How Is American Housing Against Other Countries?
In this issue:
Market Snapshot ??
Banana Bits ??
Paradise Means Leaving Thumb Drives Behind
You’ve got enough things to worry about. A thumb drive full of deal docs and data shouldn’t be one of them.
With SRS Acquiom, it doesn’t have to be. Because once your files are up and organized on the VDR, they can stay there until you decide to take them down. Since there’s no additional charge to keep the VDR open, it’s totally up to you whether and when to close it. In the meantime, all that confidential data stays as secure as ever.
It gets better: transparent, flat-rate pricing for however many users and uploads you need, for as long as you opt to keep the VDR open. No pay-by-the-page nonsense or unexpected upcharges here.
It’s obviously a win-win as far as VDRs go. It’s also one more way SRS Acquiom maximizes efficiency throughout the deal process— from due diligence, to payments, all the way through post-closing. That’ll keep your clients happy and you looking great at what you do.
Need more convincing?
Macro Monkey Says ??
Americans Should Stop Complaining
Anytime you tell someone, “It could always be worse!” remember that you’ve just increased your odds of getting punched in the face by at least 10x.
That said, the American housing market is bad. But remember, it could always be worse.
And, it is worse—a lot worse—everywhere else on the planet. Let’s get into it.
What Happened?
The Organization for Economic Cooperation and Development (OECD) recently published a study comparing housing across all 41 nations.
And, (un?)surprisingly, the United States has the best combination of housing size, quality, and affordability, according to their data.
Aside from this chart being an eyesore that would make Stevie Wonder throw up, it shows the OECD’s summary of housing conditions measured by rooms per person, access to “basic needs,” and cost as a percent of income.?
The United States leads the league in “basic needs” at 99.9%, which measures private access to things like toilets, clean drinking water, and (probably) semi-automatic firearms—y’know, basic needs.
Meanwhile, the U.S. and New Zealand placed second in “rooms per person” at 2.4. Only our neighbor to the north came out ahead, with Canada flexing 2.6 rooms per person.
Finally, the U.S. ranks 9th in affordability, which came as a shock to me as I would’ve assumed we were in the bottom half.
But, compared to most other OECD countries, the United States is really big and really spread out. The average home in the Northeast or California is more expensive than the OECD average, but homes in the South and Midwest/West are the opposite.
In total, the average American household spends 18.3% of their total income on shelter. The gold medalist in affordability, South Korea, spends just 14.7%, while the least affordable country, the Slovak Republic, spends 27.4% on housing.
Who Cares?
Despite clear issues with the U.S. housing market, such as my distinct lack of owning a home, it turns out U.S. housing is one of, if not the, best housing markets in the world.
Programs like Section 8 and Section 202, providing affordable housing to low-income workers and low-income seniors, respectively, partially contribute to this.
However, it appears that the lack of government-sponsored housing is part of the secret to success. Rent control is limited and state-by-state, while homeownership is strongly incentivized in the U.S. tax code and American culture.
But, the greatest secret to success in U.S. housing is the standardization of the 30-year, fixed-rate mortgage. Canadian and European countries have a greater reliance on variable rate or shorter-term mortgages, giving less certainty to buyers.?
In terms of the quality of life created by housing, however, the U.S. falls precipitously when we step out our front door.?
The U.S.’s preference for suburban sprawl and strict zoning laws, as opposed to mixed zoning regulations in Europe and elsewhere, creates cities riddled with traffic and a lower degree of connection to the community.
The Takeaway?
No wealthy nation, such as those in the OECD, has figured out housing.
There are pros and cons to each system. But improvement is needed across the board, especially when we just got New Home Sales data like this:
New Home Sales in the U.S. fell through the floor in May to an annualized rate of 619k, an 11.3% decline from April and 16.5% compared to May of last year.
The good news is this weak demand led to a 0.9% decline in median sales price to $417.4k
Fingers crossed, it keeps moving in that direction, ideally low enough to get U.S. shelter costs in the same league as Korea’s.
What's Ripe ??
领英推荐
FedEx (FDX) ??15.5%
Rivian (RIVN) ??23.2%
What's Rotten ??
General Mills (GIS) ??4.6%
Paychex (PAYX) ??6.1%
Thought Banana ??
Apple vs. The World
Although the EU’s tech sector is about as lively as its blacksmithing sector, they sure have led the way on the regulatory front.
Having legislators who are not entirely made up of geriatrics who just learned what Bluetooth is is much help, but I digress.
Europe is picking on Apple once again. And, this time, it could be not only Apple’s biggest ever fine—but the biggest fine ever paid by a corporation.
What Happened?
On September 14th, 2022, the EU signed into law the Digital Markets Act (DMA), a first-of-its-kind regulation meant to promote and enhance competition on the internet and digital platforms.
The law identifies “gatekeepers,” as they’re called, and requires them to, among other things:
As of right now, there are 6 “gatekeepers” in the entire world. They might sound familiar, including:
And already, Apple has allegedly violated the DMA.
According to EU antitrust regulators, Apple’s App Store practices are in breach by not allowing developers to interact directly with consumers, preventing them from steering consumers to cheaper alternatives.
These “anti-steering” laws prevent Apple and other “gatekeepers” from blocking user’s access to alternative products, services, and subscriptions.?
Further, these laws call into question whether Apple’s long-time practice of disallowing third-party app stores is permissible under the DMA.
As the nail in the coffin, the European Commission also said Apple’s 30% fee charged to most developers “go[es] beyond what is strictly necessary,” meaning Apple is using monopolistic powers to extract higher fees than it otherwise would.
Needless to say, Apple disagrees, arguing that limiting interactions between developers and consumers is important for security issues.
Apple says they’ve made the necessary changes to comply, allowing developers to direct users off-app and to the internet to complete purchases. Go ahead—try to buy a Spotify audiobook on an iPhone, and let me know how that goes.?
The Takeaway?
The DMA is a bold and broad regulation that critics say could, like the GDPR, inadvertently slow innovation even further in the EU.?
But, if found in breach, Apple could face fines of up to 10% of its global revenue. In 2023, that amounted to $394.33bn, meaning the firm’s max fine could be as high as $39.43bn.
That would be the largest fine ever paid by a company, surpassing the $20.8bn paid by BP for destroying the Gulf of Mexico and Volkswagen’s $30bn in fines paid for “Dieselgate.”
With over $67bn in cash & marketable securities on their books, however, I don’t think CEO Tim Apple—I mean—*Cook is too worried.
The Big Question: Will the DMA lead to increased competition in European and global tech markets? What changes, if any, will Apple and others have to make?
Banana Brain Teaser??
Previous ??
A pharmaceutical company received $3mn in royalties on the first $20mn in sales of the generic equivalent of one of its products and then $9mn in royalties on the next $108mn in sales. By approximately what percent did the ratio of royalties to sales decrease from the first $20mn in sales to the next $108mn in sales?
Answer: Roughly 45%
Today ??
Club X has more than 10 but fewer than 40 members. Sometimes, the members sit at tables with 3 members at one table and 4 members at each of the other tables, and sometimes they sit at tables with 3 members at one table and 5 members at each of the other tables. If they sit at tables with 6 members at each table except one and fewer than 6 members at that one table, how many members will be at the table that has fewer than 6 members?
Send your guesses to [email protected]
Wise Investor Says??
“Sometimes life hits you in the head with a brick. Don’t lose faith.” — Steve Jobs
Today's Peel??
??All the bananas? ? ???Meh? ? ? ? ??Rotten AF
?
Happy Investing,
David, Vyom, Jasper & Patrick