[link removed]

A couple months ago, I attended an open house for a property that was for sale. We weren’t really looking, but sometimes those things are fun. This was a property that you could imagine buying as an investment.

The problem was that the numbers didn’t make any sense. At what they were asking for, the income generation of the property as a rental was maybe 3.5%. Mortgage rates today are more than twice that. And you can get higher interest rates on high-yield savings accounts. I concluded that the listing price was about 40% over what I would deem a good value. In the weeks since, they’ve cut the price multiple times, still to no takers.

On the flip side, you have buyers who feel frozen out of the market because prices remain too high and no one can afford a mortgage. A young couple who had been house hunting until recently said to me, “We’ve given up looking for the time being.”

I talked to a friend in commercial real estate in New York – think office buildings. “It’s a mess,” he says. “Every day’s a new issue or problem. And we aren’t fully occupied, not to previous levels. I’d consider selling, but I don’t think we could get fair value, in part because no one is sure what fair value is now on an office building in Manhattan except that it’s a lot lower than the last appraisal.” The level of commercial real estate debt that comes due in the next 18 months is over $1 trillion.

I had lunch with a friend who invests in startups. She told a similar story. “There are dozens of companies that raised money in 2021 at valuations that now they can’t justify. There are going to be massive haircuts of 50% or more, and those are the companies that are able to access new money. A lot of them won’t be able to.” She saw a lot of dying companies or depressed entrepreneurs in the not-so-distant future.

There are strikes in the news every day, whether it’s the UAW or the actors, though I’m thrilled that the latter strike was just resolved. One reason the media feels so shrill is that a lot of those companies are struggling to make money – even flagship names like the Washington Post. Student loan repayment has kicked back in after a multi-year forbearance.

The Biden Administration is touting rosy economic numbers – but most Americans don’t feel good about the economy even if their personal situation is all right.

Now, you could say that commercial real estate is only a thing in certain cities, and most people don’t work at startups or for a striking union or as a journalist – all true. Residential real estate obviously affects a lot of people, and there are a ton of Americans who would like to buy or sell a home but can’t do so because of elevated mortgage rates.

Here’s the point - most Americans still feel that prices are too high and they are constantly under some sense of financial pressure. And these are the good times.

I’ve been an entrepreneur in flush times and in tough times. I’m seeing tons of signs that tough times are around the bend.

You operate differently in different periods. In good times, you invest in growth. In times of contraction, you batten down the hatches and streamline. You make different kinds of bets. And maybe, sometimes you settle for the smaller holiday party. It feels to me that the latter kind of time is coming soon.

What does this mean for our politics?

Continuity will be a tough sell. Someone – let’s say President Biden – running on how good things are will have a difficult time. Particularly if things go from okay, which is where I think the economy is now, to a rough stretch.

In my opinion, a lot of Democrats feel committed to Joe Biden out of a sense of fear and caution. He’s at least familiar and comforting.

But riding an 81-year old incumbent with a 39% approval rating and a message of “4 more years” may be the exact opposite of what the majority of Americans want to hear next year. What seems like the safe bet may be the riskiest bet of all.

----

Who could be a better bet for the Dems against Trump? Check out Dean Phillips ([link removed]) , a 54-year old Congressman from Minnesota whom I believe in.

Andrew Yang
Co-Chair, Forward Party
forwardparty.com ([link removed])
andrewyang.com ([link removed])

============================================================
Want to change how you receive these emails?
You can ** update your preferences ([link removed])
or ** unsubscribe ([link removed])
.