Scary New Facts About the Nation’s Housing Mess
There’s an old barn down the road from our place.
We drive by it and wonder about its story. It’s a sad tale. But it wasn’t always that way.
We can’t help but know what hurt that old barn is about to hurt millions of Americans.
You see, that old barn used to be the centerpiece for a healthy, family-run dairy farm. As with so many barns like it, it was built in the late 1970s.
That’s when, you may recall, Jimmy Carter handed dairy farmers a “gift.” He subsidized milk prices… pumping more than $2 billion into the industry.
When he did, barns like the one down the road went up all across the countryside. Times were good. Milk was flowing.
Soon enough, though, too much milk was flowing. Everybody wanted some of that easy milk money.
Cure Worse Than the Disease
With prices falling, the government had to step in and intervene once again.
You’ve certainly heard of its chosen path… government cheese.
It was bad stuff.
But even giving the stuff away couldn’t get rid of the glut fast enough.
Eventually, Uncle Sam was sitting on some 500 million pounds of dairy products. They started to get old and moldy.
Then the worst happened… The foul winds of government intervention changed direction.
The Ag secretary showed up at the White House and hosted a press conference. He held up a spoiled block of cheese and set the fate of that barn down the road.
“We’ve got 60 million of these that the government owns,” he warned. “It’s moldy. It’s deteriorating.”
With that, the government began its long journey to get out of the cheese business.
When it did… it took the dairy business with it.
The little guy, as you’ve surely heard, can’t make it these days. Even with government guarantees and handouts, prices are below his cost.
Coming to a House Near You
That swings us around to a bit more of a modern topic… one that will surely lead to more dereliction dotting our nation’s beautiful countryside.
What’s happening today is more proof that the little guy can’t make it on his own.
But this time we’re not talking just about dairy farmers… We’re looking squarely at the majority of Americans.
Take the nation’s housing situation.
It’s a mess.
You’ve surely heard about the boom in prices.
And you’ve surely heard about the huge eviction crisis that’s just weeks or months away.
But we bet you haven’t heard the facts. When you do, you’ll see that old dairy barn is begging us to take its lesson seriously.
It’s another dire tale of government intervention gone wrong.
Growing the Ranks
We’ll start with the evictions. That side of things is clear. Millions of Americans lost their jobs. About half of those jobs won’t ever come back.
It’s devastating to an entire class of Americans.
Nearly 13 million of them now owe an average of $5,400 in late rent. Added all together, Moody’s tells us the hole could be as big as $70 billion by the end of the year.
For context, the mortgage crisis of 2008 put only 3.8 million folks out of their homes.
This looming crisis is more than three times as large.
But the government and its handouts have made things even worse. Instead of giving out free cheese, the government has handed out free money… trillions of dollars.
And that free money – directly or indirectly – went to every person in the country – whether they needed it or not.
Companies were propped up. Jobs were saved. Businesses were inflated.
It’s created some impressive bubbles.
Many of the folks are taking their free money and getting out of town… literally. They’re moving to the suburbs like never before.
It’s raising home (and therefore rent) prices in a way we’ve never seen before.
Prices are booming despite a historic recession – proof that only something as powerful as an inept government could be behind the move.
With so many folks using all that free money (the Fed has printed $3 trillion so far this year) to push prices higher, it’s creating quite a gap between the folks with jobs and the folks without.
It’s just like the dairy industry… where the little guy can’t survive.
Getting Worse
Proving the point, just yesterday The Wall Street Journal ran a piece about soaring rents.
“Landlords are able to raise rents right now at a rate that is high in normal times,” said an industry researcher. “It’s ridiculously high when you put it in a backdrop of a recession.”
Rates are rising by 5% or more.
Lots of folks can’t pay the bill. And lots more are paying it with debt. The amount of folks using their credit cards to pay their rent has soared by 50% from this time last year.
That’s not good.
They’re trading one devil for another.
Of course, we know what you’re thinking. The government will never allow tens of millions of folks to get evicted. It’ll never toss them all on the street.
We agree.
But what will Washington do?
What it’s always done…
Print more money… launch more subsidies… and create more derelict dairy barns down the street.
America is pumping its fist as the elections come to a close and Pfizer promises some hope maybe next spring. The mood is high… for now.
But a vaccine merely stops the cutting. It doesn’t stop the bleeding… and it certainly doesn’t heal the wound.
This story is far from over.
So pay attention… please.
The only way to survive this mess is to do whatever you can to stay on the positive side of the trend.
Wisely invest free money that comes your way.
Don’t sit on the sidelines as prices soar.
And stay above the devastation.
Have questions on how Andy sees this devastation unfolding and what to do about it? Send them to mailbag@manwardpress.com.