We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.
I mean VW makes $100,000 Porsches and $20,000 Jettas. At some point it’s not economical to make cheaper cars due to materials and workmanship. You can certainly buy an e-bike for half that, I did. The cost of construction in America is $150/sqft. We’re not even close in cities. Off by an order of magnitude.
Sorry I guess I was more obtuse than I intended. My point was I can buy a used car for $5,000, and Honda building new cars allows that even if the new cars are out of my price range.
The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…
> permanently priced out of home ownership
The baby boomers will all die off during your lifetime. There aren’t enough people left to absorb all of their houses. I assume at some point there will be a tremendous glut of empty houses on the market which should dramatically lower prices.
We have the same problem with the car market. I can only afford a $5,000 car, but the car manufacturers make all their money building $20,000 cars. I just can't see how Honda making another $20,000 fit is going to help me afford a $5,000 car.
The problem from the manufacturers' perspective is that the gear required to meet 2021 safety, emissions, and fleet efficiency standards by itself almost pushes a new car's price over $5000, and that's without leaving any budget left over to make it a car anybody would want to buy. They do sell vehicles at that price which get around all of those standards, but they lose two wheels in the process.
You can still easily buy a decent used car for $5k.
Try buying a half-decent used home for 25% of its initial sticker price.
retirement savings don't affect day-to-day decisions or welfare, and most folks will not be selling their home, especially not in a recession, so those are both non sequiturs . long-term assets, particularly for the middle class, are relatively recession-resistant.
~17% of people right now are living off their retirement and that percentage will increase as baby boomers hit retirement age. Remember 2008 when a bunch of houses were underwater, cash strapped poor families could neither make payments nor sell to get out, and the whole thing was awful? Yeah that didn't really help wealth inequality.
most households at/near retirement (55+, according to the fed reserve) are doing fine with an average net worth over a million (note that that's all the boomers), and almost none of them are still paying off mortgages. they aren't losing houses nor going without meals. moreover, social security income is inflation protected, as essentially is medicare, so poor elderly are no worse off. again, that's a disingenous argument, the kind often made by politicians seeking political gain, not general welfare.
The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…
> permanently priced out of home ownership The baby boomers will all die off during your lifetime. There aren’t enough people left to absorb all of their houses. I assume at some point there will be a tremendous glut of empty houses on the market which should dramatically lower prices.
That seems like a slow, one-time correction given immigration and perhaps even before then, demographic shifts changing what types of houses are needed and boomers retiring off the sale prices of their houses. Yes, things don’t normally go up forever, but it’s shocking how much things have gone up and continue to go up, in all financial asset classes. While renting is still seen as an option for many, there will be a market to buy houses (shrinking the “glut” to buy at the low) and pay a bit extra to then rent the house and make some money before selling it again. More interesting to me is whether business real estate will have any kind of dip, given recent work from home, but I also can’t see how that makes residential any less attractive for investment over the long run, unfortunately.
The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…
So, I’m 36, and I promise you don’t want a deep recession. Cheap housing doesn’t matter if you don’t have a job. We dodged a freaking bullet economically with COVID. We recovered quickly. Heck, even in 2008 we did better than the countries that tried fiscal or monetary austerity. And yeah, the real enemy is zoning. It’s fun to blame Blackrock, and they deserve it, but it’s regular homeowners trying to restrict more h…
Hello fellow 36 year old!
I think graduating into the 2008 mess gives us peculiar point of view. Two years older, we might have already had burgeoning careers. Two years younger, we might have avoided it altogether.
I remember so much impending doom from those years. Pretty different than the current sentiment.
I know this may be sacrilege to some, but: Consider moving to a less desirable place if you can. I got priced out of my hometown of Seattle. So I moved to a small town in rural Oregon and I couldn't be happier. The combination of spending comparatively little on housing + a tech salary is hard to beat. I have my own shop! It feels like freedom, even if it comes at the cost of being near my extended family.
I don’t think this is good advice financially, though there is more to life than money. First, if by “tech salary” you mean a software engineers salary or a product managers, then you should be able to afford a house in a place like Seattle. It might be tight if you are early in your career, but it is very doable. The main reason this is likely to be bad financially is that your house won’t appreciate like a house in…
>The main reason this is likely to be bad financially is that your house won’t appreciate like a house in Seattle.
So the only solution then is endless appreciation of house prices and salaries?
> The real problem as always is zoning. If the real problem was always zoning, wouldn't dense cities like NYC and Shanghai be cheaper than average, not way over average? > Check out Japan housing CPI - a market where supply meets demand thanks to federal zoning rules, and is also centrally banked. Japan went through a huge bubble in the 1980s. Also, housing (the structures at least) rapidly depreciates in Japan, whic…
Zoning is also an issue in NYC. The suburbs are unable to become dense do to zoning which causes the prices to go up.
Brooklyn increases the density steadily. I see a lot of construction around me, mostly higher-density replacing low-density, but it's relatively slow.