I don't quite follow how they extrapolate the housing economic bubble to a pyramid scheme.
One of the fundamentals of a pyramid scheme is that early entrants profit, and continue profiting as the scheme plays out. How does this apply to the housing market if you don't get continual returns on resale?
An interesting correlation between Eve factories and the housing market which they don't mention is that no rational actors are incentivized by depreciation. There is only positive pressure on the price to push it up, which is interesting because for many assets you have investors that can bet on it going down (i.e. shorting).
> "One of the fundamentals of a pyramid scheme is that early entrants profit, and continue profiting as the scheme plays out. How does this apply to the housing market if you don't get continual returns on resale?"
You buy your first house, flip to to the next sucker/investor for a profit, use that profit to buy a second house, rinse and repeat. As long as property prices continue to increase, you'll always win. Until the world runs out of suckers.
At least, that's what's happening right now in my home country.
The key point here is leverage... because property is funded in part by debt when you increase your equity from the first sale then you can purchase a more expensive property (with even more debt) or possibly multiple second properties... in fact you can even do this without selling the first house by just increasing the mortgage.
One of the fundamentals of a pyramid scheme is that early entrants profit, and continue profiting as the scheme plays out. How does this apply to the housing market if you don't get continual returns on resale?
An interesting correlation between Eve factories and the housing market which they don't mention is that no rational actors are incentivized by depreciation. There is only positive pressure on the price to push it up, which is interesting because for many assets you have investors that can bet on it going down (i.e. shorting).