Real Estate’s Falling Allure by Tomas Pueyo

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5. General

Real Estate’s Falling Allure by Tomas Pueyo

Welcome to the fifty-eighth edition of ‘3-2-1 by Story Rules‘.

A newsletter recommending good examples of storytelling across:

  • 3 tweets
  • 2 articles, and
  • 1 long-form content piece

Let’s dive in.


𝕏 3 Tweets of the week

Source: X

Of course, we also film events to create memories to relive them later.

But there is clearly a point to what Gurwinder is saying. Guess the Status Game has captured most of us.


Source: X

Wise words – and great use of contrast!


SourceL X

Super-detailed but fascinating graph.

So it turns out that not only are Italian, Chinese, Japanese and Thai the most popular cuisines across the world, these countries themselves are relatively insular in their own food choices

India is a good balance – ranked reasonably high in global preference while also being relatively more open to other cuisines!

📄 2 Articles of the week

a. ‘Why I Don’t Invest in Real Estate’ by Tomas Pueyo

Even though this article is focused on developed countries, it makes for fascinating reading – and is a well-structured data-story.

Tomas alludes to the prevalent belief in the West (especially in the US) that real estate prices will always rise because they have been doing so for several decades now – essentially the entire lifetimes of most folks living there.

Source: Tomas Pueyo

And then he widens the perspective – by going back in time, to indicate that this was not always the case and the period from the 1950s onward was a unique phase:

Source: Tomas Pueyo

I love how Tomas breaks down the factors that drove growth in house prices (and how those factors are now slowing down):

Housing prices used to be very stable. So why did they grow so dramatically in recent times?

Simply because demand has outstripped supply.

A. Demand

What drives the demand for housing?

– More people

– Who want to live in the same place: cities

– Who generally want bigger houses

– And who also might want fewer people living in the same household

Each one of these four trends has been growing incredibly in the past few decades, but is unlikely to keep growing and may even reverse.

Tomas then goes into each of the four factors above (and more) and explains what drove them in the decades till now and how they are all seeing a slowdown or reversal.

And of course, a key factor he talks about is remote work:

Remote Work

If the car can allow people to live dozens of kilometers away from downtown because they can travel at 30-50 km per hour, what happens when they can travel at 300,000 km per second? That’s the speed of light, which is basically the speed of your video call. When you work remotely, you are no longer limited by the Marchetti constant (maximum commute of 30 mins). At most, you’re limited by the timezone.

This final section gives a neat summary:

Over the last 75 years, demand for urban housing was driven by:
– Higher population growth
– More urbanization
– More homes per person
– Bigger homes

But supply ground to a halt horizontally and vertically:
– Cities grew as much as they could horizontally and the edge of our car suburbs hit the Marchetti constant.
– NIMBYs restricted building up, limiting supply

Now, we’re entering a world where all these trends are slowing down or reversing:
In demand:
– The population is shrinking or soon will
– Urbanization has reached its limits
– We have all the homes we need per person. That growth is stopping.
– Homes keep getting bigger, but that trend is slowing every year

In supply:
– Remote work eliminates the need to live close to work, which means the entire world becomes potential housing land supply
– Building restrictions can’t get any tighter, and will likely be relaxed

We’re moving from a world where people have only experienced growing housing prices, to one where they are likely to shrink.

Does that sound like a world where real estate will be as good an investment as it used to be?
Not to me. That’s why I don’t invest in real estate.

b. Note on the Encampment’ by the President of the University of Chicago

In case you are not aware, massive protests have been brewing in American university campuses against the Israeli offensive in Gaza. Things have taken a violent turn in many campuses.

Some students are justifying the protests under the banner of ‘freedom of expression’.

In this context, U-Chicago President Paul Alivisatos responded with this polite yet firm note.

The general principle we will abide by is to provide the greatest leeway possible for free expression, even expression of viewpoints that some find deeply offensive. We only will intervene when what might have been an exercise of free expression blocks the learning or expression of others or that substantially disrupts the functioning or safety of the University. These are our principles. They are clear.

The examples help explain his perspective better – you can read the full post below:

Source: X

The note reminded me of a well-known idea from moral philosophy: Your right to swing your fist ends where my nose begins.

🎧 1 long-form listen of the week

a. ‘The next global superpower isn’t who you think’ by Ian Bremmer (YouTube)

I was struck by this TED Talk (Apr-2023) that I came across recently. What I liked was Ian Bremmer’s framing of the global power order across 3 dimensions instead of the typical focus on just military power.

What kind of a world order might we expect over the next ten years? Some of what I might say I think will surprise you. Because we’re not going to have a bipolar or a unipolar or even a multipolar world. If we don’t have one or two superpowers, we don’t have a single global order. No, instead, we will have three different orders, a little overlapping, and the third will have immense importance for how we live, what we think, what we want, and what we’re prepared to do to get it.

The three dimensions are:

  • Security
  • Economy
  • Digital

On each dimension, the power structures are different. When it comes to military power, given the decline of the Soviet Union/Russia and China still being on the ascendant, clearly the United States is the pre-eminent global power. On the economy, things are more distributed, with China being a strong second and India rising.

It’s the third one, which was most interesting for me:

…there’s a third that is coming soon that’s even more important. And that is the digital order. And the digital order is not run by governments but by technology companies. We all know how much military support NATO countries have provided Ukraine during the war. But it’s technology companies that provided the tools allowing Ukraine to defend itself from Russian cyber attack. It’s technology companies that gave the Ukrainian leaders the ability to speak with their generals and their soldiers on the front lines. If it wasn’t for those technology companies, Ukraine would have been fully offline within weeks of the war.

Bremmer argues that technology companies are impacting us at a fundamental level:

Technology companies increasingly determine our identities. When I was growing up, it’s nature or nurture.

But today, our identities are determined by nature and nurture and algorithm. If you want to challenge the system, you can’t just question authority, as we were all told when we were growing up. Today, you have to question the algorithm, and that is a staggering amount of power in the hands of these technology companies. What are they going to do with that power? And that depends on who they want to be when they grow up.

He ends on a cautionary note – a note that has become even more relevant given the developments in AI in the last one year:

When I was a student back in 1989, and the Wall fell, the United States was the principal exporter of democracy in the world. Not always successfully. Often hypocritically. But number one, nonetheless. Today, the United States has become the principal exporter of tools that destroy democracy. The technology leaders who create and control these tools, are they OK with that? Or are they going to do something about it? We need to know.


That’s all from this week’s edition.

Photo by Diana Polekhina on Unsplash

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