As homeownership becomes increasingly difficult due to high prices and mortgage rates, more people are turning to renting. Large corporations and private equity firms are buying suburban homes to capitalize on this trend. The shift away from homeownership could have significant financial consequences for future retirees who won’t have home equity as a major asset. This trend also benefits companies like Home Depot, as homeowners may invest in expanding and renovating their existing homes instead of buying new ones.

Transcript:

One of the things that’s happening right now is, is that people are starting to rent by the millions.

Yes. Rent is expensive, very, because sort of, you know, the rent market is being driven by the fact that people don’t buy houses.

But we may end up with a generation or two of people who are not homeowners and may never be.

Yeah, and you’re exactly right. And it’s not just people renting out apartments.

Large, large corporations and private equity, they’ve been buying up suburban homes for the last year in a big way, because they see that, they see that train coming.

For many decades, maybe the last century, people’s major asset was the equity in their homes.

You bought a home, 30 year fixed, you live in it for 28 years.

You’ve got, you have that, you remember you used to have the mortgage burning parties, you know, you take your, right.

And, that dream and the equity that goes with it, to me, that’s a financial consequence that we’re looking at maybe two decades out from now is that you may have people who do not have that slug of equity going into their retirement, which could change, could change the face of retirement 20 years from now a lot.

Yeah, it really could. I think you’re a hundred percent right.

And you know, some of the best investments I’ve ever had, we owned a place in Hawaii for over 20 years.

And we bought and sold three places there and made money on each one of them. The last one was really nice.

And, but are people going to be able to do that in the future?

Because the last one we sold was way above what we paid for it. And somebody had to buy it.

And, but you know, they did, but it’s, is it going to be only the wealthy or the Uber wealthy that can afford a second home or a nicer home from their entry level home?

Well, I think that that is going to happen. I think that you’ll see people keep the first home they bought.

Now, this is good for people thinking about a stock pick. This is good news for Home Depot.

If you have a house, you can’t afford a new house, what you can probably afford is taking your 2200 square foot house and turning it into a 2800 square foot house which is great for Home Depot.

I think that’s going to happen more and more.

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