Red Lion

This logic makes sense to me, but I think there are a lot of other factors that play a role. Couldn't it also have something to do with the fact that renters tend to have less capital so affordability weighs on rents before home sales? Seems like this could have something to do with the "K shaped" recovery everyone talks about. Renting a home is sort of like a commodity, whereas buying a home has a collectible type value layered on top (having pets, growing a garden, painting the walls whatever color you want, etc.) If I've got $10 million and want to buy a new house, I'm not going an indefinite timeframe for a bargain, whereas if I've got $8,000 a month income and I don't have anywhere to live, I'm going to pay market rent while I continue to save for a big enough downpayment to make the numbers work. I also suspect the huge build out of multi family that started around 2020/2021 may have played a role in slowing rent growth over the last 6 years. The replacement cost for homes (not just the price) also went up enormously since 2020, and since those multi family units have all hit the market by now, and the economics don't really make sense to build a lot more multi-family (what with much higher construction costs and carrying costs), I suspect the next 5 years see rent prices increase a lot faster than home prices.

These are great points, but on the flip side and maybe this partially explains the push to build bigger homes, it costs a lot more per square foot to build a smaller square footage home, which is one reason I don't think we are cranking out 1,200 square foot homes. I've run the numbers a few times on building ADUs in the 800-1200 square foot range to rent out, and it doesn't make a lot of sense when you can buy an existing house on a separate APN# for a similar cost. Some of this could be California specific, but no matter where you build, you're going to be sinking the most money on kitchens/bathrooms/adhering to modern building codes/utility hookups/permits, so building a home 25-50% larger doesn't increase the price by nearly 25-50%. Really interesting point about open floorplans, I hadn't considered that before.

Absolutely, earn more. I’m not sure there really is a political fix to the housing issue. California made a lot of reforms to streamline the construction of guest houses, and costs have continued to go up. Labor and materials and modern building codes are very expensive everywhere. If anything lowers the price of construction it’s going to be technology or manufacturing companies, not politicians. And it feels to me like there’s more upside to rent than there is to house prices themselves. So accepting “I’ll never own a home” is very risky.

I don't disagree with this, but it's more complicated than just that the purchase price needs to come down. If the purchase price was far higher than the cost of building new homes (including land, site prep, utilities, infrastructure, etc.), then we could just build a ton of new housing stock. In many parts of the country, the purchase price of a home is lower than the all in cost of replacement. I just asked chatGPT about the net increase in the housing stock, and it's currently running 1-1.3 million a year (if chatGPT is to be trusted, and I thought I'd rather take the easy way out rather than dig through Fred) on a housing stock of about 150 million. So well below 1% net increase in the housing stock. I also asked ChatGPT what the population increase has looked like since Trump took office the second time (at which point it slowed down for obvious reasons), and that's supposedly averaged around 0.4%. Another factor, is that single member or single parent households have been exploding over the last several decades, so unless that demographic changes, there are more homes needed per person. Why would the purchase price come down (barring financial or real estate crisis) if there's a structural shortage of homes, we aren't building them fast enough, and the price of building a home is equal to or higher than buying one? To me, it seems like the most likely scenario is that housing/rent continues to eat up a larger share of budgets than it did in the past.

If the puts usually expire worthless and you’re putting in 3%, that’s basically a 10% return on 30% cash. Where the cash itself earns about 3.5% right now. I doubt you come out ahead with this approach over the long run, unless you’re just marketing timing. if you are living on portfolio draws at 4%, how many years worth of cash do you really need? Especially if your stocks pay some dividends? Maybe 10-15% tops to avoid selling during a protracted down market.

You could use bull put spreads. I just pulled up Micron out of curiosity, lots of ways to create a 100-200% gain if the price drops a little by next June (with a 100% loss) if it doesn't. I think you could do 500-700% with a drop to $500 if you go further out of the money.

Very impressive.

Makes sense, seeing the same thing with my new ADBE position. If only my alt asset managers would get out of the penalty box.

These have been wildly volatile, I started building a position in BRO/RYAN only to see huge short term unrealized losses, now I'm actually in the green on BRO and down under 10% on RYAN.

Maybe they're trying to sail through any type of insider lockup so they can start dumping shares on the market when multiples improve?

I'm down 7% YTD, which is pretty terrible particularly considering the index performance. Eats up the last few years of outperformance. On the bright side, I feel good about my current portfolio composition.

Don’t you hold cash/t-bills? Or am I mistaking you with another poster?

I’ve got about $750 sitting in kalshi, and there’s an error every time I try to withdraw my funds. Annoying. And a red flag.

This is a great open-minded post. Open mindedness is incredibly rare when it comes to Trump.

I've been dealing with pros and cons of having a second home/vacation residence, and I feel like going somewhere a few months a year is optimal (if you can swing it with your work/family obligations), and then just getting a commercial flight and keeping a car in the garage can work out great!