The economy is going great, except for the housing market
investopedia.com
The economy is going great, except for the housing market
1–10 of 84 posts
Re: The economy is going great, except for the housing market
#2Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
Re: The economy is going great, except for the housing market
#3Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
But is it going to happen? In the next 10 to 20 years that I personally care about? And it’s not just supply, the housing market is rigged in various ways.
Re: The economy is going great, except for the housing market
#4The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.
Re: The economy is going great, except for the housing market
#5Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
> kick existing owners in the teeth to fix this crisis
You're assuming a definition of "crisis". 2/3 of households own their own homes, and a big chunk of those that don't aren't looking to buy in any circumstances. As much as we hear about the high cost of housing, it's only an issue for an extremely vocal minority. That's not to say I don't view it as a problem (clearly it is) but I'm skeptical it's going to win any political battles.
Re: The economy is going great, except for the housing market
#6Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
Great. Housing should not be an investment and chasing ever-increasing property values as a society is obviously unsustainable. If you own a house as your primary residence, then its market value shouldn't really matter, because the value has no impact on your quality of life.
Re: The economy is going great, except for the housing market
#7Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
The majority of voters are homeowners so that’s probably why it isn’t going to happen so dramatically.
Re: The economy is going great, except for the housing market
#8Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
Governments will choose the path of least pain everytime and that means EVERY SINGLE TIME they will choose to hyperinflate the money supply rather than pay their debts.
No one is going to purposfully crash the single largest market in the world. Hyperinflation is comming.
Re: The economy is going great, except for the housing market
#9Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.
Great. Housing should not be an investment and chasing ever-increasing property values as a society is obviously unsustainable. If you own a house as your primary residence, then its market value shouldn't really matter, because the value has no impact on your quality of life.
But it is valued based on its impact to your quality of life.
Re: The economy is going great, except for the housing market
#10That's not really surprising, considering that's exactly how interest rate increases are supposed to work. They crowd out a bit of business investment and a lot of housing investment [1]. This in turn cools the economy by curtailing construction.
Unfortunately, housing in most areas was screwed to begin with. This was not nearly the case with prior inflation bouts that required rate increases. The Fed was left with two bad choices. It did what it had to do.
If the economy was Windows XP, housing would be its networking stack - its most exploitable sector. This is largely because of local governance and regulatory capture [2]. Housing has been artificially undersupplied for 5 decades under a variety of pretexts, such as architectural integrity. It has effectively turned the sector into a pyramid scheme that captures the wages of renters.
[1] https://archive.is/8wAry (from https://www.nytimes.com/2022/04/19/opinion/inflation-interes...)