Revolutionizing Housing: Lessons from Tesla

Good Day,

In the realm of innovation and disruption, Tesla stands out as a beacon of transformation. Over the past decade, this American company has reshaped the automotive industry, particularly in the realm of electric vehicles (EVs). What lessons can we glean from Tesla's journey and apply to the housing sector?

Consider this: just fifteen years ago, Tesla had a mere 147 vehicles on the road. Today, that number has skyrocketed into the millions, showcasing the remarkable growth and impact of the company. However, Tesla's trajectory hasn't been without challenges, especially as competition in the EV market intensified.

Between 2019 and 2023, Tesla experienced a surge in demand, leading to soaring prices for its vehicles. Yet, as more competitors, both new and traditional automakers, entered the EV arena, inventories of EVs surged. Recognizing the evolving landscape, Tesla responded by lowering prices and profit margins to maintain sales momentum. Moreover, in response to heightened competition, Tesla announced plans to introduce a more affordable car option, signaling adaptability and strategic foresight.

Now, let's pivot to the housing market. For years, developers have predominantly focused on constructing luxury and high-end homes, driven by the allure of higher profits. However, similar to Tesla's experience, market dynamics come into play when the supply of luxury homes outweighs demand, highlighting the critical need for more affordable housing options.

Drawing inspiration from Tesla-nomics, there's hope that developers will shift their focus towards addressing the pressing need for entry-level and affordable homes. Governments can play a pivotal role in facilitating this transition by streamlining building codes, enhancing Department of Buildings (DOB) efficiencies, and providing practical incentives such as tax breaks to incentivize affordable housing construction.

Perhaps, just as Tesla disrupted the automotive industry with its innovative approach, Tesla-nomics could inspire a revolution in the housing sector, driving accessibility and affordability for homeownership.

Wishing you a magical weekend ahead!

Alexander

P.S.

DID YOU KNOW? What is driving the healthy US GDP numbers......real estate perhaps? Nationwide, the NAR estimates that the real estate market contributed 18% - equivalent to $4.9 trillion - to the GDP in 2023. Specifically, each home sale at the median generated about $125,000 in 2023. Why are employment numbers strong? Real estate perhaps? Every home sale generates 1-2 jobs.... Among the top states for the economic contribution of real estate were Florida (24.1%), Nevada (23.2%), Delaware (23.1%), and Arizona (23.1%). (NAR)

DID YOU KNOW? A recent study by ATTOM reveals that May, February, and April are the most lucrative months for selling homes, with May 27th identified as the optimal day, yielding a premium of 16.2% for sellers. The analysis, based on data from 2011 to 2023, suggests that placing a home on the market during these months could lead to higher profits. (Florida Realtors)

DID YOU KNOW? The OECD estimates GDP will grow by 3.1% globally this year, up from a previous forecast for expansion of 2.9%. Growth is projected at 1.7% among the OECD member countries. The brightening outlook reflects faster falls in inflation than expected, improved business confidence and a recovery in household incomes. However, there is a clear transatlantic divergence in fortunes. The OECD upgraded its forecast for US growth to 2.6% for 2024, while a weaker outlook for Germany helped keep its forecast for eurozone growth unchanged at just 0.7% (FT)

DID YOU KNOW? In case those in the UK are concerned about high gasoline prices at the pump, look no further than Shell's results that revealed massive, higher profits from REFINING, no not the oil price/supply. This directly impacts inflation numbers and fuels inflation......and interest rates. (FT)

DID YOU KNOW? Florida generates about 74% of its electricity using natural gas.....global natural gas prices spiked after the Russia invasion of Ukraine, and so did electricity prices. In August, 2021, natural gas traded well over $9....it dropped to $2.50 by February 2023 and today it's under $2....the US produces 13% more than 5 years ago, the highest levels in history: does your electric bill reflect this? Homeowners these days are looking at monthly operating costs in a higher interest rates environment.....

“We’re in pretty good shape and so far it looks like that soft-landing type of scenario. But put me on the cautious side of that one.I think in fact there will be rate cuts, but not as many as previously estimated. When I look at the factors that make this inflation sticky over the last 3-4 months - home rentals, car insurance, etc - forward-looking I see many indicators that inflation is coming down. Some caution and resistance to higher prices is emerging....just look at Starbucks.”

— Jeremy Siegal, Wharton

DID YOU KNOW? U.S. investors are buying up London commercial property at the fastest rate in eight years. (Reuters)

DID YOU KNOW? Recently the New York Post - not exactly known for cheering on its hometown - has started writing articles about PLUMMETING home values in Texas and Florida....read past the headlines and evaluate the data and facts. Not unlike their 'imminent demise' headlines for New York, Los Angeles and San Francisco, their salacious headlines about other areas where headlines like "Sellers slashing prices" rarely mention this applies to asking prices .....and "Inventory Surges" hardly ever mentions these are a follow up to intense inventory shortages.....

DID YOU KNOW? While climate is changing, the model for insurance has not. The premiums of the many still pay for the losses of the few. But those losses are increasing, and neither the public nor private sector has yet grappled with the full ramifications of this. (FT)

DID YOU KNOW? Starting conversations can be tough for most: Some have learned that no one really cares what you say. For all the anxiety and nervousness with which one approaches interactions, most people are too preoccupied with their own fears and insecurities to much consider yours. Unless you’re desperately rude or highly precocious, people don’t tend to judge. Most of the time we’re pretty grateful that someone is prepared to talk to us at all. Everyone is awkward. Few people are natural (and even fewer, gifted) raconteurs. Asking questions is often best! (FT)