I’m in Canada visiting family. The economy here is weird. 🇨🇦 🇨🇦

Brock's newsletter | OCTOBER 4, 2024

The economy here is sputtering for real - if the country were the 51st US state, it went from the GDP-per-capita of Montana a decade ago to just below Kentucky now.

A mixture of lack of consumerism, declines in the Canadian oil industry, and immigration policy…

But Canada's real estate prices are still insane. Overheard: “90% of Canada’s economy is just us selling houses to each other.”

Housing costs have become a huge political football (there’s an election coming) and the whole situation feels like a harbinger of things to come in the U.S. Imagine every political debate seen through the lens of housing costs.

There’s a philosophy described as the Housing Theory of Everything. It’s the idea that all of society’s issues (poverty, loneliness, traffic, pollution, etc.) are downstream from affordable, accessible housing. And to fix everything, all we need to do is build, build, build.

Even if you don’t believe it, we can all agree that expensive, inaccessible housing creates insane commutes, poverty, isolation, etc.

Building is always easier said than done, though, mainly because it’s hard to get homeowners on board the YIMBY train. Once you "get yours,” sympathy for those who haven't gotten theirs can dry up quick.

Because while homes have never been more expensive, what that also means is homeowners have never been wealthier: the amount of home equity in the US just hit the highest level since 1958.

And building is hard because all real estate development is under city control, not county or state. So you get little fiefdoms like La Canada and Santa Monica, which have allowed slightly more than zero housing units to be built since the 1970s. No affordable housing in their cities? They don’t care and like it that way. Luckily, the state has started suing cities to make them get on board to build.

But fundamentally, to create affordable housing, we need to build more. More supply. Here in L.A., in Canada, everywhere.

The economy in Canada is weird (high prices, bad economy), but there are signs it's getting weird here too. I just got two move-out notices for business tenants on York in Highland Park. Conversations with friends and news reveal turmoil and uncertainty in a broad swath of businesses: restaurants, entertainment, private equity…but job numbers were nuts today, and mortgage rates ticked back up in response. So, who knows?

Remember, low rates are for bad economies. Everyone thinks the market will go wild when rates drop, but rates drop in response to slowing economies.

Rates will stay up as long as things are humming, and as Warren Buffett said, “Despite some severe interruptions, our country's economic progress has been breathtaking. Our unwavering conclusion: Never bet against America."

Never bet against America.

And by the way, my wife is on FIRE, listing three gorgeous homes this week. They're all open. Go visit her.

Our Top Weekend Open House Picks

🔑 5206 Los Bonitos Way, Los Feliz - Mid-Century show-stopper featured in AD last year with a pedigree of notable architects & interior designers - Listed at $4,295,000 - Open Sunday 2-5pm