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The Rate of Return on Everything, 1870–2015 (2019)

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Re: The Rate of Return on Everything, 1870–2015 (2019)

#101

Post by rootusrootus »

martincmartin wrote: post #84
Retric wrote: post #48

Earlier quoted context omitted.

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

$82,098 in 1955, adjusted for inflation, was worth $727,502.05[1]. So homes were actually much more expensive back then. [1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=82098&year1=19...

That can't be right, it must already be an inflation-adjusted number. My parents bought their most recent house in ~1970 for $30K, and that was a bit above the median for the area.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#102

Post by rootusrootus »

cyberax wrote: post #68
_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

I wonder if Texas, especially around Dallas, is settling into a pattern that'll work well. If you have enough land, that is. Instead of single big city with dense downtown surrounded by progressively less dense housing, there are multiple cores. Smaller cities, close enough that their suburbs mix. On the surface that does seem more workable than building mega-cities.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#103

Post by cyberax »

javednissar wrote: post #79
cyberax wrote: post #68

Earlier quoted context omitted.

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

I don’t understand the logic here, the land itself will be valuable regardless of whether or not there is a house there or an apartment building. The principal component of the cost of buying a house or a condo is the associated land cost. Building more density gives more people access to that land. If your contention is that more housing is bad because it draws more economic activity which raises land values then th…

It's the "spiral" part (i.e. self-reinforcing vicious process).

Dense cities allow employers to get access to a larger pool of workers, giving them a competitive advantage. This in turn makes cities more attractive for workers. Since land area is conserved and people won't commute for much more than 30 minutes, it means cities have to increase the density.

This in turn makes cities more attractive for employers, driving the demand for housing even higher.

Rinse, wash, repeat.

> That may sound like hyperbole but that is the end result of NIMBYism and illiberal land use policy.

There is literally no city in Japan, US or in major EU countries that managed to build its way out of high housing prices. Not a single one.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#104

Post by cyberax »

rootusrootus wrote: post #102
cyberax wrote: post #68

Earlier quoted context omitted.

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

I wonder if Texas, especially around Dallas, is settling into a pattern that'll work well. If you have enough land, that is. Instead of single big city with dense downtown surrounded by progressively less dense housing, there are multiple cores. Smaller cities, close enough that their suburbs mix. On the surface that does seem more workable than building mega-cities.

YES!

That's exactly the right model. Sparse cities with distributed industry.

Houston (Greater Houston Area) is another such example. It's geographically huge, but most commutes are fairly short. This allows Houston to have faster commutes than NYC, despite having a comparable population, and VASTLY better living conditions.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#105

Post by lotsofpulp »

charlie0 wrote: post #96
lotsofpulp wrote: post #65

Earlier quoted context omitted.

To add to that, household size also decreased. https://www.pewresearch.org/short-reads/2019/10/01/the-numbe...

Yet, almost no one makes those sweet starter homes anymore.

Newer homes have been trending smaller and smaller for a long time. Especially in the western US.

https://www.washingtonpost.com/business/2024/03/10/smaller-n...

> Median new-home sizes are at a 13-year low.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#106

Post by Too »

_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

Trust in institutions and low interest rates allows people today to afford houses 10x more expensive than their tangible savings.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#107

Post by nradov »

cmrdporcupine wrote: post #86
mensetmanusman wrote: post #37

Earlier quoted context omitted.

Yeah, it would be interesting to have more transparent costs, especially with inflation. New siding every 20 years is $40k, a new roof might be $30k every 25 years, a new driveway, etc.

I just shudder to think about all my trips to Home Depot over the last 20 years of owning a home. I never did those when I was renting. Yes, I didn't get to renovate or pick my paint colours. And yes my money paid down someone else's mortgage. But I suspect if you add it all up...

You should add it all up. Some of the things you purchased at Home Depot can be counted in the cost basis of the home and reduce your capital gains tax if you later sell it.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#108

Post by mapt »

gamepsys wrote: post #62
georgeecollins wrote: post #25

Earlier quoted context omitted.

To help you conceptualize how that is possible: 100 years ago the world population was 2 billion, and now it is 8 billion. While the housing stock is also increasing with that population growth, the actual amount of desirable land does not grow as fast. That's why -- for example-- the US gov't in the 1850s could just hand out 40 acre plots of land to people. They can still do that, but it has to be way out in Alaska…

> So the wealth of everyone is going up faster than the supply of desirable land We are also slowing down the rate we are making land desirable. During the 50s-70s we had massive success by creating suburbs that were connected to city centers. Due to how geography works, new suburbs are further from city centers and inherently less desirable. We have developed most of the geographically appealing regions of the US. T…

> Due to how geography works, new suburbs are further from city centers and inherently less desirable. We have developed most of the geographically appealing regions of the US.

"We have turned all of the areas within 15 miles of the existing urban development into suburbs, while banning nearly all new urban development, and banning nearly all urbanization of existing suburbs. We've run out of cities to build suburbs around and this seems like a natural limit where a Mad Max style fight for a limited suburban housing stock is our inevitable outcome. This is Basic Geography 101."

That Mad Max style fight has already been won by geriatric white men (PostWar Boys) who paid off their houses 20 years ago, who are now nominal multimillionaires, and whose preferences appear to largely control national, state, and local political outcomes.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#109

Post by charlie0 »

lotsofpulp wrote: post #105
charlie0 wrote: post #96

Earlier quoted context omitted.

Yet, almost no one makes those sweet starter homes anymore.

Newer homes have been trending smaller and smaller for a long time. Especially in the western US. https://www.washingtonpost.com/business/2024/03/10/smaller-n... > Median new-home sizes are at a 13-year low.

I must not be looking at the right place then. All the new homes I've seen recently are 2000+ sq. ft. The only ones that are smaller are usually townhomes and are even less affordable than the bigger homes I just mentioned they are located near downtowns or other heavily populated areas.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#110

Post by Grimblewald »

superb_dev wrote: post #9

How can an entire economy have a growth rate? Is it not measuring how much "new money" was put into the system?

Money just represents tokens to use on our collective pile of goods and services. Growth refers to the rate at which the pile grows, and is largely divorced from money. Money is fake, and the systems behind it's distribution/allocation is regularly gamed for personal gain, in ways that go against the spirit of what money is supposed to represent. Money is an intermediate tool to help keep a track of who put how much on the pile so that everyone can focus on doing what they are good at, and in return, take from the pile what they need, as made by others who are good at other things.

Increasingly we see a problem of people who add nothing to the pile getting large wads of money and taking more than their fair share from the pile. This is a problem.

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