Throughout my real estate investing career, which started in 1967 when I was a senior at West Point, I have repeatedly read about structural changes in real estate.
Predictions of 150 our of the last two structural changes
These were “things are going to be different from now on” articles. It has been said that economists failed to predict 148 out of the last 150 recessions. But futurists have predicted about 150 out of the last two structural changes.
Structural changes come into high relief in the long term. There was a structural change called the industrial revolution. The majority of American worked on farms including my father as a kid, then he and others left the farm and moved to the metro areas.
Another was the ability to produce cheap cars via the assembly line which moved people and businesses out of cities to the suburbs.
Another was the invention of the 30-year fixed-rate less than 20% down home mortgage. That was transformative, but less noticed b the public because of its technical financial nature.
The information/computer revolution is now taking place. But its resulting structural change is not clear.
At present, the media are straining to see the structural change, if any, caused by covid 19.
It is wise that we look so hard at the future. But jumping to conclusions about it prematurely is dangerous.
A recent one that seems to have collapsed was that the 21st century was the era of China. Americans were taking their small children there to learn Mandarin at the height of that. We had some heated arguments here about Americans learning Chinese in a world where English is the most studied language.
It is redundant and stupid for the Chinese to study English, which they are, and which is a far easier language to learn than Chinese, and for us to simultaneously study Mandarin. It’s like two guys each holding the door open for the other and each insisting on the other going through first.
When I was in grad school—1975-1977, we heard the same thing about the Japanese taking over the world. The book Japan as Number One was a best seller.
China is a Communist country. Communism does not work. It was tried in Russia, Cuba, Chile, Venezuela, Eastern Europe, North Korea.
Condos took a large market share of housing in the 1970s and since. I hate them and will not buy in them. Too much litigation and difficulty getting a mortgage. Too many incompetents managing large residential complexes without knowing what the hell they are doing. I wrote a book on how to manage that now in is 7th edition.
Has America been changed by covid? Yeah. But it was also changed by the Spanish Flu in 1918. Was that structural? No. It was like a drought. It passed.
Are people working more at home now? Absolutely. Will they all resume commuting to downtown office buildings when it is over? I doubt it.
However, not every massive change changes society. I have been working at home since 1978. Some people have always worked at home.
The Wall Street Journal yesterday wrote a big article about remote working remaking America. Among other things, they said small towns are building shared work centers to try to cash in on this. That is stupid. Remote working does not need buildings. Duh. Not needing buildings is the whole idea.
But the Journal also identified, however, did not realize the full implications of, the new dramatically increased labor-force mobility of the remote work discovery. This is about high-end workers. Low-end workers are still in the pre-covid era. They have a traditional work place and need to go there. They still do what my mom often cautioned me to avoid—working with their back or their personality as a waitress or some such. You cannot be a remote waitress. She urged me to work with my mind.
The likely structural change is that educated professional workers no longer need to go to the booming job market. For them, that market exists in many places.
It is the combination of this greatly enhanced mobility and our long noted “federal system” where we have 50 laboratories of democracy. Today, one laboratory called Florida is attracting refugees from Dem Marxist cities like the Oklahoma Land Rush. And another laboratory called New York is defiantly, gleefully chasing away its most productive citizens.
This has implications. Secession has lately been talked about. This is the way it will happen, not firing on some new Fort Sumter.
The battle will be between the Dems in DC trying to turn the US into one Marxist big inescapable state and Republicans showcasing their better way in the red state freedoms created by their local courts and legislatures.
Covid has freed educated Americans from their local job market, and their local Cuomo. Remote working lets you “work” in San Francisco while LIVING in Naples and telling places like New York City and Chicago to take their inner-city pathologies and taxes and regulations and shove them.
If there is a structural change in America due to covid, it is more likely that it will be that places like FL and TX and other red states have been given a tremendous recruiting advantage and abusive Marxist cities dependent upon, yet contemptuous of, capitalists, a tremendous retention disadvantage.
In 1969, there was a riot at a club called Stonewall in NYC. The club was gay. That was the night the gays stood and fought.
The Stonewall of modern free Americans may be the juxtaposition of Amazon spending years looking for its HQ2, choosing Queens, NY, then being humiliated and run out of town by AOC and DeBlasio followed by covid essentially saying HQ2 was so pre-covid.