Taking a car that does 25mpg, at $2/gal gas you can do a 100 mile round trip commute each workday for $160/month in gas. At $4/gal it goes up to $320, etc. That doesn't seem like a big enough jump to me to cause people to default en masse on their mortgages and trigger the crisis - compared to the teaser rates which probably made mortage payments jump by $500-1000+ when expired?
Economists say that high gas prices triggered the housing crisis in 2007 (2012)
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Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#42i wonder how often Economists are right, and never tried to measure it.
The frequency is assumed to be so low that nobody even bothers to measure it
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#43Earlier quoted context omitted.
It's an entire economy. When someone else buys a Tesla, oil demand is rendered less inelastic. This also primes the market so that more EVs get sold, including cheaper ones, and eventually used EVs become available at a much lower price. You can get a used Nissan Leaf for I guess we should not do anything if it can't immediately be made affordable to everyone in the very first generation. So we should never have done…
so what you are saying is you are in favor of trickle-down economics? - where people who make $300K+ a year, buy government subsidized Tesla's, and somehow, somewhere, the poor single mother who now has decide between filling her car to get to work, and buying food - will somehow benefit from wealthy tech-bros driving $100K cars.
No post body was provided.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#44> "The key word is, 'triggered,'" said JunJie Wu, an OSU economist and one of the authors of the paper. "This theory recognizes the role of subprime mortgages and lax lending practices as inflating the housing bubble, but high gasoline prices provided the trigger that burst the bubble." Are we in another bubble? And if so what is the theory for why? I assume subprime and lax lending wouldn't be the cause after the le…
Well, house prices have gone up far faster than incomes, for years now, in the US and also several other countries around the world. One driver is the purchase of real estate as an inflation hedge.
This doesn't prove it's a bubble, but it sure does suggest strongly.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#45Earlier quoted context omitted.
Not a bubble because for the most part people are buying homes that they can pay the mortgage on. High energy prices are also going to spike inflation which eventually means rates rise. If that happens owners with their 2.75% mortgages aren't going to be inclined to sell. Coupled with higher new construction costs the housing market probably continues to rise.
> for the most part people are buying homes that they can pay the mortgage on The question is can they still pay the mortgage if cost of living goes up significantly (like it appears to be)
Inflation helps borrowers. They get to pay back their loans with cheaper dollars.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#46Earlier quoted context omitted.
How would that work? I thought most US based student loan can't be defaulted on.
It can't be discharged through bankruptcy (thanks Joe!), but neither can we squeeze blood from stone. Debtors who don't have the funds to both eat and make their payments will not make their payments.
I assume that by Joe you mean Joe Biden?
Student loans haven't been something you can discharge in bankruptcy since the 1970s. If you want to thank a US president (as opposed to, say, the legislature that actually passes these laws), you should be thanking Gerald.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#47Earlier quoted context omitted.
Not a bubble because for the most part people are buying homes that they can pay the mortgage on. High energy prices are also going to spike inflation which eventually means rates rise. If that happens owners with their 2.75% mortgages aren't going to be inclined to sell. Coupled with higher new construction costs the housing market probably continues to rise.
> for the most part people are buying homes that they can pay the mortgage on The question is can they still pay the mortgage if cost of living goes up significantly (like it appears to be)
The cost of living increases are heavily driven by housing prices, which they’ve already locked in for themselves.
Unless unemployment spikes dramatically (the opposite of what’s been happening) and they lose their jobs and they bought homes on the ragged edge of what they could pay monthly, this is unlikely to be an issue.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#48Had to read half the article before the word "gasoline" appears, indicating that the gas in the headline is vehicle fuel and not heating gas. After reading the whole thing, I'm still not 100% sure.
Why Americans refer to petrol as gas, even though it is liquid, is still a mystery to me.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#49Earlier quoted context omitted.
It's an entire economy. When someone else buys a Tesla, oil demand is rendered less inelastic. This also primes the market so that more EVs get sold, including cheaper ones, and eventually used EVs become available at a much lower price. You can get a used Nissan Leaf for I guess we should not do anything if it can't immediately be made affordable to everyone in the very first generation. So we should never have done…
so what you are saying is you are in favor of trickle-down economics? - where people who make $300K+ a year, buy government subsidized Tesla's, and somehow, somewhere, the poor single mother who now has decide between filling her car to get to work, and buying food - will somehow benefit from wealthy tech-bros driving $100K cars.
Bash that straw man!
I agree that current inequality is excessive, but the argument I made applies if there is any inequality at all. There has never been a human society with absolutely zero inequality. If there is any inequality at all there is always some "trickle down" effect in the form of aftermarkets, priming of industrial production leading to future lower prices, etc.
It's possible to simultaneously acknowledge certain "trickle down" effects and believe they can be beneficial while also being in favor of reducing inequality.
Re: Economists say that high gas prices triggered the housing crisis in 2007 (2012)
#50Had to read half the article before the word "gasoline" appears, indicating that the gas in the headline is vehicle fuel and not heating gas. After reading the whole thing, I'm still not 100% sure.
Why Americans refer to petrol as gas, even though it is liquid, is still a mystery to me.
maybe from gasoline?