How did we create a society where we can’t afford to live in our own country?

“America’s affordable-housing stock dropped by 60 percent from 2010 to 2016” (Washington Post) is kind of interesting on its face:

The number of apartments deemed affordable for very low-income families across the United States fell by more than 60 percent between 2010 and 2016, according to a new report by Freddie Mac.

At first financing, 11 percent of nearly 100,000 rental units nationwide were deemed affordable for very low-income households. By the second financing, when the units were refinanced or sold, rents had increased so much that just 4 percent of the same units were categorized as affordable.

… affordable housing without a government subsidy is becoming extinct.

The study defined “very low income” as households making less than 50 percent of the area median income, and “affordable” rent as costing less than 30 percent of household income.

During the period in which the U.S. was a market economy this never happened, did it? People who were poor found crummy places to live. If poor couldn’t could afford the rent on crummy place then the landlord would have to reduce the rent.

Can we blame income inequality? Supposedly it was higher 100 years ago and poor people were able to afford crummy houses back then.

Can we blame rich people stealing all of society’s wealth? Again, wealth inequality was very high 100 years ago. In any case, a rich person may cause us to become sick with envy but he or she doesn’t usually occupy 50 apartments at a time. So it doesn’t make sense to blame rich people for reducing the housing supply, does it?

How about population growth? We’re stuffed with 325 million people now, with planeloads of immigrants arriving every day, and immigrants choosing to have lots of children once they’re settled here. (“Foreign-born Americans and their descendants have been the main driver of U.S. population growth, as well as of national racial and ethnic change, since passage of the 1965 law that rewrote national immigration policy. They also will be the central force in U.S. population growth and change over the next 50 years.” (Pew)) But we still have land on which we can build apartment buildings and, in a lot of cities, we can also build higher.

Finally there is government, which promises to pay for housing if a low-income resident of the U.S. can’t afford it (“means-tested public housing”). That’s a change compared to 100 years ago. Landlords can insist on rents higher than poor people can pay because they know that the government will pay. (“As a former affordable housing underwriter, I’d say that affordable housing is 1% altruism, 99% profit..” (Wall Street Oasis))

I’m wondering if the most likely answer is a change in the definition of “housing.” Americans live in roughly twice as many square feet per person compared to the 1950s. So the standard low-income unit today might be larger than the standard high-income unit circa 1950.

Could it be selective click-bait journalism? They picked 2010 as the base year because the economy was still sluggish after the Collapse of 2008 and therefore cheap housing was unusually cheap? 2016 is therefore less affordable than 2010, but not that different in affordability compared to 20 or 30 years ago?

Could it be that low-income Americans circa 1900 could afford housing, but it was so cramped that it didn’t meet our modern definition of “housing”?

What about blaming/crediting Malthus? On a planet populated by nearly 8 billion people, not everyone can expect to have his or her own room? (world population was roughly 1.6 billion in 1900) Evidence for a housing “shortage” being inherent given current population levels sharing only a single Earth is that newspapers in England are running the same stories, e.g., “Housing crisis threatens a million families with eviction by 2020” (Guardian): “Shelter says that in 83% of areas of England, people in the private rented sector now face a substantial monthly shortfall between the housing benefit they receive and the cheapest rents, and that this will rise as austerity bites and the lack of properties tilts the balance more in favour of landlords.” The situation seems to be similar throughout Europe, unless someone wants to live in a barn on a farm that is 50 miles from the nearest job: “Wild Rent Hikes Are Leaving Europe’s Cities Totally Unaffordable” (Vice)

Philip Greenspun’s Weblog

Join Us Friday for a Special Traders Talk Live Day of Webinars!

I’m so excited to join the line-up of expert traders who will be presenting various strategies for you all day Friday!

I’ll be discussing my favorite Trend Day Recognition and Trading Tactic – how to spot and profit from Trend Days – at 3:15 EST (right before market close) so be sure and register now (free) and join us.

I’m excited to hear from the other speakers as well!

For my topic, I’ll be discussing the following:

C’mon and join us!  Go ahead and register now and plan on attending one or all sessions live!

Thank you to Traders Talk Live for this exciting educational opportunity for the trading community.


Afraid to Blog

The happiest children in Spain live with two daddies

Americans like to gather statistics… as long as the numbers have dollar signs in front of them or are at least related to dollar figures (e.g., school test scores, which tend to predict employer demand for graduates).

Europeans, on the other hand, seem to be a lot more interested in how people feel. The Spanish, for example, have assembled a huge data set by surveying school children (roughly 10-18 years of age) and asking them, e.g., how satisfied they are with their lives. They also ask for a lot of demographic data and therefore it is possible to get some insight into what makes children happy.

On a slide featuring these Spanish data at the International Conference on Shared Parenting 2017, there was the same pattern that Malin Bergstrom and colleagues found in Swedish data on 172,000 children (see the Children, Mothers, and Fathers chapter for references): children who live with mom and dad in an intact family are happier than children who live in a 50/50 arrangement with a separated mom and dad who are in turn substantially happier than children who live primarily with one parent (i.e., parental separation makes children less happy, but children in 50/50 shared parenting aren’t all that different from their counterparts in nuclear families).

Much more interesting to me, however, was that the happiest children in Spain were not those who lived with their mother and father in a nuclear family. There was a yet happier group: those who lived with their two fathers. (This phenomenon cannot be explained by a preference for same-sex parenting; children who lived with their two mothers were extremely unhappy, one of the most dramatic differences in any two populations presented at the conference.)

Readers: Discuss! (I posted this on Facebook and there wasn’t a single comment. Either the above information is uninteresting or people are afraid to say anything about it! Of course I couldn’t resist noting that “for couples who really want the best for their kids it may be a good idea to look at transgender options”. Perhaps that was offensive? I don’t think it is that I have been defriended by all of the right-thinking folks on Facebook. An adjacent incredibly dull post about our 1.75-year-old’s first use of chopsticks got more than 30 “likes”)

[Separately, Spain is interesting for its regional variation in family law. Unlike France and Germany, but like the U.S., the law is different from region to region and outcomes are different from region to region even when the law is the same. For example, in some regions of Spain it is obvious that, post-separation, a child’s best interest is to be in a roughly 50/50 shared parenting situation and have ample access to both parents. Since 2010, this may be written into the law as a presumption. Across a state line, however, the statutory and/or judicial presumption will be that obviously a child’s best interest is to have a stable home base and be primarily with one parent, visiting the other parent occasionally. The regional prevalence of shared parenting tracks the legal environment and ranges from 8 percent to 40 percent (with an average of about 25 percent). Like Americans, Spaniards are comfortable with the idea that “justice” and “best interests of the child” may be completely different for two children living on opposite sides of a state or provincial border.]

Consistent with the first paragraph, I’m not aware of any way to compare Americans to their Spanish counterparts. The U.S. has more children not living with both parents than any other nation (both percentage and absolute), but nobody in the U.S. seems to care what is happening with these kids. Their living schedule and access to parents are governed by government court orders, but no state or federal agency bothers to track the contents of these orders. Therefore it would be impossible to say what percentage of children are living in shared parenting versus primary/secondary custody situations. We make K-12 students sit for standardized tests regularly, but I don’t think there are any questions about “How do you feel about your life?”

Philip Greenspun’s Weblog

New York Times discovers that it is expensive to live in Boston

“How Homeownership Became the Engine of American Inequality” (nytimes) advocates for a seemingly sensible economic policy (getting rid of the mortgage interest deduction), but I can’t see how the cited stories support the author’s argument. Here’s my published comment on the piece:

Affecting stories. And of course subsidizing unproductive investments in housing is a sure way to kill per-capita GDP growth (a worker who lives in a larger and nicer house does not get more work done), so it is hard to imagine a more counterproductive policy for an indebted government (which needs economic growth to pay off $ 20 trillion in debt) than the mortgage interest deduction.

That said, the author picked people who live in one of the world’s most expensive housing markets (Boston area) and they have kids and they want to have each child in a dedicated bedroom. Absent fellow taxpayers (many of them childless working drones) giving them subsidized housing, how was that ever going to work unless one parent had a high income?

There are some Americans who can afford to have kids with a moderate-income co-parent and a comfortable-sized house/apartment. There are some Americans who can turn a moderate income into a comfortable-sized house/apartment in a high-cost area. What this article shows is that the intersection of these two groups is non-existent without an ample helping of tax dollars contributed either by (a) those who have a higher income, or (b) those who don’t have kids.

Readers: Can you see a way in which eliminating the mortgage interest deduction would make housing in prime urban areas more affordable for low-income people who want multi-bedroom units? If killing the deduction slowed construction of new housing, wouldn’t the price of existing housing actually go up? And how does the mortgage interest deduction have a significant effect when we have (1) a growing population (due to immigration), (2) a demonstrated inability to construct new urban environments that are attraction?

[Separately, if you bought a house in Detroit or Cleveland 15 years ago you’ll be pleased to learn from the NY Times that “homeownership … is a proven wealth builder”]

Philip Greenspun’s Weblog

SMBU’s Options Tribe Webinar: Live From New York: The ten qualities we look for in SMB’s Options Desk traders

This week, Seth Freudberg will share the ten qualities that SMB’s Options Trading Desk is looking for in traders that we are recruiting. Andrew Falde, who will be in New York presenting the Netzero options trading strategy to a live audience of participants, will share his personal journey from retail trader to professional proprietary trader on SMB’s options trading desk. Read more […]
SMB Capital

WEBINAR MAY 10th – Live Mentoring with a succeeding retail trader on sizing

Learn how to size properly during a live mentoring session with a retail trader who has surpassed 100k in trading profits.  This succeeding trader is struggling to increase his size.  Mike Bellafiore offers mentoring to help this trader reach the next level. Read more […]
SMB Capital

SlopeCharts Is LIVE!

On Thursday, May 4th, I tried to do something that I’ve done for about 4,300 consecutive days: launch ProphetCharts. However, for the first time ever in those 4,300 days, it didn’t load. And it didn’t load for one simple reason: it doesn’t exist anymore. It was a strange feeling, but by virtue of planning ahead […]
Slope of Hope

Join Me Wednesday March 29 for a Live Market Forecasting Panel with Wyckoff Analytics

We’re doing it again!

I’m honored to be a guest of Roman Bogomazov and his team at Wyckoff Analytics for a live Market Outlook and Stocks Review.

We’ll be live March 29th at 3:00pm PST (6:00pm EST) with our session.

Here’s more details and how to register (free):

We had a great time on our prior January 4th panel where – if you watch the recording – we were correct about our calls in the S&P 500 (strongly trending higher), Oil (neutral to bearish future), and Gold (bullish rally).

What will Bruce, Roman, and I have to say about these markets today?

Bring your questions and individual stocks and we’ll use Wyckoff and classic technical anlaysis methods to forecast probable price pathways and potential opportunities for the near future.

Join us!

Thanks to Roman, Bruce, and his team for this amazing opportunity.


Afraid to Blog

Live Trading Class Today After the Close

Bella will be teaching a FREE LIVE online trading class today at 4:15 PM Eastern (NYC). 
During this class, you will…

Learn about the skill that takes traders to the next level
Watch recordings of three real trades that were taken on our proprietary trading desk.
See why tape reading is the best leading indicator
Discover how to find trades that chartists will never see

Register now to get your link to join the class for free after the close. Read more […]
SMB Capital – Trading Education