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| 1. | Brandon Donnelly | 14M |
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| 9. | William Mougayar's Blog | 28.4K |
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I was reminded of this when I read this recent article in the WSJ talking about how the Chinese have started spending -- and taking on the debt -- like Americans, particularly among Chinese under 30. It is the inverse of the depression baby phenomenon. In this case, it is arguably years of economic expansion leading to greater comfort around financial risk.
Here are a couple of figures from the article:
JPMorgan estimates China’s ratio of household debt to gross domestic product will climb to 61% by 2020. That’s up from 26% in 2010 and higher than current levels in Italy and Greece.
The level in the U.S. is about 76%, after falling from 98% in 2006, according to the International Monetary Fund.
By another measure—the ratio of household debt to disposable income—China appears to have already surpassed the U.S. Its ratio reached 117.2% in 2018, up from 42.7% in 2008, according to calculations by Lei Ning, a researcher at the Institute for Advanced Research at Shanghai University of Finance and Economics. The U.S. peaked at 135% in 2007 and dropped to 101% in 2018.
Not surprisingly, the article goes on to talk about how this dramatic increase in household debt might be something to worry about. Maybe. I'm not an economist. But I do think this is designed to boost the Chinese growth machine and I do think it makes them less reliant on other countries -- such as, maybe, the United States.
The Wall Street Journal's recent piece about "Silicon Valley invading Toronto" is, in my view, describing a generally positive outcome.
We are one of the largest cities in North America (the exact ranking depends on where you draw the urban boundaries).
We have more enlightened views around foreign and high-skilled workers (I was given a short window in which to leave the US after I finished my first graduate degree there).
And we have a large and highly educated pool of tech talent (the salary differential discussed in the article looks to be, at least partially, a result of the weaker Canadian dollar).
I have been writing about algorithmic home buying on the blog since Opendoor launched back in 2014.
I don't have anything new to report on that today, but this recent article from the WSJ is interesting in that it talks about why Phoenix, in particular, has become ground zero for algorithmic home buying, as well as for institutional investors looking to buy cheap rentals.
Across Opendoor, Offerpad, and Zillow, nearly 500 homes are now being purchased -- largely by software -- in Phoenix each month:
I was reminded of this when I read this recent article in the WSJ talking about how the Chinese have started spending -- and taking on the debt -- like Americans, particularly among Chinese under 30. It is the inverse of the depression baby phenomenon. In this case, it is arguably years of economic expansion leading to greater comfort around financial risk.
Here are a couple of figures from the article:
JPMorgan estimates China’s ratio of household debt to gross domestic product will climb to 61% by 2020. That’s up from 26% in 2010 and higher than current levels in Italy and Greece.
The level in the U.S. is about 76%, after falling from 98% in 2006, according to the International Monetary Fund.
By another measure—the ratio of household debt to disposable income—China appears to have already surpassed the U.S. Its ratio reached 117.2% in 2018, up from 42.7% in 2008, according to calculations by Lei Ning, a researcher at the Institute for Advanced Research at Shanghai University of Finance and Economics. The U.S. peaked at 135% in 2007 and dropped to 101% in 2018.
Not surprisingly, the article goes on to talk about how this dramatic increase in household debt might be something to worry about. Maybe. I'm not an economist. But I do think this is designed to boost the Chinese growth machine and I do think it makes them less reliant on other countries -- such as, maybe, the United States.
The Wall Street Journal's recent piece about "Silicon Valley invading Toronto" is, in my view, describing a generally positive outcome.
We are one of the largest cities in North America (the exact ranking depends on where you draw the urban boundaries).
We have more enlightened views around foreign and high-skilled workers (I was given a short window in which to leave the US after I finished my first graduate degree there).
And we have a large and highly educated pool of tech talent (the salary differential discussed in the article looks to be, at least partially, a result of the weaker Canadian dollar).
I have been writing about algorithmic home buying on the blog since Opendoor launched back in 2014.
I don't have anything new to report on that today, but this recent article from the WSJ is interesting in that it talks about why Phoenix, in particular, has become ground zero for algorithmic home buying, as well as for institutional investors looking to buy cheap rentals.
Across Opendoor, Offerpad, and Zillow, nearly 500 homes are now being purchased -- largely by software -- in Phoenix each month:
US companies are gobbling up office space in Toronto. And presumably, this is one of the reasons why 139 new flights were added between Toronto and Francisco over the last two years. (Source: WSJ)
However, I do agree with the remarks from people like Jim Balsillie (Blackberry) and Harley Finkelstein (Shopify) that a better outcome would be the creation of more massively successful Canadian tech companies.
As Finkelstein points out, there's a big difference between 100,000 square feet of space for the HQ of a new and growing Canadian tech company and 100,000 square feet for a new branch or satellite office.
The stats we read in the papers about the number of tech jobs being created in Toronto generally don't speak to composition. Where in the value chain do these people sit? Where is the value accruing?
The intellectual capital is here. And we should be doing everything we can to foster and finance new homegrown ideas and businesses.
Image: WSJ
One of the reasons why Phoenix is well suited to these platforms is that the housing stock is cheap and fairly homogenous. (The WSJ calls it "stucco sprawl.") This makes it easier for the algorithms to put a value on the homes.
A big chunk of the housing stock is also relatively new. Just over 36% of it was built in 2000 or later. And it tends to trade fairly often. Below is the percentage of homes in 2018 that were resold within a year of purchase.
It's also worth noting that Arizona is a non-recourse state, meaning you're typically not personally liable if you default on your home mortgage. You simply hand back the keys. So it's viewed as a fairly risk tolerant state, which may be one of the reasons why Phoenix's median home price chart looks like this:
I'll end with this quote from the article: “It’s the dawn of e-commerce for real estate,” said Zillow Chief Executive Rich Barton. “Phoenix is ground zero.”
Charts: WSJ
US companies are gobbling up office space in Toronto. And presumably, this is one of the reasons why 139 new flights were added between Toronto and Francisco over the last two years. (Source: WSJ)
However, I do agree with the remarks from people like Jim Balsillie (Blackberry) and Harley Finkelstein (Shopify) that a better outcome would be the creation of more massively successful Canadian tech companies.
As Finkelstein points out, there's a big difference between 100,000 square feet of space for the HQ of a new and growing Canadian tech company and 100,000 square feet for a new branch or satellite office.
The stats we read in the papers about the number of tech jobs being created in Toronto generally don't speak to composition. Where in the value chain do these people sit? Where is the value accruing?
The intellectual capital is here. And we should be doing everything we can to foster and finance new homegrown ideas and businesses.
Image: WSJ
One of the reasons why Phoenix is well suited to these platforms is that the housing stock is cheap and fairly homogenous. (The WSJ calls it "stucco sprawl.") This makes it easier for the algorithms to put a value on the homes.
A big chunk of the housing stock is also relatively new. Just over 36% of it was built in 2000 or later. And it tends to trade fairly often. Below is the percentage of homes in 2018 that were resold within a year of purchase.
It's also worth noting that Arizona is a non-recourse state, meaning you're typically not personally liable if you default on your home mortgage. You simply hand back the keys. So it's viewed as a fairly risk tolerant state, which may be one of the reasons why Phoenix's median home price chart looks like this:
I'll end with this quote from the article: “It’s the dawn of e-commerce for real estate,” said Zillow Chief Executive Rich Barton. “Phoenix is ground zero.”
Charts: WSJ
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