31–40 of 704 posts
If housing interest rates stay low or drop, prices will keep rising. Absent wage inflation that ratio will go up.
If inflation flows through to wages as it seems to be in process of doing, the ratio will stabilize or drop.
I suspect these two phenomena have different causes overall, but low interest rates are a common factor that cause all asset prices to increase.
On the housing side, I suspect consumers purchase the house that their cashflow can comfortably support, not necessarily the one where they believe it is correctly valued, because the assumption that house values only increase means purchasing a well constructed house is almost never a "bad deal."
I'm not sure what the "solution," is, but knowing that voters hate when their home values fall does not give me confidence that prices will decrease in the long term.
[0] https://www.statista.com/statistics/953641/sandp-500-ev-to-e...
Earlier quoted context omitted.
Why do you consider the 2 examples you gave “draconian”?
Rent control really doesn’t make sense. If we could make things cheaper by passing a law we’d do it for everything. Rent control won’t work for the same reason a price control for food or cars won’t work. https://freakonomics.com/podcast/rent-control/
Price controls for medicine are proven to work, based on single payer European systems. They cost cheaper and provide better outcomes than the US system.
Yet here we are.
One thing this ignores is interest rates and availability of credit. The biggest determinant of homes people buy is not the total price, but rather how much cash do they need for down payment, and what will the monthly payment be. With low interest rates and increased credit availability ( you don’t need 20% down payment in many cases now), people on the same income are actually able to buy a more expensive home. I t…
I agree this is mostly how people decide, but it's not necessarily a good idea. buying a very expensive home at historically low interest rates is a significant risk. there's a good chance you get upside-down on that loan over a 15-30 year period. better hope you don't get divorced, lose your job, or need to relocate during that period.
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Why pay them more when they're content with what they get now?
I upvoted your comment because it clicked with me, but now I'm thinking about it more. _I'm_ content with my pay now, perhaps others aren't and there is little they can do about it. How might we even define "content" for a cohort as large as "anyone buying a house"?
There's nothing to worry about.
Earlier quoted context omitted.
Rent control really doesn’t make sense. If we could make things cheaper by passing a law we’d do it for everything. Rent control won’t work for the same reason a price control for food or cars won’t work. https://freakonomics.com/podcast/rent-control/
Some forms of rent stabilization make perfect sense. But most of the policies implemented in big cities are far too restrictive. There is a lot of policy to be explored between "your rent never goes up forever" and "you can't be immediately evicted for no reason". No one wants the latter, but there are better ways to address that, like much longer notices for rent increases, or requiring multi-year lease options.
Simple the 50 year or 100 year mortgage. But really covid was the perfect opportunity to let the housing market collapse and reset buying us an additional decade. Wasted opportunity by bailing out landlords.
Some very clever and influential people better start finding and implementing real solutions to housing prices right now. If they don't, expect overwhelming support from Millennials for massive expansions to public housing and rent control, if not even more draconian measures.
Earlier quoted context omitted.
Rent control really doesn’t make sense. If we could make things cheaper by passing a law we’d do it for everything. Rent control won’t work for the same reason a price control for food or cars won’t work. https://freakonomics.com/podcast/rent-control/
> If we could make things cheaper by passing a law we’d do it for everything. Price controls for medicine are proven to work, based on single payer European systems. They cost cheaper and provide better outcomes than the US system. Yet here we are.
But you are correct that in those cases it can work well. Same with other monopolies like utilities.