Financial, Economic and Social Mood Update (April 2, 2026)
The subject of this month’s blog is housing, which has become too expensive for most people to afford and where high quality in new construction has all but disappeared. Housing and other real property comprise the biggest piece of the entire financially quantifiable asset base on planet earth and is continuing to change for reasons beyond what most people comprehend and certainly beyond our control.
Much of the change is due (as always) to evolving human demographic change. Put simply, the population of the earth is continuing to age which translates into an increasing median age, lower fertility (fewer and fewer children being born), smaller family size, smaller household size, less of a need for primary education staff (school district employees), fewer working people and more retired people. The older the population, the less vibrant, the less active and the less mobile it becomes. This is the reason why the average age of owner occupied housing is now no less than 16 years or more than double what it was during the seven decades immediately after the end of the Second World War in 1945.
Decades of asset inflation due to credit inflation caused by governments continuing to create credit (people often inaccurately refer to this as “printing money”) have made asset prices artificially high. At the same time purchasing power has continued to fall with declining real wages in particular in much of the so-called industrialized world. Much of the so-called developing world is no longer under so-called “imperial” or “colonial” authority which means that they are no longer as subservient to the so-called developed world. This means that more of the world has become more “competitive” in the modern industrial sense and that developed countries and their peoples no longer have as much of an artificial advantage which has existed for much of recorded modern human history or since the end of the Middle Ages.
Simply put, much of the world (and its resources) were stolen from indigenous populations which gave the mostly western or industrialized world a grossly unfair advantage. This was especially pronounced in the Western Hemisphere (North and South America), Australia & Oceania, Africa and Asia. It even took place in Europe where smaller and older indigenous cultures were overtaken by the much larger Indo-European or Indo-Germanic cultures.
Now back to the crux of housing or real property. The housing / real property stock is older than it has been in at least two hundred years. This translates into a never-ending need for repairs and renovation which have become very expensive. Furthermore much of the old forest stock of trees have been depleted which means that new lumber is of very young and poor quality. Add to this the ageing human demographic which means that there are not enough skilled laborers to build the necessary housing. It is not so much “new” housing that is needed as much as “repaired” or “renovated” housing. The existing stock of vacant or unused housing is actually very high. There is no shortage of housing – quite the opposite.
The factors of 1) the advanced age of the housing stock, 2) the related need to repair and renovate these homes and 3) the very low quality and durability of brand new construction mean that there is no real appreciation in value – the high prices are very closely related to the high cost of renovation and repair that went into these properties. Similar properties with little or no renovation and repair are thus markedly less expensive to buy because the new owners must bear the needed cost of renovation and repair which take both much time and money.
Due to high material costs and the shortage of construction labor it will make more sense to increase both manufactured and modular home construction. Site built homes now take years instead of months to complete, and quality is often so low that new homes do not last more than 15 years. The advantage of manufactured and modular home construction is that there are more regular quality controls in factories, costs are reduced and construction time is much shorter or faster.
The stock of vacant or unused housing in the USA is no less than 16 million units or 12 to 13 percent of the total. This is because many more affluent people own more than one home and because most existing properties are too expensive for people to afford. Note this is due to high price and NOT due to interest rates. Interest rates are actually historically quite low. And given the overall debt situation, lowering interest rates would be both artificial and moronic.
Many extended families live in more than one residence and as we have seen human mobility is actually in decline which translates into weaker economic demand. When this is taken into account something like 23 percent of the housing stock is either vacant or seldom used. Simply put we DO NOT need more new houses – we need better quality and more affordable repair and renovation for the existing stock of housing. Which leads us to two (2) very important and critical factors often left out of the public discussion: property tax and homeowner’s insurance both of which are skyrocketing in cost.
Property tax will not go away. Property taxes fund things such as schools, daycare, colleges, universities, police & fire departments, libraries, hospitals, roads and other infrastructure. Furthermore, when local bond measures pass by popular vote, guess what – property taxes go up. Homeowner’s insurance is the other big variable and these costs are driven primarily by CLIMATE such as flooding, wildfire, extreme heat, damaging winds and air pollution.
The average (mean and NOT median) property tax in the USA is now USD $5,255.73 per year. The median midpoint property tax among all 50 states and the District of Columbia ranges from USD $1,135.63 per year to USD $9,375.83. And remember that if one type of cost is relatively low in a particular area (say property tax) this will likely be balanced with higher income taxes. As I have said the many services funded by these taxes will never disappear.
The average homeowner’s insurance in the USA is USD $2,329 per year and there are big differences here as well due to the climate related issued mentioned above. The state with the most expensive homeowner’s insurance cost is Florida at USD $5,409 per year. And this is IF one can get insurance at all, because many name brand insurance companies are abandoning such high risk markets for obvious reasons. The Florida county with the highest homeowner’s insurance is Miami-Dade at USD $13,362 per year and this is not a small county – the population exceeds 2.8 million people. There is no way that most of these people are affluent. All 50 states and the District of Columbia are divided into four (4) quadrants related to annual homeowner’s insurance cost. The most expensive (high climate risk) states are Florida, Texas, Colorado and Nebraska. States in the second most expensive quadrant for annual homeowner’s insurance include Louisiana, Oklahoma, Kansas, Wyoming, South Dakota and Connecticut. The least expensive states for homeowner’s insurance are Nevada, West Virginia and Maine: https://www.youtube.com/watch?v=OOzkt04nhBE.
If it isn’t one thing it will be another. Many states with relatively lower property tax and/or homeowner’s insurance cost have very high housing prices and vice versa: many states with relatively low housing prices have very high property taxes and/or homeowner’s insurance cost. And all of these items tend to be balanced with state income taxes: in other words, lower property taxes tend to be balanced with higher income taxes and vice versa.
Geopolitical chaos caused by the Trump Administration
The suicidal decision of the USA and Israel to wage armed aggression against Iran is forever changing the entire world and we will never return to the “old world” of American dominance (since 1945) and a Zionist Apartheid state (since 1948). The changes heading our way are all closely interconnected with the topics covered in my most recent monthly financial and economic blogs. Namely, that our world is one big community which cannot be divided – our actions affect all of our neighbors on this globe. The issues of the gross inequality of the distribution of wealth, income and resources must be addressed and corrected. Environmental destruction must stop and resources must be monetized and place under global oversight. Furthermore, the ideal of “one person, one vote” must be met. The political change coming to the entire planet will not be unlike what happened in southern Africa – to Zimbabwe (formerly southern Rhodesia) in 1980, to Namibia (formerly Southwest Africa before 1990) and to the Republic of South Africa in 1994 when F.W. de Klerk agreed to free Nelson Mandela and thus concur that he become the first black President of a more modern South Africa. Voting franchises must be expanded instead of being restricted. Societies must become more inclusive and not exclusive. The so-called early democracies of the western world have a very long history of enforcing a very small and privileged electorate where the overwhelming majority of population groups have been excluded due to so-called “citizenship,” race, ethnicity, religious affiliation, age, property ownership, wealth, income and of course gender. The Anglo-Saxon model of representative government which grew out of the Magna Carta in England (June 15, 2015) and which spread from Great Britain to North America, Australia and New Zealand excluded more than 99 percent of the entire human population as recently as 1820, over 90 percent of humanity as recently as 1904 and more than 85 percent of the population as recently as 1924.
The end of “Pax Americana”: https://www.youtube.com/watch?v=Dt45p4wuNow&t=166s.
The final electoral bastion standing against this necessary change in the western world are the extreme or far-right wing near-fascist groups such as MAGA in the USA, Reform UK, the National Rally of France, the Brothers of Italy and Northern League in Italy, Vox of Spain, the AfD of Germany, the Freedom Party of Austria, the Swiss Peoples Party, Likud of Israel, Fidesz of Hungary, Law and Justice of Poland, the Finns Party of Finland, the Golden Dawn of Greece, the Sweden Democrats, the Flemish Movement in Belgium, the Azov group in Ukraine, the Libertarians of Argentina and the Party for Freedom in the Netherlands = the wished for fascist international being promoted by the likes of Steve Bannon. The end result (reality) of what they seek compares to what “United Russia” has given the Russian Federation since the demise of the former USSR – in other words, to replace the former status quo with right wing autocracy by appealing to the disgruntled population groups who feel “cheated” due to the collapse of an old order. They propose utterly simplistic (even infantile) solutions to utterly complex problems and always blame a needed “scapegoat” (“undesirable” population groups) for every single problem.
David Pakman on Trump’s imploding popularity: https://www.youtube.com/watch?v=icLt6xJ0d6U.
An excellent interview with Professor Richard Wolff: https://www.youtube.com/watch?v=9XziXtig9jE&t=1383s.
