You know, I was walking to the studio today,
just looking up at the skyline. You see these
massive glass towers, the row houses, the construction
cranes swinging over the street. And it just
feels like the backdrop to our lives. It's just
there. It is. It's the stage we act out our lives
on. We wake up in it. We go to work in it. We
visit friends in it. It is the, well, the omnipresent
container of human activity. Exactly. But then
I started reading through the research stack
we have for today, this comprehensive deep dive
into real estate. And I realized... I've been
looking at it all wrong. We tend to think of
it as home or rent or the mortgage bill due on
the first. But if you peel back the paint and
the drywall, it is actually a massive complex
machine. It's a machine that eats nearly 40 %
of the world's energy. It's a machine where four
cents, four measly pennies, once bought an entire
acre of land. And frankly, it's a machine where
some of the most expensive apartments in New
York and London aren't homes at all, but basically
Swiss bank accounts made of... concrete, and
glass. That is the dark side of the asset class
we'll definitely get to later. It is fascinating
how a building can just cease to be a shelter
and purely become a financial instrument. We
are going to cover all of that. We're basing
this deep dive on a massive review of the real
estate entry, and it covers everything from ancient
Roman law to modern algorithmic pricing. Our
mission today is pretty straightforward. We want
to take you from just occupying a space to actually
understanding the estate you're in. We need to
decode the jargon fee, simple hedonic regression,
the difference between a condo and a co -op,
and look at the history of how we decided that
a human being could own a piece of the planet.
Which is such a weird concept if you really stop
to think about it, pointing at the ground and
saying, this dirt is mine. That dirt over there
is yours. It's a very weird concept. It's a shared
fiction, really, that holds the global economy
together. So let's dive in. I want to start with
the vocabulary because I think most of us use
land, real estate and property as, you know,
synonyms. If I say I bought some property, everyone
knows what I mean. But the source material makes
a pretty sharp distinction here. It does. And
legally, that distinction is everything. If you
are going to understand this topic, you have
to separate the physical from the abstract. Real
estate is actually a compound term. You have
the real and you have the estate. Okay, let's
break that down. What is the real part? The real
part refers to the physical land, the dirt, the
rocks, the geography, the crust of the earth.
It is tangible. You can, you know, kick it. And
the estate? That sounds more formal. The estate
part. That's entirely abstract. The estate refers
to the interest or the rights a person holds
regarding that land. It's a legal concept, not
a physical one. So you can have the land without
the estate. Exactly. Or, more commonly, you can
have an estate in the land without owning the
dirt forever. Think of it like this. Real estate
isn't just a thing. It's a bundle of rights.
A bundle of rights. I've heard this analogy before,
the bundle of sticks. Yes, it's the classic law
school analogy. It's a really good one. Imagine
you are holding a bundle of sticks. One stick
is the right to build on land. One stick is the
right to mine under it. Okay. One stick is the
right to walk across it. One stick is the right
to keep other people off it. That's the right
of exclusion. And when you buy a house, you assume
you're getting the whole bundle, the whole big
pile of sticks. You assume so. But sometimes
some of the sticks are missing. Like if there's
an easement for a power line, is that what you
mean? Right. The power company holds that stick.
You have the right to cross your land to fix
the wires. You can't stop them. So you don't
have the full bundle? Not at all. Or in many
parts of the U .S., you might own the surface
rights, the grass and the house. But someone
else, maybe a big energy company, holds the stick
that lets them drill for oil or mine for coal
right under your kitchen. Wow. So you still have
the real estate, but your estate, your interest
is limited. Precisely. You own the surface. They
own the subsurface. It's why reading the deed
is so, so important. You need to know how many
sticks are actually in the bundle you are buying.
That makes so much sense. Now, looking at the
physical definition in the source, it lists the
obvious stuff, land, buildings, but then it lists
natural resources. Yes. Anything that is naturally
attached to the land. is part of the real estate.
Crops, timber, minerals, water, that seems standard.
If I buy a forest, I own the trees, that tracks.
But then I saw this in the source material and
I had to double check it. Wild animals. Yes,
ferre nature. Explain this to me. If I buy a
generic three -bedroom house with a backyard
and a squirrel runs across the fence, do I own
the squirrel? In a manner of speaking, under
the old common law definitions of real property,
yes. The wildlife that is strictly on the land
is considered part of the natural resource package
of that land while it is there. So if the squirrel
leaves, if it jumps into my neighbor's yard...
It's not your squirrel anymore. If it hops over
the fence to your neighbor's yard, it becomes
part of their real estate. That is wild, literally.
It's a fascinating remnant of a time when land
wasn't just for living, but for subsistence.
You bought land to hunt, to fish, to forage.
So the deer in the woods or the rabbits in the
field were just as much a part of the asset's
value as the timber or the water. They were resources
to be harvested. It really highlights how all
-encompassing this definition is. The source
uses the phrase immovable property. That seems
to be the golden rule here. That is the defining
characteristic. Real property is immovable. Personal
property is movable. The source material spends
a lot of time on this distinction between real
property and personal property. And it feels
like one of those things that causes a lot of
arguments during a divorce or a sale. Oh, it
causes endless lawsuits because the line can
be blurry. The test is usually, is it permanently
attached? Right. If you have to use a tool to
remove it or if removing it would damage the
property, it's generally considered real property.
So the house is real property. The car in the
driveway is personal property. Easy. But what
about the chandelier in the dining room? Ah,
the classic trap. This is where deals fall apart.
Generally, once you screw it into the ceiling,
it becomes a fixture, becomes part of the house.
It's immovable. So if I'm selling my house and
I have this heirloom crystal chandelier I got
from my grandmother, I can't just take it with
me. You better take it down and replace it with
a cheap one before you show the house. Or you
have to write it into the contract explicitly.
Chandelier excluded. Otherwise, the buyer expects
the light fixtures to stay. They bought the real
estate and the fixtures now attached to it. The
source used a great example regarding farms to
illustrate this. The rolling stock. Right. The
tractors, the plows, the combines. Those are
expensive pieces of kit. Extremely expensive.
Yeah. But they move. They have wheels. So they
are personal property. They're chattel. You buy
the farm. You get the barn because it's a building
real property. You get the fences because they
are dug into the ground real property. But the
tractor. The old owner drives that away unless
you buy it separately. I like the shake test
I've heard before. The shake test? I haven't
heard that one. Yeah. If you took the property,
turned it upside down like a dollhouse, and shook
it, everything that falls out is personal property.
Everything that sticks is real estate. That is
a very good rule of thumb. The sofa falls out.
Personal. The fireplace mantle stays put. Real.
Okay, so we know what it is, but who can own
it? The source lists a bunch of entities in the
U .S. context, individuals, corporations, nonprofits,
fiduciaries. It's a very open market in the U
.S. Almost any legal entity can hold title to
land. This isn't true in every country, but in
the U .S., a corporation has the same property
rights as a person. And within that ownership,
we have these tiers. The source mentions fee
simple. I see this on forums all the time, but
I never really knew what it meant. It sounds
like a medieval tax. It does sound medieval because
it is medieval. Fee simple comes from feudal
law. But today, it is the absolute top of the
food chain in ownership. It's the whole bundle
of sticks. So if I have fee simple ownership,
what does that mean in plain English? It means
you own it completely. You have the full bundle.
You can sell it. You can destroy it. You can
leave it to your kids and your will. There are
no time limits on your ownership. It is yours
forever or until you decide to get rid of it.
As opposed to what? What's the alternative? As
opposed to a life estate, which the source also
mentions. This is a common tool in estate planning.
Okay. How does that work? Let's say an elderly
parent wants to give their house to their child
to avoid probate later. But they want to ensure
they can live there until they die. They don't
want the kid to kick them out, right? Makes sense.
So they might transfer the property deed to the
child, but retain a life estate. So they own
it, but not really. They own the right to use
it and occupy it for the duration of their life.
But the moment they pass away, that life estate
vanishes and the full ownership interest automatically
snaps to the child. The parent can't sell the
house to a stranger and run off to Vegas because
their interest is limited to their heartbeat.
It's amazing how these legal tools allow us to
slice and dice time and space. You can own a
place for a timeline, not just a physical boundary.
It's all about control. Who controls the land
and for how long? That is the essence of the
estate. Speaking of time, let's go back way back.
Because the idea that a person can point to a
patch of earth and say, mine, that isn't a law
of physics. It's a story we decided to agree
on. It is a social construct. Absolutely. Nature
doesn't recognize property lines. A wolf doesn't
care about your fence. The source traces this
back to Roman law and Greek philosophy. The Romans
were the great codifiers. They gave us the framework
of dominium total control. They were obsessed
with defining boundaries. But the source makes
a really interesting jump to the 15th and 16th
centuries. The era of natural law. Right. You
have philosophers debating the nature of man
and government. And they start arguing that property
ownership is a natural right. Meaning it's God
-given. Or something else. Meaning it's inherent
to being a free human being. The argument was
something like, I own my body, therefore I own
the labor of my body, therefore I own the fruit
of that labor. And if I use my labor to farm
a piece of land, I should own that land. This
was a radical thought at the time, wasn't it?
Incredibly radical. Before that, the king owned
everything and you just leased it from him. This
shift in natural rights meant that property was
something the government couldn't just take away
without a very, very good reason. And this spilled
over into international relations. The source
brings up a treatise from 1758 by Emmerich de
Vatel, The Law of Nations. Vatel is huge. He
was trying to figure out how nations should talk
to each other in a civilized world. And he argued
that protecting private property was a key part
of international stability. How so? Well, imagine
a French citizen owns a vineyard in Germany.
If France and Germany go to war, Vettel argued
that the German government shouldn't just seize
that guy's vineyard. The property rights of the
individual should transcend the conflict of the
states. So property rights started to transcend
borders. Exactly. It set the stage for modern
foreign investment. It's a reason why today you
can buy a condo in London or Tokyo and feel reasonably
secure that the government won't just steal it.
While the philosophers were thinking about it,
the British were actually doing it. The source
talks about the birth of the real estate profession
in England in the 1500s. It started with agriculture.
England was moving away from feudalism. They
needed to clear land, drain swamps, and farm
more efficiently to feed the growing population.
So they needed people to measure it all. They
called them surveyors. Which is a term we still
use, but usually for the guys with the tripods
on the side of the road wearing neon vests. Back
then, they were the valuers. They weren't just
measuring the perimeter. They looked at the soil
quality, the water access, the timber stand.
They told the lord of the manor what his dirt
was actually worth in terms of production. And
interestingly, the source notes a linguistic
shift. In England, it was surveying. But when
the practice jumped the Atlantic to North America...
It became appraising. Appraising. Put a price
tag on it. Which makes sense for America. America
was a land market. Everything was for sale. In
England, land stayed in families for generations.
In America, land was a commodity to be traded.
Which brings us to the sale of the millennium.
The Louisiana Purchase, 1803. The deal that made
America. I want to pause on this because the
numbers in the source blew my mind. I think we
all learned in school Thomas Jefferson bought
Louisiana from Napoleon. Right. We see the map
in the history book, the big yellow section.
But let's look at the scale. This wasn't just
the state of Louisiana. This was the entire middle
slice of the continent. From New Orleans all
the way up to Montana, it's about 828 ,000 square
miles. It doubled the size of the United States
overnight. It fundamentally changed the nation
from a coastal republic to a continental empire.
And the price tag, $15 million. Which in 1803
was a massive amount of money. It was a huge
risk for a young nation. But the source breaks
it down per acre. Do you remember the number?
It's just staggering. Four cents per acre. I
can't buy a single grape for four cents today.
And they bought millions of acres of prime farmland,
the Mississippi River system, mineral rights,
for four cents an acre. It completely distorted
the American view of land. In Europe, land was
scarce. It was owned by the nobility. It was
expensive. In America, it was effectively infinite
and practically free. Of course, we have to acknowledge
the source material briefly touches on the fact
that this transaction ignored the people already
living there. Yes, the indigenous populations.
From a legal standpoint, the U .S. bought the
preemptive right to negotiate with the tribes.
But in practice, it was treated as a transfer
of title. It paved the way for Western expansion,
which was essentially a massive. Real estate
acquisition strategy. So now you have all this
land. You need people to sell it. The source
mentions the oldest real estate brokerage firm
in the U .S. Established in 1855 in Chicago.
Originally L .D. Olmstead & Co. Now known as
Baird & Warner. And still operating, which is
incredible. That's wild. 1855. That's pre -Civil
War. It shows that Chicago was the real estate
engine of America. It was the gateway to the
West. If you wanted to buy a farm in Iowa or
a timber lot in Wisconsin, you went through Chicago.
And naturally, where there is money, there are
scammers. Always. As long as there has been land
for sale, there has been someone lying about
it. The industry had a reputation problem. The
whole snake oil salesman selling swampland in
Florida, that cliche comes from somewhere, right?
Buying land you've never seen was a great way
to lose money. So the industry realized it needed
to organize. In 1908. Again in Chicago, the National
Association of Realtors was founded. And here
is a squares a rectangle moment for me. Realtor
versus real estate agent. I thought they were
the same thing. No, and the association is very
protective of this. Real estate agent is a job
description. It means you have a license from
the state to sell property. Okay, so anyone with
a license is an agent? Realtor is a trademarked
title. A trademark, like Coke or Kleenex. Yes.
It means you are a member of the National Association
of Realtors and you subscribe to their specific
code of ethics. So all realtors are agents, but
not all agents are realtors. Exactly. They coined
the term in 1916 specifically to separate the
professionals from the peddlers. They wanted
to signal trust to the public. They wanted a
badge that said, I won't rip you off. So the
industry is professionalizing. Cities are growing.
The roaring 20s are roaring. Everyone is making
money. Everyone is buying land. And then 1929.
The Great Crash. We usually talk about the stock
market when we talk about 1929, but the source
gives a stat about real estate that is just terrifying.
In the four years after the crash, real estate
values depreciated by 50%. 50%. Let's just sit
with that. You buy a house for $10 ,000 of fortune
then. Four years later, it's worth $5 ,000. But
you still owe the bank $10 ,000. You are so far
underwater. And the bank is failing. And you
have no job. It was a complete systemic collapse.
And the way mortgages worked back then made it
even worse. The source explains that before the
1930s, buying a house was awful. You usually
had to put 50 % down in cash. 50 % down. Today,
people complain about 20%. And the loan wasn't
for 30 years. It was usually for three to five
years. And here is the kicker. It was interest
only. You paid interest for five years, and at
the end, you had to pay the entire principal
back in one giant lump sum, a balloon payment.
So if you didn't have the cash at year five...
You lost the house. It was a rich man's game.
So the government steps in. The source says this
catastrophe is actually what created the modern
housing system we have today, the New Deal era.
It had to. The market was completely broken.
The Sourceless, the Baking Act of 1933, and the
National Housing Act of 1934. What did they actually
do? What changed? They created the FHA, the Federal
Housing Administration. They introduced mortgage
insurance. Basically, the government told the
banks, if you lend to regular people for long
terms and they default, we will cover your loss.
That risk removal changed everything, didn't
it? It invented the 30 -year fixed -rate mortgage.
Suddenly, a factory worker could buy a home and
pay it off slowly, like rent. And then came the
big one, 1938, Fannie Mae. The Federal National
Mortgage Association. I feel like I hear Fannie
Mae on the news every time the economy gets wobbly,
but explain what it actually does. The source
describes it as creating a secondary market.
What is that? Okay, this is crucial. Imagine
a small -town bank. They have a vault with, say,
$1 million in it. Okay, $1 million. They lend
it all out to 100 families to buy homes. The
vault is now empty. They have a stack of IOUs,
but no cash. So when the 101st family walks in
and wants a loan. The bank has to say, sorry,
we're out of money. Come back in 30 years when
the other guys pay us back. The lending just
stops. That freezes the market completely. Exactly.
Fannie Mae was created to fix this. Fannie Mae
comes to that small bank and says, hey, give
us those 100 mortgages, those IOUs. We will buy
them from you. So the bank gets its cash back.
The bank gets its million dollars back, plus
a little profit. The bank's vault is full again.
And now they can lend to the next hundred families.
It's like refilling the bucket. It's exactly
like refilling the bucket. Fannie Mae created
a secondary market where mortgages are bought
and sold as assets. It kept the money flowing.
It greased the wheels of the whole system. It
flooded the engine with oil. Without Fannie Mae,
the post -war suburban boom Levittown, all of
that. literally could not have been funded. There
wouldn't have been enough liquid cash in the
local banks. But, and there is always a but,
in American history, this funding wasn't available
to everyone. No, it was explicitly exclusionary.
The source brings us to 1968, Title VIII, the
Fair Housing Act. This was the legislative response
to the civil rights movement. For decades, the
real estate industry and the government itself
had practiced redlining. This is where they literally
drew red lines on maps. Yes. They drew red lines
around black neighborhoods and said, no FHA loans
here. Too risky. So white families could get
these cheap government -backed 30 -year loans
to build wealth and black families couldn't.
It locked an entire generation out of wealth
creation. Precisely. Title VIII in 1968 was the
attempt to ban discrimination in renting, buying,
and financing. The source notes it focused on
the incorporation of African -Americans into
neighborhoods. It made it illegal to say, I won't
sell to you because of your race. Right. It changed
the legal landscape. But as the source implies,
the economic damage of the previous decades was
already done. Fast forward a bit. We get through
the 70s and 80s. And then we hit 1999, the tech
shift. The moment real estate went online. Internet
real estate. It seems so normal now. I spend
half my life on Zillow looking at castles I can't
afford. Don't we all? It's the modern pastime.
But before 1999, information was key kept, wasn't
it? Completely. If you wanted to know what a
house was worth or what was for sale, you had
to go to a broker. They had the book, a physical
book of listings. They controlled all the data.
And 1999 broke the lock. It democratized the
data. Suddenly the consumer knew as much as the
agent. It shifted the power dynamic permanently.
So that brings us to today. The source says that
as of 2021, 65 % of U .S. homes are owner -occupied.
A solid majority. We are a nation of homeowners.
But home is a flexible word. The source breaks
down the different types of residential real
estate. And honestly, some of these definitions
cleared up years of confusion for me. Like what?
Like apartment versus flat. I always thought
flat was just what British people said to sound
fancy. It is mostly linguistic, yeah. But the
definition focuses on the perimeter lockable
doors. It's a self -contained unit inside a larger
structure. But the big one, the one that trips
everyone up, is condo versus co -op. Oh, yes.
This is crucial, especially in cities like New
York, Chicago, or Washington, D .C. In my head,
they're both just apartments in a big building.
What's the real difference? The difference is
what you actually own. In a condominium, you
own real property. You have a deed to your specific
unit. You own the drywall, the floor, the air
inside your walls. It is yours. Okay, that seems
straightforward. And you jointly own the common
areas, the hallway, the lobby, the pool with
your neighbors. But you own your box. And a co
-op. In a housing cooperative, you do not own
your unit. Wait, I don't own the apartment I
live in. No. You own shares in a corporation.
And that corporation owns the entire building.
So I'm a shareholder, not a property owner. Exactly.
and your shares come with a proprietary lease
that gives you the right to live in apartment
4B. Why does that distinction matter so much?
Control. In a condo, if you want to sell your
unit to a guy who plays the drums at 3 a .m.,
you largely can. It's your property. In a co
-op, the board of directors, your neighbors,
can interview the buyer and say no. We don't
want a drummer here. Because they aren't just
your neighbors, they are your business partners.
Exactly. If the drummer stops paying his maintenance
fees, the corporation suffers, and you might
have to pay more. So co -ops are famously strict.
They can reject buyers for almost any reason
they want. The source mentions co -ops are very
common in places like New York City, but also
in Indian metro cities. Yes. In dense urban areas
where shared infrastructure is the only way to
live, the corporate model often makes more sense
than the individual ownership model. Speaking
of global terms, I loved some of the architectural
words the source threw in. We know duplex and
terraced house, which is just a townhouse. Roll
houses. Very efficient use of space. But then
it listed chals and havelas. These are specific
terms from India. A havela is beautiful. It's
a traditional townhouse or mansion, usually centered
around a courtyard. It's designed for a specific
climate and for an extended family structure.
And a chal. A chal is more utilitarian. It's
a type of residential building found in Mumbai.
Think of long corridors with single rooms opening
off them and shared bathrooms at the end of the
hall. It was built for mill workers originally.
It's high -density, low -cost community living.
The source also mentioned the measurements. We
are so used to square feet in the U .S. Right.
It's our standard. But in South Asia, they measure
in Ghaz, Quila, Marla, and Bega. It reminds us
that real estate is hyper -local. We measure
land in the language of our ancestors. A bega
varies in size depending on which state in India
you are in. It's not standardized like a meter
or a foot. And we can't forget the portable dwellings.
The nomads. Mobile homes, houseboats. But the
source even lists tents. Usually temporary, with
roof and walls consisting only of fabric -like
material. It sounds funny when you define it
like a lawyer. So precise. It does. But for millions
of people... The refugees, the unhoused, or even
digital nomads, a tent is their primary residential
estate. It is their home. Okay, so we have established
what real estate is, where it came from, and
the different shapes it takes. But now we need
to talk about the impact. The footprint. The
green elephant in the room. The stats in the
source are sobering. It says that in 2019, real
estate was responsible for 39 % of total worldwide
emissions. Almost 40%. Think about that. Yeah.
We worry about cars. We worry about airplanes.
We worry about plastic straws. But the buildings
we are sitting in right now are the biggest culprit.
And it's not just the lights and the AC, is it?
I think that's what people assume. Oh, well,
just turn off the LED bulbs. No. A big chunk
of that 11 % is what we call embodied carbon.
What does that mean, embodied carbon? It's the
emissions from making the materials. The concrete,
the steel, the glass. It's just the building
is made of. Concrete is terrible for the planet.
The chemical reaction to make cement releases
massive amounts of CO2. So before you even unlock
the front door of a new building... before you
ever flip a light switch, that building has already
done huge damage just by existing. So we can't
just efficiency our way out of this with better
insulation. We have to change how we build. Exactly.
But the source points out that this relationship
goes both ways. Real estate hurts the environment,
but the environment can hurt real estate value.
Drastically. We're seeing this now with climate
change and sea level rise. But even locally.
If a piece of land is contaminated, it's worthless.
The source mentions ESA's environmental site
assessments. This is now a standard part of the
business. If you are buying a commercial strip
mall or an old factory, you hire a firm to do
a phase one ESA. What are they looking for? They
are detectives. They check old records. Was this
a gas station in the 1950s? Is there an old oil
tank leaking into the groundwater? Is there asbestos
in the walls? Because if there is, the property
might be worth zero. It might be worth less than
zero. You might buy the land for $100 ,000 and
then find out you are legally responsible for
a million -dollar cleanup. That's terrifying.
So the market is reacting. We are seeing the
rise of green development. The source tracks
this back to the 1970s. The environmental movement.
Now we have things like LED certification. Is
that actually making a difference or is it just
marketing? Greenwashing? It's a mix, to be honest.
But the push for resource efficiency is real.
Better insulation, smart glass, solar integration.
The goal is to get that 39 % number down, not
just to save the polar bears, but because operating
an inefficient building is becoming too expensive.
It feels like a necessary shift. But let's pivot
from the moral cost to the financial cost. Because
for a lot of people, real estate isn't just about
shelter. It's about money. It is the ultimate
investment vehicle for most people. The source
distinguishes between buying for use, living
in it, and buying for investment. And under investment,
it lists flipping. The reality TV favorite. Buy
it, fix it, sell it. It's arbitrage. You are
betting that the market price plus the cost of
repairs is lower than what someone will pay for
the finished product. It's high risk, high reward.
Speaking of risk, the source categorizes investments
into three buckets. Core, value added, and opportunistic.
This is how the big pension funds think. Core
is safe. A fully rented apartment building in
a nice part of Boston. Low return, but you won't
lose your shirt. It's steady income. And opportunistic.
That's the Wild West. Ground up development.
Building a hotel in a neighborhood that might
become cool in five years. You can make a fortune
or you could go bankrupt. Now, here is where
the expert in you needs to explain something
to me. The source mentions a term that sounds
like a paradox. Hedonic regression. Ah, yes.
My favorite. And it says real estate structures
tend to depreciate with age, according to this
principle. But wait, the golden rule of real
estate is it always goes up. My grandpa bought
his house for $10 ,000 and sold it for $500 ,000.
How is that depreciating? This is the great illusion
of homeownership. You have to separate the land
from the house. The land depreciates. They aren't
making any more of it. Demand goes up. Supply
stays flat. Price goes up. The dirt becomes more
valuable. But the house itself. The house. Yeah.
The physical pile of bricks and wood, that is
a rotting asset. Like a car, the moment you drive
it off the lot. Exactly. Every day, the roof
gets a little older, the pipes rust a little
more, styles change. Nobody wants a pink bathroom
from the 1950s anymore. So the house is actively
losing value. Hedonic regression is the statistical
way of measuring that decay. It separates the
value of the amenities from the land. So the
reason my grandpa's property value went up is
because the dirt underneath the house became
insanely valuable. The house itself probably
lost value unless your grandpa spent a fortune
maintaining and renovating it. That is a huge
aha moment. We confuse the container with the
location. Every single time. We think we made
money on the house, but we made money on the
land. Now we have to talk about what the outline
calls the dark side of real estate investment.
The London and New York phenomenon. The source
describes luxury real estate as a store of value.
Think of a gold bar. You don't do anything with
a gold bar. You can't live in it. You put it
in a safe and hope it holds its value. But in
this case, the gold bar is a $50 million penthouse
on Billionaire's Row. Correct. The source says
these units are often used by corrupt foreign
government officials and business people to launder
money. It's a massive issue. Imagine you are
an oligarch in a country with a shaky government.
Yeah. You steal $100 million from the public
treasury. Okay. You can't just keep it in cash
under your mattress. And you can't put it in
a local bank because a dictator might seize it
tomorrow. You need to get that money out of the
country. and into something stable. So you buy
a condo in Manhattan. It's a stable jurisdiction.
Right. Property rights are protected. Remember
our friend Vettel from 1758? Right. International
law protects it. The U .S. government isn't going
to seize it arbitrarily. So you buy the condo
through a shell company. You never live there.
You never rent it out. It just sits empty. It's
a safety deposit box in the sky. That is dystopian.
You have these needle -thin towers casting shadows
over the park and nobody is even inside them.
Meanwhile, the locals can't afford rent. It creates
massive social tension. It turns housing, a basic
human need, into a pure financial derivative.
The source does mention that development is different
from this kind of speculation. Yes, development
is the actual hard work of building. Planning,
zoning, construction. And interestingly, the
source claims development can be less cyclical
than pure investing. Why is that? That seems
counterintuitive. Because the timelines are so
long. If you start building a skyscraper today,
it won't be finished for five years. You might
start in a boom and finish in a bust, or vice
versa. It forces you to take a long -term view.
You can't day trade a skyscraper. We have covered
a staggering amount of ground today. We really
have. From sticks to skyscrapers. We went from
the Roman concept of dominium to the four cent
acres of the Louisiana Purchase. From the squirrels
in your backyard to the empty penthouses of the
oligarchs. From the invention of the 30 -year
mortgage to the carbon footprint of concrete.
It's a lot to process. So what is the takeaway
here? When the listener drives home today and
pulls into their driveway, what should they be
thinking? I think the takeaway is that you are
part of a system. You aren't just living in a
box. You are holding an interest in a piece of
the planet. You're holding a bundle of sticks.
You're holding a bundle of sticks that connects
you to history, to the law, to the global economy,
and to the environment. It makes you look at
the walls differently. You start wondering, where
did this drywall come from? Who owned this land
200 years ago? Do I actually own the air above
my roof? And most importantly, Check your deed
for the wild animals. Always check for the squirrels.
But seriously, I want to leave the listener with
a question based on what we discussed. Go for
it. We talked about how real estate is a natural
right, according to the old philosophers. Yeah.
But we also talked about how it causes 40 % of
global emissions. Right. A huge contradiction.
As we move into the next century and climate
change becomes the dominant story, will that
right to property? start to erode? If building
a single family hung becomes in itself an environmental
crime, does your right to own it disappear? That
is a heavy thought. Will the real eventually
overtake the estate, the physical reality overriding
the legal one? We'll have to wait and see. Thank
you for guiding us through the invisible structures
of our world. My pleasure. And thank you for
listening to The Deep Dive. Go check your deeds,
think about your footprint, and we'll catch you
on the next one.