Hong Kong, London, Singapore, Manhattan (as opposed to broader New York), Vancouver, San Francisco, and Sydney. On the flip side, the most affordable large cities in the United States are Atlanta, with valuations at 3.1 times income, Dallas at 3.7, Chicago at 3.8, and Tampa and Phoenix, both at 4.1. These are cities where everyday people can still (barely) afford houses.

Viewed from St. Louis, the history of capitalism in the United States seems to have as much to do with eviction and extraction as with exploitation and production. History in St. Louis unfolded at the juncture of racism and real estate, of the violent management of the population and the speculative valuation of property. The first to be forced out were Native Americans, who were pushed west and killed off by settlers and the US military. But in St. Louis the practices of removal and containment that developed out of the history of empire in the West were generalized into mechanisms for the dispossession and management of Black people within the city limits. And because removal is fundamentally about controlling the future, about determining what sorts of people will be allowed to live in what sorts of places, it is always concerned with the control of gender, sexuality, and reproduction; often women and children are singled out for particular sanction and targeted violence.