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Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

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Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#181

Post by nicoffeine »

notanzaiiswear wrote: post #155
minikites wrote: post #72

Earlier quoted context omitted.

Capitalism is predicated on the idea of perpetual and infinite growth. Those assumptions are reflected in many ways and we're going to need to rethink our economy and political systems with entirely different assumptions soon enough because we're already running into their limits.

Growth means that things get better. If you build better houses and cars, that is growth. Likewise if you cure more cancers. Economic growth does not imply consuming more resources. Developing a more fuel efficient car is also growth, for example.

Growth only means that there is more economic activity. If you reduce the quality of houses and cars but increase the price and your profit, that's also growth. If you cure cancers, that's bad for growth if you made more profit on treatments than the cure.

> Developing a more fuel efficient car is also growth, for example.

One of the major economic concerns about electric vehicles is that they have fewer moving parts and maintenance requirements, and might cut auto worker jobs in half.[1] I don't think the article got into numbers of job loss in gas stations, oil production and distribution, etc. So the most fuel efficient car possible may prove to be bad for growth in general.

> Economic growth does not imply consuming more resources.

Technically true, but in practice, if your product is not 100% recycled and 100% carbon negative to produce, you'll need to extract more of the earth to sell it.

I will say that with some industries like meat production potentially moving to vats and away from farmed animals, there is a possibility. But you also have to consider the economic damage of eliminating cattle farmers, farm vets, slaughterhouses, meat packing, etc.

[1] https://www.nbcnews.com/business/autos/electric-vehicles-pos...

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#182

Post by colinmhayes »

larrik wrote: post #25
gnur wrote: post #7

Earlier quoted context omitted.

Anything related to storage or compute? I couldn’t image having a 2tb drive 20 years ago, but having a 2tb ssd in my laptop is kind of amazing

compute? GPUs used to basically top out at $400, now the cheap ones go for more than that.

You can get GPUs as powerful as the ones from 2000 for like $10.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#183

Post by CryptoPunk »

This is adjusted for CPI inflation, but asset prices have inflated far more than consumer good prices. The 12.5 fold [1] expansion of the money supply since 2008 has, according to some analysts, flowed to assets.

[1] https://fred.stlouisfed.org/series/M1SL

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#184

Post by imtringued »

fartcannon wrote: post #116
PragmaticPulp wrote: post #81

Earlier quoted context omitted.

The down payment hurdle is indeed a problem. However, if we took steps to make down payments easier (by lowering down payment requirements or through something like Biden's first-time homebuyer credit) then we're also pumping more money into the housing market. That will drive prices up again, further raising prices and making it even harder for future buyers to enter the market. The only real way to push affordabili…

Build more and ban investment properties. No more AirBnB, no more rentals. Prices will come down and those people who previously had to rent, will now be able to own and life will be better for everyone except the poor souls who bought in the last 20 years.

Add a progresssive tax on land. The more land you own, the more you pay. This forces developers to focus on denser housing while the average home owner can be left alone.

The tricky part is that home owners will knowingly defend the interests of real estate corporations because they want their own tax bill to be low.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#185

Post by inetknght »

PragmaticPulp wrote: post #20

They cite the numbers in "real terms", which would mean inflation adjusted: > The average price of American homes, in real terms, is now the highest it's ever been Of course, you really need to be looking at mortgage rates to understand housing affordability: http://www.freddiemac.com/pmms/pmms30.html July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points) 2008 12-month average 30-year mortgage rate: 6.03% (…

> In other words: Houses are still way cheaper, in actual out-of-pocket terms for average people, than they were in 2008

False. Actual average people are making significantly less today than they were in 2008. Their buying power is therefore also significantly less too.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#186

Post by imtringued »

throwdecro wrote: post #121
PragmaticPulp wrote: post #20

They cite the numbers in "real terms", which would mean inflation adjusted: > The average price of American homes, in real terms, is now the highest it's ever been Of course, you really need to be looking at mortgage rates to understand housing affordability: http://www.freddiemac.com/pmms/pmms30.html July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points) 2008 12-month average 30-year mortgage rate: 6.03% (…

Affordability is only part of the picture though. A higher value loan means higher risk as well. If interest rates rise, or something else happens that reduces the value of the property, then that $500,000 mortgage might be against a house worth less than $500,000. At that point people have to start playing chicken with the banks again, trying to mitigate the losses with strategic defaults.

Ok, I will bite. What will cause interest rates to rise? Do you expect a war that destroys Taiwan or something? (a permanent semiconductor shortage would have a massive impact on modern life). Increasing trust, stability and keeping inflation low will keep interest rates low forever. Japan had decades of deflation.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#187

Post by imtringued »

fridif wrote: post #69
PragmaticPulp wrote: post #20

They cite the numbers in "real terms", which would mean inflation adjusted: > The average price of American homes, in real terms, is now the highest it's ever been Of course, you really need to be looking at mortgage rates to understand housing affordability: http://www.freddiemac.com/pmms/pmms30.html July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points) 2008 12-month average 30-year mortgage rate: 6.03% (…

No, I disagree. Law of big numbers. Houses in Seattle area are mortgaging for 1.2M. Property taxes are low. Houses in NY are mortgaging for $500,000. Property taxes and interest rates are higher. You shouldn't apply 8% interest rate from 2000 and think that it somehow is the correct rate when prices are 5x higher.

Land is non reproducible. The fact that it goes up in value when money is cheap is not very surprising. Yet nobody tries to tax the problem away. You know, everyone pretends that the government is doing MMT or whatever. If MMT were a recipe book of economic policy (which it isn't) then the government would simply raise taxes on land.

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#188

Post by nicoffeine »

nicoffeine wrote: post #157
gruez wrote: post #85

Earlier quoted context omitted.

>Capitalism is predicated on the idea of perpetual and infinite growth First sentence from wikipedia: >Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. How does this predicate "on the idea of perpetual and infinite growth"? I mean, it'll be nice if the economy grew infinitely, but I'd still want to invest my money into production even if that d…

Modern capitalism depends on fiat currency and investment from those with capital. Currency loses value over time to inflation, so investors are always trying to get better returns against a baseline. Even at 3% per year, consumption has to double every 16 years if investors only want to break even. So, it's not "nice" if the economy grows, it's an absolute requirement to keep investors interested.

For the downvoters:

"The single most important question in investing this year is whether the rampant inflation of the moment is temporary, as the Federal Reserve believes, or marks a historic shift. I argued last week that we are on the cusp of a major change and long-run inflation is now more likely."

https://www.wsj.com/articles/if-inflation-is-coming-here-is-...

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#189

Post by 100-xyz »

rrrrrrrrrrrryan wrote: post #151
meterplech wrote: post #105

Earlier quoted context omitted.

100% true. And a good reminder of how much exposure housing prices have to interest rates. To frame the same math another way: If you bought a house for, say, $580k with a $500k mortgage... You paid $80k down payment + $20k closing costs and your monthly would be ~$2,073/month. If interest rates go up to 6%, and the person buying your house also wants to pay the same ~2,073/month, they would only be able to afford a…

This logic doesn't hold in all housing markets. In California, people generally buy the absolute most house they can possibly afford. Houses are extremely expensive and people don't want to live in shacks, so they stretch their budget as far as they can. Home prices in these markets are extremely sensitive to changes in interest rates, as you've described. However in other markets, interest rates can wiggle up and do…

Sincere question - can you point me to such markets where interest rates can wiggle up and down without having as dramatic an effect on prices?

Re: Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble

#190

Post by imtringued »

AdmiralAsshat wrote: post #34

Awesome. I've been trying to buy a home since 2015 or so and noting that housing prices continue to rise, without fail, regardless of economic or political climate. Economy is doing well? Price increase! Economy is doing terribly because of global pandemic? Price increase! I have been patiently waiting for the next "bubble" to pop, even as my realtor insists that oh no, we're not really in a bubble, this is just the…

It probably can't. You'll hit a massive floor at -10% interest.
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