[HN Gopher] US house prices in 1950 vs. 2024, accounting for inf...
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US house prices in 1950 vs. 2024, accounting for inflation
Author : ivewonyoung
Score : 115 points
Date : 2024-11-29 19:03 UTC (3 hours ago)
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| Finnucane wrote:
| Now do price-to-income ratio over the same time.
| notadoc wrote:
| 10x-15x+ price to median income is common in many desirable
| areas. Completely ridiculous, but also what you might expect
| after a decade+ of QE, asset inflation, and the last four years
| of core inflation.
| ponector wrote:
| Still not that bad comparing to other countries, like those
| in EU.
| Finnucane wrote:
| To say nothing (apparently) of decades of allowing the
| wealthy to absorb most of the created wealth of the last few
| decades.
| jjtheblunt wrote:
| I think about this and wonder if it's supported by data.
|
| I wonder because no one speaks about the poverty created by
| the last few decades, which might contradict what you
| wrote, or might not. I also wonder where one could track
| creation of wealth and creation of poverty.
|
| (living outside income, for example, i think of as creating
| poverty)
| ajross wrote:
| That's because "desirable" areas aren't fixed over these
| timescales. Today's gated suburbs in the Bay Area were
| literally dust bowl farms in 1950! Like, literally Steinbeck
| wrote a famous novel about it.
| Kon-Peki wrote:
| Steinbeck's books were mostly late-30s, no? Which one are
| you thinking of? Grapes of Wrath is mostly around
| Bakersfield, Cannery Row and East of Eden are
| Monterey/Salinas Valley. I'm not sure of anything set that
| far north.
|
| I have family photos from back in the 50s showing lots of
| good orchards in the Bay Area. Certainly no dust bowl
| stuff. If I remember correctly, my grandparents bought
| their 5BR tract house in Santa Clara in the mid-1950s for
| somewhere around $15 or $16k, which was ~40% more expensive
| than the median California house back then. The Bay Area
| has always been expensive!!!
| baron816 wrote:
| Yes, comparing to median household income is the right way to
| do this. CPI isn't actually useful in this case.
| em500 wrote:
| The longest history I could find using FRED data is this:
| https://fred.stlouisfed.org/graph/?g=1BPi3. So median house
| price to family income rose from 2.9 to 4.3 between 1963 and
| 2003, based on the series
| https://fred.stlouisfed.org/series/MEFAINUSA646N and
| https://fred.stlouisfed.org/series/MSPUS.
|
| Getting long historical series of economic data is often a
| challenge due to changes in definitions and sampling
| methodology over time. FRED has a bewildering array of both
| income and house price series, all with subtly different
| definitions, most with pretty short histories.
| cma wrote:
| Should also also adjust for price/sqft and energy
| efficiency/insulation savings, lack of plumbing in some and ~15%
| without electricity. And also externalities of 1950s air
| conditioning designs that would have depleted the ozone by now if
| we stayed with them, and things like lead paint causing mental
| development issues.
|
| Median wages are up since significantly since 1950 (most
| stagnation was after 1970s), and house building is expected to be
| heavily affected by purchasing power parity, using a heavy
| portion of local labor.
|
| Occupational deaths in construction went from 8 per thousand
| workers in 1950 to below 2 per thousand today, but I couldn't
| find numbers for residential. In the 1950s, if there was as much
| highschool attendance as today, out of each medium sized
| highschool you'd expect a higher than 50% chance of one of your
| peers to eventually die in a construction accident.
| inglor_cz wrote:
| Given that even in the least attractive locations, home prices
| have grown around 100 per cent, we can probably chalk those 100
| per cent up to general improvements of homes (size, appliances
| etc.) Neither homes, nor cars, nor planes are the same as they
| were in 1950.
|
| The rest is the "true" growth.
| jonnycomputer wrote:
| I only want to add that in 1950 a significant number of homes
| still did not have indoor plumbing, and I'd guess that a lot of
| existing housing stock was small square footage. I don't want to
| say there wasn't housing inflation, but I do think the the nature
| of housing stock has changed too.
| TuringNYC wrote:
| > I do think the the nature of housing stock has changed too.
|
| Ultimately it doesnt change the fact of affordability unless
| one can also find homes w/o indoor plumbing to make up for
| inflation.
| mlyle wrote:
| Hedonic adjustments are important but, as you point out, have
| issues.
|
| But, affordability isn't represented well by inflation,
| either. Median family income in 1950 was equivalent to $45k
| today; the actual number is $100k.
|
| A big part of the issue is that workers stopped benefitting
| from productivity growth in the mid-1990s. That's what's
| really made the housing crisis particularly sharp.
| Cumpiler69 wrote:
| _> A big part of the issue is that workers stopped
| benefitting from productivity growth in the mid-1990s._
|
| Distributing the benefits of increased productivity to the
| workers was never part of the capitalist motto. That was
| what socialism was for.
| ChrisMarshallNY wrote:
| In our area, it doesn't matter what shape the house is in. Most
| of the buyers seem to be corporate buyers, and they often gut
| and rebuild.
|
| They pay cash, too, which many sellers like.
| tdb7893 wrote:
| In a lot of states there was a more than 3x increase in price
| which I think is hard to justify as a difference in stock.
| Median square footage for homes now is only 1835 square feet
| (https://fred.stlouisfed.org/series/MEDSQUFEEUS). There are
| also a lot of arguments like how quality has gone up but
| building technology has vastly improved. Either way that the
| price increase is mostly a function of housing quality doesn't
| seem convincing to me (I've seen really garbage houses go for
| crazy amounts recently).
|
| One example is my grandparents' home was built in the 1930s.
| It's a small home but in a good location and they said when
| they were younger it was worth ~200,000$ (I don't know the
| exact decade they were talking about here but from context it
| was somewhere in the 50s to 70s). The literal exact same house
| is now worth around 3,000,000$. The house now needs a lot of
| work (it actually decreases the value of the land) but the
| price is still 15x higher.
| tpmoney wrote:
| > It's a small home but in a good location and they said when
| they were younger it was worth ~200,000$ (I don't know the
| exact decade they were talking about here but from context it
| was somewhere in the 50s to 70s). The literal exact same
| house is now worth around 3,000,000$. The house now needs a
| lot of work (it actually decreases the value of the land) but
| the price is still 15x higher.
|
| If this is true, and using 1960 as our middle of the road,
| then this isn't exactly "egregious". 200k in 1960 is 2.1M
| today just accounting for inflation. If we use 1950 it's 2.6M
| and if we use 1970 it's 1.6M. Now sure the house needs work,
| but I also. bet the area even if it was "good" when they
| built it in the 1930's how many more people are living in the
| same location now all vying for the same plots of land?
| People often gawk at what their parents or their grand
| parents paid for their houses, but rarely consider what
| living there would have been like 30 or 60 years ago. I have
| some relatives that bought a house outside a developing area
| about 30 years ago that's probably seen an easy 3-4x increase
| in value (of which only 2x would be accounted for with
| inflation. But the difference between then and now is that
| when they bought that home, it was 1 of 6 on a street in the
| middle of nowhere, surrounded by fields and undeveloped land.
| There was a single main road that ran through "town" about 5
| minutes away that had 2 gas stations, and 3 fast food stores
| and a grocery store. For anything else you were driving 20-40
| minutes into the nearest city (or around). They commuted
| every day 45 minutes into the city. Today that same area is
| bursting with new homes, there's now 2 exits / entrances onto
| the highway within 10 minutes of their house, the main street
| is jam packed with businesses and filled with strip malls and
| shopping centers with multiple grocery stores, and a good
| chunk of the main "national brands" you might expect (Home
| Depot, Lowes, Walmart, Gamestop etc). And just about anything
| they don't have along that main street and it's adjoining
| centers can be found 15 minutes away in the shopping centers
| and neighborhoods that sprung up between them and the city.
| In short, the house they live in today is in the sort of
| place some folks looking to move into a thriving and growing
| area would want to move into, and the house they bought 30
| years ago was in the sort of backwoods sticks that such
| people would be avoiding as "too remote".
| dataviz1000 wrote:
| I'm curious how much the equivalent modern home would cost in
| 1950? Also the medium salary has almost doubled. I suspect
| modern homes are a much better value although more expensive.
| jbverschoor wrote:
| What kind of inflation? Bc inflation numbers are artificial and
| are often doctored. Like here in NL where they conveniently
| adjusted the "basket"
| willcipriano wrote:
| You don't have teams of economists go over your grocery list to
| minimize inflation?
|
| Next you'll tell me you can't eat iPads.
| ta1243 wrote:
| Inflation figures in all manner of goods are available, at
| least in the UK, I assume in your country too.
|
| A "basket" is chosen as a realistic example of how a typical
| person spends their money. Your personal "basket" is going to
| be different to mine.
|
| If you don't think the typical basket is representative, then
| be honest and come up with your own basket and work out what
| your personal inflation is.
|
| Some will have inflation far higher, others will have it far
| lower, that's the nature of a generalised number.
|
| None of this means that the figures are "doctored"
| foogazi wrote:
| I wonder how the price per sqft has changed, anyone have that ?
| foogazi wrote:
| Doing median price over CA makes no sense
| mlyle wrote:
| It makes a lot more sense than doing the mean.
|
| The typical home is a reasonable basis for comparison.
| KaoruAoiShiho wrote:
| Can this be compared to the S&P 500?
| ta1243 wrote:
| No, the S&P500 wasn't formed until 1957
| tempestn wrote:
| You could use the Dow though. It varied from 2700 to 2900 in
| 1950, and is now about 45,000, so about a 16x increase, while
| inflation over the same period has been about 30x. However
| the index price doesn't account for dividends, so total
| return has been much larger.
| corentin88 wrote:
| Now the next question is why? Why the houses prices have surged
| in the past decades. And why is it a worldwide situation (at
| least in developed countries)?
| hijinks wrote:
| too many people and not enough land in areas where people don't
| have to drive 3 hours to work.
|
| Want pricing to go down then we need to build more dense
| housing even an hour drive from the city. The days of wanting a
| big backyard are coming to an end for most home owners.
| freeone3000 wrote:
| What if we put the jobs closer to the people instead of
| making the people get closer to the jobs? Just drop a big ol'
| tech park in the middle of Oakland?
| syndicatedjelly wrote:
| Who is the "we" in that sentence? Is there a Central
| Planning Bureau that forces "jobs" to be placed in certain
| locations? What jobs would you place near the people,
| whatever that means?
| CrimsonCape wrote:
| I often see comments in the theme of "dense housing is the
| panacea."
|
| You can't really run power tools in dense housing, correct?
| Or fix stuff yourself? Sounds awful.
| tokioyoyo wrote:
| I was born, raised, lived in dense cities. I've lived in
| semi-suburban life as well. Unless you're into some hobbies
| that requires such tools, you just never use it? And when
| you have to... you just use it? I live in an apartment
| building in a city, and once a month or so, during daytime,
| people use tools and it's no biggie.
|
| To each their own though. I definitely grew to understand
| that if someone was raised in rural or suburban life, it
| would be extremely hard to adjust to hardcore city life,
| and vice versa. But I don't think we should be blocking
| build ups for one, if there's demand.
| camgunz wrote:
| We just bought a place in a dense area of The Hague, and I
| run a table saw + shop vac frequently as we renovate. No
| complaints yet, just keep my hours between 10-6. Lots of
| other neighbors doing similar stuff too.
|
| There are lots of benefits to density. Our grocery store
| and day care are less than ten minutes away on foot,
| because there's a ton of people so we can support these
| kinds of businesses (also weed, hair salons, bars, cafes,
| boutiques, secondhand stores, restaurants, play cafes, etc
| etc.)
| marcosdumay wrote:
| > Want pricing to go down then we need to build more dense
| housing
|
| You need mass transit and transport integration. House
| density can only move you so far (and it's not very far).
| seryoiupfurds wrote:
| Luckily, density is what makes mass transit viable. It's
| more cost effective to run a driverless metro every three
| minutes in an urban core than to run a mostly-empty bus
| once an hour in a distant suburb.
| marcosdumay wrote:
| > Luckily, density is what makes mass transit viable.
|
| Up to some point, and it's not even that high...
|
| What really makes mass transit viable is integration.
| AdrianB1 wrote:
| That is easy:
|
| 1. bigger houses
|
| 2. a lot more equipment in it: electricity, plumbing, AC
|
| 3. zoning restrictions reducing supply to increase the value of
| existing houses; owners benefit from that, local government
| benefits even more from higher property taxes and also from
| permitting taxes
|
| 4. increase of demand due to different factors, like lifestyle
| changes (back then almost nobody lived on their own in a house,
| single people were very rare _by comparison_ ), unequally
| distributed immigration and internal migration to some cities)
|
| 5. very different and more expensive safety requirements for
| new houses
|
| 6. more expensive workforce building the houses
|
| 7. huge reduction in self-building houses and price gouging by
| the developers
|
| and more
| betaby wrote:
| > 1. bigger houses
|
| also 300 sqft condos.
|
| sqft per person hasn't changed much since 1980s.
| thisislife2 wrote:
| It's not just "developed" country problem any more. It is also
| happening in developing countries, like India and Vietnam for
| example. In India, real estate prices have sky rocketed over
| the past 30+ years. Part of this is because of the rise of
| property development firms. Government encouragement too has
| played a role, I think, because construction (and the
| construction industry) does create a lot of jobs. Real estate
| is also a vehicle to hide black money, and that's another
| factor here in India.
|
| (I wanted to strangle Trump when he once commented that real
| estate in India and other parts of Asia, are still
| "undervalued"!)
| corentin88 wrote:
| Should have say "high-income countries" instead of
| "developed" countries. Thanks for pointing that out.
|
| Had no data for low/middle income countries, but thanks as
| well for reporting that it's a global issue.
| tokioyoyo wrote:
| More people want to live in the city than ever in the history
| of humankind for various reasons. See gigantic rental price
| drops in mid-2020 when people briefly thought city-life will
| never return to normal. Housing prices mostly went up during
| the year, but they're much stickier than rental and that flight
| didn't last long enough for people to sell their homes (well,
| it's much easier to drop your rental for another, than sell and
| buy somewhere else).
|
| When demand starts slowing down or supply is caught up (it's
| happening everywhere outside of Tokyo in Japan, and somewhat in
| HK and other places as well), they stabilize or go down.
| partiallypro wrote:
| New home sales are at a near 30 year low at this very moment,
| at least in the US. No one is really buying, but prices are
| still inflated drastically. The people that -are- buying
| homes, are people that already have them. Houses in rural and
| suburban areas are also super inflated as well. It's not just
| a city phenomenon. There is clearly something very broken in
| the market. It really comes down to NIMBYs, entrenched
| interests and ZIRPs massive distortion of the market that
| locked a ton of people into a low rate.
|
| Many current homeowners have their wealth in their home, they
| want it to (in some cases) to continue to out-perform the S&P
| 500. Since they live there, they bully the local governments
| to not allow more building so there is less supply to compete
| with their asset. State and federal agencies are going to
| have to step in at some point to incentivize local
| governments to upzone. Not even mentioning this isn't
| remotely sustainable as a tax base in most instances, because
| subdivisions and infrastructure to deal with the sprawl this
| a bill that will come due in a harsh way making higher
| property taxes inevitable pricing out many of the people that
| were in. The #1 reason people are fleeing California and New
| York is due to costs...and in turn they are about the lose
| electoral power in Congress and Electoral college.
| tokioyoyo wrote:
| Yeah I agree with basically every statement. But house
| prices are extremely sticky with 30 year mortgages. Less
| stickier in Canada because of 5 year mortgages. There's
| actually a big drop in rental prices in my very-in-demand
| city. SFH still sell like hotcakes though. Since rates
| might be coming down again, it's incentivizing people to
| move and lock in for 5 years.
| ndriscoll wrote:
| People who intend to continue living somewhere don't care
| about the price of their asset per se (they're not going to
| sell it), and dense zoning tends to increase land prices
| anyway. Opposition to density is about quality of life.
|
| In a related phenomenon, people will pay more to be around
| better neighbors (which you can see reflected in price
| differences across similar houses in similar areas but in
| different school catchment areas). It makes some sense that
| people will pay as much as they can to be in a better area
| with better kids when you look at the state and direction
| of public education. If you can't afford private school,
| that's basically your only lever to try to buy quality. If
| you can, you still have a tradeoff that you could spend
| ~13k/yr/kid on tuition or add 200k/kid to your home budget
| to live in an area with better public schools.
| zackmorris wrote:
| My take as someone living in the northwest and witnessing
| exponential growth over my lifetime: - We
| clearcut 95% of US timber, now the remaining 5% is in states
| like Oregon, Washington and Idaho. Some wood is an order of
| magnitude more expensive or simply unavailable, with prices
| held artificially low by importing wood and deforesting Canada,
| for example. - Good, fast, cheap (pick any two). We build
| homes good and fast, but little effort is being made to reduce
| costs by an order of magnitude by using materials like
| hempcrete. - Zoning laws have been changed so that row
| houses and 3-4 story apartments can be built right up to the
| road, maximizing profits but externalizing urban decay. High
| price/low value. - The US adopted a service economy when
| it sent 100,000 factories overseas under the GW Bush
| administration in the 2000s after Clinton signed NAFTA in the
| 1990s. Now a smaller fraction of the population does the work
| of building homes, with most everyone else pushing paper, so
| charges what it wishes. - People with high carbon
| footprints had more children. Bigger houses for high consumers
| left less housing for thriftier people. - Garages, lawns
| and commuting wasted immeasurable resources after we
| could/should have transitioned to sustainable energy and
| transportation in the 1980s but chose to double down on the
| nuclear family, trickle-down economics, etc. - The cost
| of those unnecessary roads was factored into property taxes,
| driving home prices higher. - Nearly unlimited financing
| was available for home loans, while almost none was devoted to
| startups and other disruptive industries. We got what we paid
| for (McMansions instead of, I don't know, 3D printed homes).
| - Modern techniques were almost never adopted into building
| codes. So rather than running wiring conduit through walls or
| encouraging similar practices to make additions and remodeling
| easier, we encouraged tearing down and building from scratch,
| which wasted countless trillions of dollars. - The tax
| system doesn't value trees, existing structures, previous money
| spent on remodels, etc. So developers profit from bulldozing
| homes and razing lots in a day to build houses in a month. The
| human and environmental cost of that can never compare to
| moving homes, remodeling them, etc. - Our culture and
| entertainment tell everyone they need granite countertops and
| $50,000 gas guzzlers. Things are expensive because other people
| consume more and more and more with insatiable appetites and
| expectations. - Wealthy people who could have steered our
| culture in a positive direction chose to do nothing. Or worse,
| actively encouraged extractive and vulture economic policies to
| enrich themselves further.
| plaidfuji wrote:
| I suppose what this illustrates is that, while the CPI does
| include rent (or "owners equivalent rent") in its calculation,
| the equivalent rent is either not representative of the median
| home, or house prices have grown much faster than rent over the
| past 75 years... and yet the apparent popularity of being a "real
| estate investor" seems only to have increased, which suggests to
| me that the rent/buy ratio has gotten more favorable, not less
| ajross wrote:
| None of the above, the disconnect is that median income has
| risen (much) faster than inflation in the last seven decades.
| See my comment elsewhere. The whole post is an exercise in
| failing to recognize confounding variables.
| ajross wrote:
| This is still a bit spun though. Median _income_ has risen even
| faster!
|
| Some quick unverified googling says that in 1950 US Median income
| was $3300, and that inflation since 1950 has been a 10.89x
| increase. US median income today is $80k.
|
| So indeed, housing has gotten a lot more expensive in real terms.
| But we've all gotten richer, and on average _A US Household is
| spending less of its income on housing today than in 1950, not
| more._
|
| California, it's true, is sort of out of control. But that's
| clearly a local thing in two metro areas, not a problem with the
| economy as a whole.
| tikkun wrote:
| It's almost as if supply has increased slower than demand.
| xenospn wrote:
| They're making too many people.
| mdtancsa wrote:
| Would be useful to see the cost of just the land as well if thats
| possible. As others have pointed out, the size and feature
| expectation inflation has to be factored in here. The little
| "wartime 4" I grew up in north of Toronto was smaller than a lot
| of "garage-ma-halls" these days and didn't really have
| insulation. It was a regular feature in winters to get ice on the
| living room window. My "modest" (by today's standards) house
| would be a rich persons place in the 70s.
| bluedino wrote:
| My garage (22x30) is over half the square footage of the house
| I grew up in. Which didn't even have a garage. Yard is three
| times as big as well.
| llm_nerd wrote:
| That kind of goes both ways, though.
|
| I live in an affluent suburb in a rich city in a sleeper town
| just outside Toronto. My home was built in the past twenty
| years and is in a "McMansion" style neighbourhood. It's a
| relatively large home, but in many ways things have regressed.
|
| Craftsmanship is non-existent. The kitchen cabinets look like
| Ikea specials with shelves held up by little plastic pegs. All
| of the various particle board doors are installed laughably
| poorly with giant gaps. Sound travels through the home with
| ease.
|
| It's well insulated and has good multi-pane windows, but
| automation and mass production should bring a lot of that just
| with the passage of time. I would expect that all else being
| equal the same work should by better windows and insulation and
| so on than fifty years ago.
|
| Regarding land value, it is interesting how in denial we are
| about land values. The city gives me property tax statements
| valuing my land at 1/10th the price of the dwelling...yet
| people are buying $1M homes on smaller lots and immediately
| tearing the home down to build new. More than a few cases of
| that demands that we completely upend our valuations.
| seanmcdirmid wrote:
| There is an equation they use that might be biased toward
| improvements. In Seattle/King county at least they are
| gradually changing the equation to value land more and
| improvements less, so our property taxes have been going down
| each year even though our value is going up (since we are a
| narrow townhome on a small plot). This is to ultimately
| encourage more density and make it more expensive to hold
| unimproved land.
| soared wrote:
| Your windows likely would still ice up today, except they are
| double pane with argon or another gas inbetween the panes so
| they are comparatively insanely well insulated.
| hervature wrote:
| What these analyses normally miss:
|
| - Building codes have changed. Things are much safer now than in
| the past. The chance of dying in a fire has decreased 1/4 since
| 1950 [1].
|
| - Houses are much bigger. Houses have almost tripled in size [2].
|
| - Quality of finishes have increased. People will probably debate
| me on this because things have generally gotten cheaper over time
| but that means that the expectation for a house now is quartz
| countertops and not vinyl.
|
| - Desirability has changed. For example, the number of sports
| teams have tripled since 1950.
|
| [1] - https://www.statista.com/statistics/526310/timeline-
| deaths-n...
|
| [2] - https://www.ahs.com/home-matters/real-
| estate/the-2022-americ...
| mistermann wrote:
| It's a valid and good point, but it's also important that there
| is very often no other option available in new construction.
| SoftTalker wrote:
| When the zoning/permitting process limits the building of new
| houses, builders are going to build what gives them the
| biggest return: large, luxuriously finished houses.
| theGnuMe wrote:
| The luxury finishes are high margin..
| jjav wrote:
| > builders are going to build what gives them the biggest
| return: large, luxuriously finished houses
|
| In a lot you could build one largish luxurious home and
| sell it for 1.5 to 2.0M
|
| Or do 8 tiny townhouse units and sell each for 800K for a
| total of 6.4M
|
| I don't see how the single home will ever be more
| profitable if a builder is doing it.
|
| We're seeing a lot of these 8 townhomes per lot (4 on each
| side with small driveway in between) popping up everywhere,
| precisely because it maximizes profit per lot for the
| builder.
| SoftTalker wrote:
| You can't do the 8 tiny townhouses if that isn't
| permitted.
|
| Many zoning codes prohibit building even a duplex in a
| "single family home" area.
|
| Maybe this is starting to change in some areas.
| camgunz wrote:
| Exactly that: you've got a limited number of lots and a
| limited number of units that can be on those lots, so max
| the value of those units. With the lot supply and zoning,
| that equals replacing whatever might already be there
| with a giant McMansion. This drives up housing prices
| while also deleting the middle out of the market.
| TheGamerUncle wrote:
| sorry what do you mean by saying "Desirability has changed. For
| example, the number of sports teams have tripled since 1950." ?
| I am like not American and I do not get how that is related to
| housing
| ziddoap wrote:
| If I understand correctly:
|
| Houses near desirable locations (e.g. sports stadiums) are
| more expensive. There are more of those desirable locations
| now (more sports teams = more sports stadiums). So the
| average is driven upwards even with no change to the housing
| itself.
| theGnuMe wrote:
| I don't think it is causative at all. The statement sounds
| like an AI hallucination. But this is testable. You do
| probably see some gentrification in the immediate area but
| you also have the negative externality of parking...
| ziddoap wrote:
| Sure, I have no idea. I was just trying to interpret what
| the parent poster said.
| grepLeigh wrote:
| Is living near a sports stadium really that desirable? I
| lived a few blocks from the Giants stadium in SF, and I'll
| never make that mistake again.
|
| Running a 15 minute errand on a game day could take hours.
| It was impossible to get my car out of the garage or get
| on/off the highway. The food/trash left on the streets was
| terrible too, which made walking my dog a PITA instead of a
| pleasure.
| ziddoap wrote:
| > _Is living near a sports stadium really that
| desirable?_
|
| For me? Absolutely not, haha. But I'm sure it is for
| others. I have no idea what the average American would
| say.
| garciasn wrote:
| I think the point is that if you live in an American city
| with a professional sports team, you're living in an area
| that offers way more than just a sports team; there are
| many things of note to do within a 20mi radius.
|
| People who choose to live, say 250mi from the nearest
| major professional sports team are going to have a ton
| less job opportunity, things of note to do, but will
| generally have a lot less to pay because no one else
| wants to live there.
| grepLeigh wrote:
| Ah that makes more sense, thank you! I wasn't looking at
| it as a proxy for surrounding development, but now I can
| see why that might be a more nuanced metric than just
| region size/population.
| xnx wrote:
| Not only an increase in square feet, but an even bigger
| increase in square feet per person.
| cj wrote:
| Let's go further and:
|
| - take the average household size in 1950 vs 2020 to
| calculate median house price per person in a household
|
| - then take the average square feet per person and find out
| what % it has increased in the past 75 years
|
| Then layer those stats on top of the inflation adjustments to
| hopefully remove some of the confounding factors?
| steveBK123 wrote:
| Yes exactly - my parents and inlaws had homes 2x the size of
| what they grew up in, and also had half the children their
| parents had.
| cperciva wrote:
| Indeed. Growing up in the 80s -- in a fairly middle class
| family -- a lot of my friends had bunk beds.
|
| Now "living wage" calculations assume that every child has
| their own bedroom.
| xenospn wrote:
| The size of a single person has also increased. Considerably.
| ziddoap wrote:
| I definitely agree that there's much more to housing prices
| than most simple analyses present.
|
| Some food for thought in the other direction, though:
|
| - Tools (e.g. nail guns, paint guns, concrete finishers,
| horizontal drilling for utilities, etc.) and materials (e.g.
| pre-engineered trusses) are significantly more efficient, so
| labor costs can be reduced which should drive pricing down. At
| least enough to offset changes in building codes, but likely
| more.
|
| - Triple house size does not equal triple building costs.
|
| - I would definitely debate on quality of finishes. Some might
| be better, but plenty is worse. For example, crown moulding is
| not as common (in my experience), and skirting is typically
| much cheaper, and I rarely see chair rails anymore. More often
| than not I see vinyl floors replicating wood instead of real
| hardwood floors.
| RAdrien wrote:
| Productivity in building construction has not improved much,
| according to data, even if tools have improved.
|
| Even if tripling house size doesn't literally triple costs,
| that is a straw man. It certainly must account for some of
| the cost increase.
| ziddoap wrote:
| > _Productivity in building construction has not improved
| much, according to data, even if tools have improved._
|
| What data are you looking at? I worked in construction (to
| be fair, industrial and commercial sector) for over a
| decade. Productivity rates changed quite a bit during the
| decade I was an estimator. I will dig up my productivity
| books from when I first graduated and compare to the last
| one I purchased (a few years ago) when I get home.
|
| > _Even if tripling house size doesn't literally triple
| costs, that is a straw man._
|
| A straw man? Even if labor only accounted for 10% of the
| cost of building a house (it is _much_ more), changes to
| labor productivity absolutely affect the cost to build.
| Productivity rates are different for a new build of
| 1000sqft and 2000sqft. Not sure how that 's a straw man?
|
| Also, just to clarify, I'm not really presenting an
| argument. I agree with the parent comment that these
| maps/analyses aren't able to capture all of the variables.
| They gave some variables to consider when looking at the
| article data. I'm giving some others.
|
| > _It certainly must account for some of the cost
| increase._
|
| I said it's not a 1:1 relationship, not that size didn't
| account for costs at all.
| seanmcdirmid wrote:
| Crown molding only it isn't common anymore because it isn't
| very desirable.
|
| I wonder if we could do housing the Chinese way and just give
| people a concrete box to renovate (houses aren't sold new
| renovated in China, and you are expected to do your own re-
| renovation after you buy a house second hand), but that
| really hasn't helped housing prices over there very much.
| ziddoap wrote:
| > _Crown molding only it isn 't common anymore because it
| isn't very desirable._
|
| Why it's not there doesn't really matter when we're talking
| about costs. If it's not there, you don't have to pay for
| it, end of story.
| seanmcdirmid wrote:
| It doesn't mean it wasn't desired. It could have been
| replaced with something else even more expensive.
| neverartful wrote:
| The use of pneumatic nailers has substantially reduced the
| time required to frame a house.
|
| Regarding labor costs and productivity, there is vastly more
| specialization in building a house now than there was in
| 1950. I suspect that in 1950 you only had a few types of
| skilled labor involved: carpenter, electrician, plumber, and
| maybe a flooring person (the flooring may have also been done
| by carpenter at that time). Now, there are additional
| specialties that need to be involved - roofer, concrete,
| HVAC, tile, countertop, appliance, etc.
| tempestn wrote:
| Also while houses are generally larger, lots are generally
| smaller, and often comprise the majority of the value.
| legulere wrote:
| Efficiency gains only lead to lower prices if they are bigger
| than wage increases. And those are driven by efficiency gains
| of the rest of the economy. Sure you can gain here and there
| some wins, but in the end construction is still a very labor-
| intensive job.
| ziddoap wrote:
| The percent efficiency gain in labor when we moved from
| hammer & nail framing to nail gun framing _significantly_
| outpaced the percent wage increase framers experienced.
|
| But yes, absolutely, you are right that there are many
| variables at play. Which is what my original post, and the
| person I replied to, were trying to convey.
| tayo42 wrote:
| My budget was around a million, idk if I saw a single home
| (sfh, Townhomes, condos) that had wood floors
| brightball wrote:
| My grandmother compiled a book of letters from families in my
| hometown that she gave all of the grandkids a copy of before
| she died.
|
| One of the letters talked about how common fires were and how
| the standard practice was to just pull up a chair in the middle
| of the street and watch it burn.
| jhrmnn wrote:
| Looks like normalizing to price per sqft might make the price
| flat at least in some parts of the US? I always debate with my
| brother, an architect, why people consider an 80-sqm apartment
| big enough for a family of 4 (Europe), but wouldn't aim below
| 150 sqm when considering a house.
| gred wrote:
| If you asked me whether I would want to pay 5x more for a house
| that reduces my likelihood of dying in a fire from 0.00427% to
| 0.00104%, I think I would choose to roll the dice (and maybe
| DIY install a $20 smoke detector).
|
| 1950: 6,405 fire deaths / 150,000,000 US pop = 0.00427%
|
| 2022: 3,490 fire deaths / 335,000,000 US pop = 0.00104%
| ziddoap wrote:
| Death is not the only negative outcome of a house fire.
| bushbaba wrote:
| No but eating McDonald's or drinking alcohol kill more yet
| we do it anyways
| ziddoap wrote:
| How is this related to the conversation? I'm not sure
| what point you're making.
| bushbaba wrote:
| The point is the risks of health/economic issues from
| home fire is something most Americans would gladly have
| for reduced housing price.
| slyall wrote:
| Death is a well tracked statistic and a severe and fairly
| distinct outcome. Other statistics might not be as
| available or accurate.
|
| Similarly the murder rate is a more accurate than other
| crime rates. Burglaries, muggings and assaults are often
| not reported to police whereas violent deaths almost always
| are.
| ziddoap wrote:
| Sure, I agree.
|
| Gred's post however strongly implies that the only
| outcome worth considering is death. That might be true
| for them, but I'm not sure if that applies broadly.
|
| Speaking from experience, losing your house to a fire is
| traumatic, expensive, and you lose things that can't be
| replaced. Even when there are no deaths.
| SoftTalker wrote:
| These are guesses but I think the main reduction in fires
| from 1950 to 2022 are:
|
| a) better electrical wiring and circuit provisioning.
| Overloaded outlets or circuits were more common in the 1950s.
| Fuses could also be tampered with more easily than circuit
| breakers.
|
| b) Matches everywhere. You had matches in the kitchen for
| lighting the stove, and around the house for lighting
| cigarettes. "Kids playing with matches" was a common cause of
| fires. You don't hear about that nearly as much today.
| lordnacho wrote:
| Also improvements in medicine might matter
| slyall wrote:
| c) Smoking
|
| In 1950 around 50% of adult males smoked, these days it is
| closer to 15%
| camgunz wrote:
| More points:
|
| Basically everything is soaked in flame retardant: your
| insulation, your wiring, your furniture, your appliances.
|
| Heater technology is way safer now. Central heat is a lot
| more prevalent, and space heaters are a lot less likely to
| start a fire.
|
| I'd also add to your wiring point: electrical appliances
| are way safer and way less hot.
|
| A counter-argument though is the prevalence of lithium-ion
| batteries. I do wonder if a spike in fires is coming--
| though I would've expected it by now.
| cogman10 wrote:
| Are you sure it's a 5x difference in material?
|
| Like, a big reason for fires in the 50s was paper covered and
| underspeced wiring.
|
| Safe wiring simply uses plastic instead of paper.
| jjav wrote:
| > Houses are much bigger. Houses have almost tripled in size
| [2].
|
| I know the numbers support this but I always wonder why my
| observations are so different.
|
| When growing up (I'm Gen X) all my friends houses and mine were
| pretty big. Most of us were lower middle class so these were
| cheap houses. Land was dirt cheap so houses used the space and
| still had huge yards. Houses were simple, but spacious.
|
| By the 90s houses had shrunk, since now land was quite
| expensive so builders had less space.
|
| All the construction going on right now in my town is even
| tinier, since land prices have skyrocketed, so builders have
| the incentive to stuff as many tiny units into tiny plots as
| possible.
|
| So, where are these 3x larger houses these days?
| cammikebrown wrote:
| The big houses are REALLY big. And, while I can find a small
| apartment, new homes under 2000 sq ft are tough to find. The
| house I grew up in was 1500 sq ft and plenty for a family of
| four. I wish I could own a 1100 or less sq ft home but
| they're all very old
| skellington wrote:
| Almost all of the middle class tract homes built in
| California (for example) in the 60s/70s are around 1200sf.
| They also used cheap materials, had no insulation, maybe 2
| bathrooms but often 1.5, very simple kitchens, etc.
|
| The stuff that people buy now are much bigger and much more
| luxurious even at the bottom end.
| frmersdog wrote:
| I suspect that something has changed in the way square
| footage is calculated. Perhaps there are more finished
| basements or something. I was very involved in several
| moves my family undertook when I was younger. I feel like I
| got a good sense for home sizes. Many of the ones listed
| for 3000 sq ft. today look more like the 2000 sq ft. houses
| from yesteryear.
|
| I also think about Louis Rossmann's quest to find a NYC
| storefront for his repair business a few years ago. He
| brought a laser measure with him, to document how the
| actual space squared with advertisements. I don't know that
| he ever found a place that wasn't lying. Yes, New York and,
| yes, commercial, but I wouldn't be surprised to see similar
| tactics in place for residential, across the country.
| ipython wrote:
| I just had this conversation with my grandmother today. She
| was describing her own grandmothers house- and how huge it
| was. The large bedrooms, a whole room dedicated to the
| telephone even! The way she described it, it was a straight
| up mansion.
|
| I was curious what this house looked like, so I asked the
| address. Looked it up on Redfin. It was less than 2400sq ft.
| The house she was standing in and comparing to was twice that
| size.
| angmarsbane wrote:
| Older homes had more usable space, so they felt larger.
| They could fit 4-5 bedrooms in 2400 sq ft or less.
| slv77 wrote:
| Much of the US housing stock includes homes built before 1990
| (30 years ago). If most of the median home price increase was
| due to build quality there would be a bimodal distribution of
| housing appreciation with newer homes having appreciated more
| than older homes.
|
| Most of the appreciation in housing is due to higher household
| incomes due to two income households.
| sir0010010 wrote:
| I would change your last sentence to: is due to higher
| household incomes due to two income households _without_ a
| similar increase in the supply of housing near where jobs
| are.
| beala wrote:
| Why bimodal? Houses are being built every year. So maybe
| houses built in 2023 have appreciated 1% more than in 2022,
| and those have appreciated 1% more than 2021, and so on,
| leading to a smooth distribution.
| partiallypro wrote:
| How much of the dying in a fire decrease is just because of
| decreased smoking, and the use of smoke alarms though?
| pllbnk wrote:
| > Things are much safer now than in the past.
|
| I wonder, should arguments like this be used to justify the
| issue? With technological advancements things should become
| better (i.e. safer in this case) without raising inflation-
| adjusted costs. Wouldn't it be very similar to saying that
| processors should have become more expensive because they
| became faster or hard drives because they have larger capacity?
| Additional costs built into the new codes should decrease over
| time as builders become more efficient at implementing them or
| technological advancements allow them to become more efficient.
| tpmoney wrote:
| Not every safety item is necessarily an extra expense due to
| inefficiency. The simplest example would be electrical wire.
| 2 lead, paper insulated aluminum wire is less expensive than
| 3 lead PVC insulated romex, regardless of manufacturing
| efficiency. There's not a lot of modern AL electrical wire
| for price comparison, but Home Depot lists a 1000ft spool of
| #2 AWG USE-2 AL wire from Southwire for $0.80 / foot. The
| same spool from the same manufacturer in CU is $2.32 / foot.
| So while not a perfect comparison, if you imagine going from
| a 1950's 2 wire AL situation to a 2024 3 wire CU situation,
| you're talking a baseline price increase of over 4x with
| modern efficiency. And that's before you consider that modern
| building codes also require many more outlets and circuits
| than they used to. My home, built in the 70's has 3 circuits
| in the kitchen. 1 counter top, 1 fridge, 1 range. IIRC the
| modern building code is 1 circuit for every hard wired
| appliance, 1 for the fridge, 2 accessory circuits and a
| circuit for the room walls in general. If you assume a modern
| house with a fridge, range, dishwasher and over the range
| microwave/hood combo, that's 7 circuits minimum for the
| kitchen. So in addition to the 4x increase in wiring costs
| for the existing circuits, you also have a 2x increase in the
| number of circuits for just that room let alone outlet
| spacing requirements in other rooms and the like.
| tpmoney wrote:
| It would also be interesting to see the numbers relative to
| mortgage rates and availability. It looks like the 1950's had
| mortgages starting around the 5% range, but that steadily
| increase to a peak of near 20% in the 80's before dropping
| through the 90's and bottoming out around 2.5% in 2021. Along
| with that I imagine qualifying / getting a mortgage in 1950's
| was more difficult than modern times with 0% down first time
| home buyer loans.
| angmarsbane wrote:
| Houses are bigger, but seem less thoughtfully designed with a
| lot of useless space that seems to be there to maximize the sq.
| footage to justify high prices.
| claaams wrote:
| Signs of a healthy economy and growing middle class!!
| thisislife2 wrote:
| Or a huge warning sign of the wealth disparity between the rich
| and lower-income group - it's a reality that lower middle-
| income group today cannot afford to buy homes; they are lucky
| if they can inherit one.
| mempko wrote:
| That's not what the data says.
| https://www.pewresearch.org/social-trends/2020/01/09/trends-...
|
| Income and wealth inequality is increasing, not decreasing.
| Meaning people's quality of life is decreasing.
| cyberax wrote:
| TLDR; it's the density death spiral.
|
| The most expensive part of a house is the land it stands on
| (which also determines the building codes and the local labor
| price).
| HumblyTossed wrote:
| Does this account for sq ft? Mobile site isn't easy to read.
| stouset wrote:
| Houses can be a good investment or they can be cheap.
|
| A good investment outperforms its alternative asset classes. We
| chose policies that ensured they'd be a good investment. For
| housing to become cheap in our lifetimes, existing homeowners
| will need to experience an enormous capital loss.
|
| This has been exacerbated by the long-term decline of interest
| rates. Sticker price and interest rate are roughly inversely
| correlated since the monthly payment a prospective owner can
| afford is roughly fixed. Over the past fifty years, boomers have
| been able to regularly refinance their loans into lower and lower
| interest rates as prices skyrocketed. This also made it easy to
| move since you could trade up on your home's increased value
| relative to the remaining mortgage.
|
| That pathway isn't as available to millennials who bought at
| sub-4% interest rates, and it likely never will be.
| casenmgreen wrote:
| > Sorry, you have been blocked > You are unable to access
| kinsta.cloud
|
| No page for you Tor users.
| brutal_chaos_ wrote:
| Using the Tor Browser, I kept trying "New Circuit" and it
| eventually showed the page. It took ~6+ tries though
| casenmgreen wrote:
| I may well be completely wrong, I am not a social scientist or
| involved with the housing market; my sense of it is that building
| has been ever harder, while demand - more people with more money
| - has continued to rise.
|
| Prices, accordingly, have risen.
|
| I think what we see here is primarily a function of constrained
| supply.
| dukeofdoom wrote:
| Depends if it's a liability or not. For many it's like a big
| savings account. The bigger the better. Inflation protected. You
| can't trust the government not keep printing more and more money
| and diluting your after tax savings. But house prices are linked
| to physical structure. Government can't just print more houses
| out of thin air. So they appreciate against inflated paper
| currency which they do just print out of thin air sometimes.
|
| Also, having owned older built Canadian houses, they're a
| constant maintenance. Many were not well designed and don't age
| well (wood construction). So for them to still appreciate tells
| you how much government has been busy printing. Where does all
| that money go? I sometimes wonder.
|
| Indebted servitude to banks, a good chunk of a lifetime of work
| to pay off one of these mortgages. And waging so government can
| take most of it in taxes. I'm not sure if this is sustainable
| much longer without a revolt in Canada... at least younger
| Canadians may one day decide it's not a good system and turn the
| tables. Average house price in Canada is like 700k now, average
| wage is like 54k.
| WealthVsSurvive wrote:
| The short answer is that a house is no longer a place to live,
| but an abstract financial asset. The problem with divorcing
| occupation and use from finance and ownership concerns
| remediation of grievances. The benefit of such a system concerns
| maximizing the building's utility. I'm personally in favor of a
| more boring housing market, in addition to automatic tenant
| enrollment in equity-sharing programs (ie, due to living in a
| building and paying rent, the person who experiences hardship and
| loses tenancy still has some small, depreciating ownership based
| upon what they paid as rent). This helps solve the problem of
| financial engagement for the less financially literate, in
| addition to enabling higher-density housing to be built.
| tmountain wrote:
| This sounds interesting. Where is it typically put into
| practice?
| mcdeltat wrote:
| Bingo. People love to go into some deep analysis of housing and
| "agh it's a really hard problem", but it's simple at the end of
| the day: we have constructed, and continue to construct, a
| society where housing is not considering a right, but instead a
| way to inflate your bank account. It smells like this from the
| prospective house buyer at the bottom all the way to the
| government propping up the system at the top. Time to change
| the system. I refuse to believe that out of all the great
| things humanity has achieved, effective housing (shelter, of
| all things!!) is unsolveable.
| toomuchtodo wrote:
| The system will not change because the folks in charge profit
| and maintain power from a system of accelerated
| financialization. They then wring their hands and clutch
| their pearls as young people take rational actions by not
| having children (rapid fertility rate decline), worried what
| happens to the pyramid scheme as it runs out of steam. Their
| crisis is the young cohort's survival mechanism.
|
| Young people have to do their best to survive in an
| unfavorable macro for the life they have left, and old folks
| age out eventually (which is the only way they give up power,
| the power which is needed to make change to improve the
| macro).
|
| https://news.ycombinator.com/item?id=40338619
|
| https://www.ted.com/talks/scott_galloway_how_the_us_is_destr.
| ..
|
| https://www.youtube.com/watch?v=u-PinTQcuik
|
| https://www.axios.com/2024/07/25/adults-no-children-why-
| pew-...
| almost_usual wrote:
| > old folks age out eventually (which is the only way they
| give up power, the power which is needed to make change to
| improve the macro).
|
| A lot of those old folks have children who will inherit
| their homes.
| toomuchtodo wrote:
| And a lot of folks don't have parents leaving them a
| portfolio or a high value asset they can live in. A
| material amount of people 55+ have no retirement savings,
| have material amounts of debt, or are in similar
| situations where the house might have to be sold versus
| be conveyed to children at death to break even
| (healthcare, senior|nursing home, memory care facility
| costs until death).
|
| If you are lucky enough to inherit an unencumbered (or
| one with a mortgage you can at least afford) residential
| property you can live in as a young person when your
| parent(s) pass, that is fantastic luck. Take the win if
| you can get it. That is not the mean experience, based on
| the data.
|
| https://www.gao.gov/financial-security-older-americans
|
| https://www.nbcnews.com/business/consumer/generational-
| wealt...
|
| https://www.nytimes.com/2023/05/14/business/economy/wealt
| h-g... | https://archive.today/fpbNK
|
| https://www.deseret.com/business/2024/09/10/millennial-
| gen-z...
| brailsafe wrote:
| This was the case with my dad and he isn't even 55. His
| house wasn't even worth all that much relatively
| speaking, but he had too much debt, not enough income,
| and too many expenses (more kids).
|
| It's fairly likely we won't see any inheritance from him.
| The 2 of us who can realistically work for a living might
| make more, but it's not looking likely either of us will
| ever be able to retire. On the other hand, if I chose the
| same life, it's plausible I could buy a house eventually,
| but buying a house in my home town isn't worth the trade
| of living in my home town.
| toomuchtodo wrote:
| Not advice, educational purposes only. Speak to an estate
| planning attorney. Depending on resources and objectives,
| a property can be transferred into a corporate or trust
| entity. Parent rents from the entity, this covers the
| mortgage payment. Upon parent's death, property basis is
| stepped up (no capital gains), beneficiaries retain
| control of the asset. If children wanted to rent it out
| to cover the mortgage, they can. Federal statute
| prohibits a lender from accelerating the note when a
| property is transferred from parent to child(ren) (Garn-
| St. Germaine Act). This preserves the equity in the asset
| while shielding it from creditors (potentially, strongly
| contingent on state creditor law). Speak to an estate
| planning attorney.
|
| Primary residence equity is the largest component of
| wealth in most family estates, ergo maximize efforts and
| opportunity to protect that wealth. When its gone, its
| gone.
| boogieknite wrote:
| in my experience its normal that old folks have lots of
| children and inheritance works out that the house is sold
| and revenue shared among children instead of one of the
| children moving in
| camgunz wrote:
| I think the common case is for medical bills to drain
| retirement savings and home equity.
| mcdeltat wrote:
| I think there may be something in this point. Lots of
| generational wealth in my area. Property investment is
| nearly a sport. The entry bar for which is lower if you
| already have wealthy parents providing you property (or
| equivalent buying power) for yourself, so the eye turns
| to property for investment. I know people in their early
| 20s, decently well off, already thinking property
| investment is the correct option for them. The rich get
| richer and the poor get poorer.
| boogieknite wrote:
| Im a rube but it my knee jerk reading tfa is there has to be
| some correction or young people are financially and
| domestically doomed. The solutions you listed here seem great.
| Is there momentum behind establishing these in the US?
|
| Is it more likely the trend continues and young people will
| simply become priced out, or is a correction more likely? If
| the latter, what are smart people expecting?
| frmersdog wrote:
| You are correct.
|
| >Is it more likely the trend continues and young people will
| simply become priced out, or is a correction more likely?
|
| As a layman, take this with a huge grain of salt: it depends.
| By established rules, a major correction should be imminent.
| In fact, it should have happened one of several times
| already.
|
| Examples of catalysts include a bond liquidity crisis in late
| 2019, the flash crash at the start of the COVID pandemic, the
| Gamestop debacle in early 2021, the collapse of the Chinese
| real estate market later in 2021, and the US bank collapses
| of early 2023. There are also others, though several venture
| into conspiracy theory territory.
|
| In every example I mentioned, unprecedented action was
| undertaken to prevent a catastrophic event that might have
| lead to financial contagion across global markets. There will
| be probably be more. It remains to be seen whether
| authorities will continue undertaking steps to shore things
| up when the bubble threatens to pop. (Trump's return to
| office is an interesting wrinkle; grab another grain of salt,
| but it's my opinion that the Gamestop thing only got as bad
| as it did because the regulatory regime under his tenure was
| asleep at the wheel.)
|
| It should be noted that a correction doesn't necessarily lead
| to affordability if purchasing power simply continues falling
| or remains stagnant, as a result of a weaker job market.
| There are people who believe that sellers will simply refuse
| to drop residential real estates prices, as they have with
| commercial properties. Consolidation of ownership under large
| entities - as we've already seen to some extent - would allow
| owners to simply squat on properties, perhaps renting then
| out. Who knows what happens to the algorithmic rent fixing
| lawsuits, that might have brought those costs back to Earth a
| bit, after this year's electoral red wave.
| toomuchtodo wrote:
| A correction won't occur because there is a housing
| shortage of between 3-8M units, depending on who you ask.
| There is not enough labor to build more units at any
| reasonable rate, so it'll be a slow burn as the system
| reaches equilibrium over time (new housing comes into the
| market when owners must sell, demand destruction due to
| pricing). Due to demographics, a lot more housing could be
| satisfied by smaller units accounting for reduced forward
| looking family formation, but the challenge remains in
| sourcing labor to build these units.
|
| With regards to the labor market, due to structural
| demographics and labor shortages, it is highly unlikely in
| my opinion that the job market weakens to the point where
| housing experiences a crisis from a rapid, sustained
| increase in homeowners who cannot afford their mortgage
| payments.
|
| https://www.voronoiapp.com/demographics/Over-Half-of-
| Househo... ("Over Half of Households in the U.S. Don't Have
| Kids")
|
| https://www.fanniemae.com/research-and-
| insights/perspectives... ("U.S. Housing Shortage:
| Everything, Everywhere, All at Once")
|
| https://www.fanniemae.com/media/45106/display ("Fannie Mae:
| The U.S. Housing Shortage from a Local Perspective")
|
| https://www.marketplace.org/shows/marketplace/the-housing-
| se... ("APM Marketplace: The housing sector droops under a
| labor shortage and price hikes")
|
| https://www.businessinsider.com/baby-boomers-housing-
| wealth-... | https://archive.today/OsNgL ("Business Inside:
| Baby boomer homeowners got rich from skyrocketing house
| prices. Now they can't find retirement housing.")
|
| https://www.bloomberg.com/news/articles/2024-09-18/us-
| faces-... | https://archive.today/Lyr5t ("Bloomberg: US
| Faces a Deficit of 6 Million Workers in Less Than a
| Decade")
|
| https://www.axios.com/2024/06/27/labor-shortage-workforce-
| ec... ("Axios: Labor shortages are the new normal")
|
| https://www.axios.com/2023/08/27/labor-shortages-air-
| traffic... ("Axios: Labor shortages plague high-stakes
| industries")
|
| https://www.axios.com/2023/05/08/us-labor-shortage-older-
| wor... ("Axios: Why labor shortages could be here to stay")
| ericmay wrote:
| Never say never, but yes, agreed. And that shortage
| depending on how it's calculated may be more pronounced
| if we look at where people plan to live in the future.
| Central Ohio where I live is on track to gain in
| population while the state as a whole loses population. A
| house in a rural county doesn't necessarily count/help,
| even if it's included in official "here are many houses
| we have" statistics.
|
| Home builders, especially with a risk-free 4% return
| today, do not have any incentive to build "cheap" or
| "affordable" housing, and as material prices continue to
| increase because there are 330 million people in America
| who also want those resources, new builds will have to
| continue to increase in price and perhaps decrease in
| quality, depending on how much oil goes into the
| construction of the house. Home builders, absent clear
| evidence of industry collusion will simply increase their
| profitability and will not build 'starter homes" or
| "affordable housing".
|
| We can address the issue in a few ways, for example
| removing artificially limiting zoning practices,
| generally speaking, or perhaps the elected government can
| just pay for cheaper housing, or we can craft good
| legislation.
|
| But on its own I don't see a good catalyst right now that
| will cause home prices to "correct"* without a treatment
| worse than the disease (economic depression or global war
| or something else that is otherwise catastrophic).
|
| * The term "correction" is popular but misused. The
| current price of an asset is _always_ correct. When an
| asset decreases in price, that decrease is no more
| correct than a corresponding increase in price.
| toomuchtodo wrote:
| Great points, great comment. An additional measure to
| solve for this would be by making remote work a protected
| labor right (assuming it does not overly burden the
| employer and such), so workers can move where the housing
| is, or the housing is cheap. But we'd rather let old,
| status seeking folks at the top of the corporate ladder
| "show workers who is in charge" and maintain control
| while workers get extracted from for higher than
| necessary rent or mortgage payments near an office (where
| housing is in demand but very slow for additional supply
| to come online, if it ever does at all).
|
| https://news.ycombinator.com/item?id=39037589 ("HN:
| Remote work doesn't seem to affect productivity, Fed
| study finds")
|
| https://www.stlouisfed.org/on-the-economy/2024/nov/why-
| do-wf... ("Federal Reserve Bank of St Louis: Nearly half
| of people working from home -- who moved to a different
| state -- moved because of housing.")
|
| People argue about paperclip maximizers that don't exist
| yet while being unaware of the one they live their lives
| in today.
| tmnvix wrote:
| > A correction won't occur because there is a housing
| shortage of between 3-8M units, depending on who you ask.
|
| I'm not from the US, and unfamiliar with the statistics,
| but in NZ the general narrative has been similar - i.e.
| "the property price boom was due to a shortage caused by
| an increase in population and a lack of new stock".
|
| For NZ, this doesn't hold up when looking at actual
| statistics.
|
| - Prices rose x4 between 1995 and 2021 (inflation
| adjusted).
|
| - The total number of households to total number of
| dwellings remained relatively unchanged over the same
| period.
|
| - The average household size remained steady (i.e. it's
| not just a case of each dwelling housing more people).
|
| Given the above (and some other evidence), my assumption
| is that the property boom was not driven by increased
| demand for homes, but by steadily declining interest
| rates causing an increase in demand for investments. If
| this is true, and we are at the end of the era of ever
| decreasing interest rates, then I believe a correction is
| entirely possible (it is well underway in NZ - 30% down
| in 3 years in my city).
|
| I would be interested to know what makes the US situation
| so different (my feeling is that the situation in most
| anglo countries is similar - if not so extreme as NZ with
| regard to price rises and population increases).
| DrillShopper wrote:
| Every time there is the potential for a correction (2008
| being close to mind) the government just hands the banks a
| ton of taxpayer money because they're "too big to fail".
|
| So I wouldn't expect a correction until the US is unable to
| borrow more money or defaults on its debt.
|
| Much like climate change it will already be too late by the
| time young people have the power to change it. So I'm not
| surprised many of them have sort of checked out from the
| "spouse/house/kids" grift/grind
| deadbabe wrote:
| People don't have the right to simply live in highly desirable
| areas for very cheap.
|
| It is time for people to accept that if they want affordable
| housing they should look at some lesser developed areas in the
| country. Otherwise it's pay to play.
| tantivy wrote:
| What happens in society when every city is filled with the
| retired rich and zero actual workers?
| MarkusQ wrote:
| The price of houses will fall and the price of basic
| services, food, etc. will skyrocket as people flee the
| stagnant cities and core economic activity moves elsewhere.
| It will never go this far of course (zero actual workers is
| an asymptote), but that's the way it will trend.
| Invictus0 wrote:
| In places like Lisbon and Milan, the rich live in the
| center and the young folks live on the outskirts. The
| outskirts then become trendy and cool and filled with bars
| and restaurants and cafes (can also look at Brooklyn, and
| now we are seeing a second Harlem Renaissance as well).
| Eventually the rich realize this and move to that place,
| and then the young people move again. But no matter what,
| the young people always end up living in the most desirable
| area because they commune with each other and create a
| desirable community in that place; meanwhile retired
| wealthy people are inherently uncool and consume more than
| they contribute.
| HarryHirsch wrote:
| Look at Aspen, CO - the indigent commute in from far away
| because they are priced out and disposable.
| boogieknite wrote:
| been noticing this for years.
|
| solar and starlink keep on improving. i continue to be
| surprised remote work communities arent commonly developing
| in scenic, non-traditional locations. it seems idealistic,
| but makes a lot of sense on paper
| charlie0 wrote:
| 100%. I myself am waiting for less fringe "network states"
| to appear so I can join one.
| cheema33 wrote:
| In my city, the homeless are offered free housing that is
| away from the downtown area. They do not want it. Preferring
| instead to camp in downtown where they want to be.
|
| Cheaper housing is available if people are willing to move to
| less densely populated areas.
|
| At the end of the day, housing is all about supply and
| demand. Like most other things in life. There is not enough
| supply in the areas where people want to live. And no country
| has been able to figure out a solution for that problem.
| frmersdog wrote:
| And the jobs? The amenities that make areas highly desirable
| require workers who can actually commute to them.
|
| It's a game of chicken. The people who live in these areas
| and expect to be served without complaint either acquiesce to
| density and lower property values, or risk (occasionally
| fiery) demonstrations against the unfair and unworkable
| situation. Their goal is to keep the game running, so that
| everyone else doesn't decide on one or the other end state.
| Essentially, "Highly desirable areas that are too expensive
| for low/middle-income workers," is a transition state.
| angmarsbane wrote:
| People don't have the right to simply live in highly
| desirable areas for very cheap - I find that it's less people
| can't afford to live in their dream locations as people can't
| afford to live where their jobs are, or within reasonable
| commuting distance.
| mcdeltat wrote:
| What about when housing is equally unaffordable in the less
| desirable areas? Keeping in mind that wages are probably less
| in those areas.
|
| Also, less desirable areas are not necessarily constructed to
| be any more functional or sustainable, so why should we
| promote that? Areas that are "less desirable" in my city are
| swathes of oversized, copy-pasted houses massively spaced
| apart with near zero amenities. 100% car dependent. Near-
| dystopian land use, really. We don't need more of that.
| Instead, I'd much rather take amore sustainable approach to
| housing across the board.
| saulpw wrote:
| There is nowhere someone can live for $200/mo, as they could
| in some lesser developed countries. The floor has been
| established by speculation, building codes, and minimum
| services. It sounds like a good idea to make sure all
| dwellings have electricity and running water, but when the
| alternative is a tent under the freeway, it's actually much
| worse.
| xienze wrote:
| > The short answer is that a house is no longer a place to
| live, but an abstract financial asset.
|
| This line of thinking is commonly repeated, but it fails to
| take into account the old "location, location, location" thing.
| If you bought a house that was once in the middle of farmland
| 30+ years ago but now that house is on (let's say) two acres of
| land in the middle of a coveted suburb of a large city where
| the average house sits on .2 acres, why _wouldn't_ that house
| (or more accurately, the land) have appreciated greatly in
| value?
|
| A LOT of these houses that "boomers" bought were once out in
| the boonies, and now those places are desirable, developed
| areas.
| blindriver wrote:
| There should be no tax on selling a primary residence if and
| only if you buy another primary residence. Otherwise tax it
| like capital gains or higher. Make it economically unfeasible
| for people to own more than one house. I'm generally a
| capitalist but i'm okay with this because the housing situation
| is ridiculous.
|
| Hedge funds and other corporations should be disallowed from
| purchasing single family homes. Period.
| ipython wrote:
| This is all well and good but as someone who just went through
| a renovation, the cost of labor and materials is astronomical.
| Yes the land is expensive too but it's not like it was free to
| get construction crews out either.
|
| So while it is a financial asset, the cost is still tied to the
| cost of physically constructing the thing.
| Eddy_Viscosity2 wrote:
| Another short answer is that actual inflation could be much
| larger than the "official" inflation numbers use for these
| calculations.
| seryoiupfurds wrote:
| If 101 people want to move to a city that has 100 houses, and
| they are prevented from building more, then house prices will be
| bid up as high as they can afford to pay.
|
| The only solution is to legalize building more homes, especially
| at higher densities that allow more people to live in desirable
| locations.
| partiallypro wrote:
| Upzoning is the only way, most of the classic neighborhoods we
| think of are just completely illegal to build now.
| tempestn wrote:
| I'd love to see this for Canada; expect it's even more striking.
| chung8123 wrote:
| There has been incredible inflation for items that cannot be
| exported in the US. Think healthcare, education and housing.
| Things that could be sent overseas like TVs, Computers, Clothing
| has seen their prices deflate. The combo of the two is what is
| called inflation but the later hides the fact we have increased
| our money supply incredibly since 1950 and that will show in the
| things that did not find a way to get cheaper.
| bdcravens wrote:
| It needs to account for the difference is sizes. Average square
| footage in 1950 was just under 1000 sqft; in 2024, it's more like
| 2300.
|
| In Texas, for example, the inflation adjusted cost per square
| foot was $79 in 1950, and about $130 in 2024. Still a steep rise,
| but a 60% jump instead of the 285% without considering square
| footage.
| TheChaplain wrote:
| I believe these kind of data is slightly misleading, because the
| price is directly affected by everything else that surrounds
| building a house these days.
|
| Just some examples zoning/land use, building standards codes
| (electrical, plumbing, mechanical), permits, compliance,
| inspections, water, sewage, etc etc.
|
| I am not advocating a wild west for building, but rules &
| regulations always increases and with that comes more costs.
|
| This of course also drives higher rents, and if you think they
| are high now...
| roenxi wrote:
| The US M2 in 1950 was <$300 billion and in 2024 was >$20,500
| billion (70x increase). The article is using an inflation
| estimate of ~13x. The author doesn't give an average but the top
| 3 states by population (California, Texas, Florida) saw increases
| of 65x, 39x and 44x respectively.
|
| I think it is more likely that house prices have slightly
| decreased in real terms and they are tracking closer to the M2 as
| houses are assets not consumables. This gels with home ownership
| [0] which is generally stable or higher than usual, it doesn't
| look like people are actually struggling to acquire homes all
| that much. Especially since I expect household size is shrinking.
|
| Most of the pain people are feeling is because of the insanity
| leading up to and flowing from the '07 crisis if the home
| ownership rates are good evidence.
|
| [0]
| https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
| IAmGraydon wrote:
| This is the first reasonable reply I've seen in this thread.
| The sense of entitlement on display is simply amazing.
| blindriver wrote:
| Prices from 1950 is relatively useless because they don't count
| the effect of women entering the workforce in the 1970s and 80s.
| Once women were working en masse in the 1980s house prices spiked
| because there was now 2 incomes that could be used to pay for the
| house. This inflation is seen in the data but you can't see it
| from this map.
|
| The higher house prices get the more desperate people are to use
| every cent to buy a house. That's why things like mortgage tax
| deduction is useless because that money immediately gets factored
| into increasing the amount of mortgage you can get and spikes the
| house prices.
|
| It's fascinating and sad because we are at the stage now where
| hedge funds are driving up the prices of single family homes so
| that millennials and gen z become renters for the rest of their
| lives.
| Salgat wrote:
| Makes you wonder how much of that added productivity from women
| workers was sucked up by the wealthy increasing the disparity.
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