We wanted ever-increasing returns for shareholders, and that meant moving factories (where these young men's grandfathers were working 60 years ago) overseas while doing nothing on the whole to retrain the workforce.
We got the shareholder returns. Too bad that can't buy a functional society for people born after 1980.
Also: Nobody in a village should take up 2 houses for themself.
But some can, and can even take up 100 houses... so long as the other villagers are fighting amongst themselves, over whether their house should be larger than that of their neighbor.
Turns out most of their problems are arguably traceable back to those people with 100+ houses each.
Which would be glaringly suspicious to an outside observer. But the villagers are too busy being enraged by the idea that some lazy person might not have to live in a tent.
Institutional housing ownership in the US is not a material contributor to housing price inflation [1]. With that said, we are approaching a housing shortage of +4.5M [2] units, and in concert with YieldStar's Backpage revenue maximization engine [3] (which is laundering landlord price fixing), renters are being squeezed (because where are you going to go if you can't afford to buy? you will pay, or you will be homeless, which certain jurisdictions are attempting to or have outlawed).
To solve housing for those who need housing, enact state level YIMBY policies to override local planning (who will always kowtow to local folks who show up to say no, and local folks who say no because it costs them nothing to do so as they already own), provide cheap money to builders [4], and build as fast as you can.
(Edit: I would still support restriction of investment ownership of housing, depending on implementation details; you have to defend the young from the old and Capital, as they are treating the young as cattle to be squeezed for all they've got simply by virtue of their existence timeline [5] [6], and it's causing folks to simply give up)
Institutional ownership is immaterial? Erm, from the same source, 10% of some metros is a lot, and that’s just moving the meter to 100+ homes. If you did 10+ or 3+ it would be even more.
“This share rises to 3.8 percent of single-family homes for institutional investors owning over 100 homes, and up to 10 percent in certain metro areas such as Atlanta.”
Then if you also consider foreign ownership of home, it would rise even more. Lots of wealthy folks have dollars due to it being primary international currency and they buy up our assets
Unfortunately this is a big side effect of internet we haven’t solved yet. It’s made buying a home anywhere easier, which inflates prices (demand is much higher now for same number of houses), squeezing out middle class locals
34% of Americans rent their homes, and having a good stock of rental units is good for America because it makes it a lot easier to move. Institutional owners provide the vast majority of rental units.
Getting rid of institutional ownership would increase rental prices substantially, and that's bad for the poor and for the mobile.
> Getting rid of institutional ownership would increase rental prices substantially, and that's bad for the poor and for the mobile.
Extremes are unhelpful, we must find balance. Institutional ownership restrictions reduces monopoly pricing power, and rent controls de-risk against rents rising faster than wages. Outright outlawing of institutional ownership is not a solution, but allowing it to operate in a highly regulated fashion (where there are still some, but more reasonable, returns and mobility is enabled for mobile consumers of this service). If the argument is continue increasing supply vs rent price controls, well, it is clear that isn't happening in the short term.
TLDR Housing needs to be pushed more towards being a regulated utility, vs a free for all. If we regulate electricity like a utility, why not housing?
The standard refrain is that the housing market is over-regulated, NIMBY's have made it too hard to build. Adding more regulation discouraging instutitions from building sounds like making the problem worse rather than better.
There are both bad and good regulations. Acting like all regulation is bad (say restrictive zoning or allowing people to block density) allows people to target the good (building codes, not building of garbage dumps or toxic materials) to get rid of
Regulations are not inherently good nor bad so please say what regulations are bad and what regulations should be changed because “less regulation” doesn’t mean things get better and can mean things get very very much worse (hey let’s allow toxic wast dumps under homes because that was too regulated before!)
These are (strongly?) correlated though, right? Over-regulating distribution should reduce generation because builders can’t depend as much on pricing signals.
>enact state level YIMBY policies to override local planning (who will always kowtow to local folks who show up to say no, and local folks who say no because it costs them nothing to do so as they already own)
It's more than that; it's a standard free-rider problem.
If all the other districts in your city support development in their area, then your own property value will go up, but you won't be burdened by any local development costs. And if you develop in your district but nobody else develops in their district, then your property value won't go up (or will go up only slightly) but you're burdened by the local development costs.
It's classic prisoner's dilemma stuff.
The simple solution is to remove the local district's ability to veto local development. At least, as long as city-level/state-level planners don't have an agenda that favors certain districts over others.
> The simple solution is to remove the local district's ability to veto local development. At least, as long as city-level/state-level planners don't have an agenda that favors certain districts over others.
That is what state level YIMBY policy is intended to do, to override the free rider problem of existing property owners in the local domain. If the human can say no to any new housing, and it costs be nothing to do so, what is a human going to do when all of their incentives are to say no?
As a YIMBY activist who also owns property, I have seen this first hand at local planning meetings. Rebutting complaints point by point (crime, decreased property value, traffic, etc) with data, we finally arrive at "because I don't like it" typically when having this discussions (happens all the time with utility scale solar permitting as well). I am only one person saying "yes, build, build, build." We need more of this, everywhere, and I argue the solution is not simple; if it was, this would be solved instead of being a herculean effort. Please consider attending local planning meetings to voice your support for building more housing in your communities.
NIMBY seems to be one of the intrinsic faults of democracy. Some people really don't like any change happening around them, and, once empowered, will go to great lengths to stop anything from happening.
This is probably something that democratic states need to address by reducing such empowerment. Much like your neighbor cannot tell you what to cook for dinner - even if he is a vegetarian and hates the smell of meat - he shouldn't be able to tell you not to build a house in his proximity.
My county deregulated housing. Literally no code checks. A permit was me drawing a square on a map, paying a few hundred bucks and it was rubber stamped in a few days.
It was an absolute godsend. I built the house myself for 1/3 the price of even a clapped out trailer.
Sure I could have built a firetrap but I have to live in the fucking house, so I did the best with what I can afford. We all have to live somehow, asking people to do their best they can with what little they have to protect themselves and neighbors should really be the most we can ask. I could never afford a 'real' developer built house anywhere near jobs.
Lots of such counties exist. Most of Alaska qualifies, as do parts of TN, NM, AZ, etc. should be a list of some you can pull up and start there if you're looking to do same.
There is no regulation on buying or building here based on citizenship, come on over. I don't like communism but I believe they ought to have equal property rights regardless of their political opinion or national origin.
You didn’t say “someone wants to live next to you”. You said “build a house”. Presumably, this includes a “house” that can hold 1000 people at low rent. If it doesn’t (since that would undeniably destroy your property value), then you’re willing to impose regulations on the pretty deregulated picture you’ve painted. If it does, then you’re not going to find that many people who own property agree with you.
>Presumably, this includes a “house” that can hold 1000 people at low rent.
Presumptuous indeed. There wouldn't be a housing shortage if vast parts of the U.S. weren't restricted to single family homes. The choice isn't a single family home or a housing complex that can hold a 1,000 people, but more efficient usage of space and infrastructure, one that isn't totally centered around everyone having a vehicle. That can also mean low rise multi-family homes seen in cities worldwide, and yes, also big complexes where viable.
>If it does, then you’re not going to find that many people who own property agree with you.
Well if things don't change, lots of people won't be able to own property, and the rules will change anyway. We're seeing this in California.
Wtf? If all of your neighbors don't like the smell of meat they absolutely can tell you not to cook it. That's what democracy is. Don't like it? Be a king.
And if all of your neighbors don't like your skin color or religion, can they drive you out of town?
That is why no country in the world actually employs limitless democracy. There are usually guaranteed and protected civil rights that you can enjoy regardless of current majoritarian (and fickle) opinion in your town.
There are more systems in the world than absolute monarchy X absolute democracy that votes on everything all the time.
Yes they can, and historically they have. The places where this doesn't happen are places where most people have decided that these traits don't matter that much.
> Institutional housing ownership in the US is not a material contributor to housing price inflation
I believe this nationally, but when you see things investors buying 1/3 of Atlanta homes in a given quarter [1] or investors buying 26% of the affordable homes, it becomes hard to believe there is not some level of effect occurring in target population centers. Most of the arguments I see about the small effect of investor purchases seems to focus on national averages (happy to be pointed elsewhere), but I think focusing on national trends will dilute the observed effect where it is occurring.
I also think there is far more informational to sellers that allow easier one way ratchets in price. Just a few houses selling higher than average in a neighborhood can increase housing prices in that area in the matter of days. In addition buyers are not limited to local market work. With online information you've brought the worldwide back to worldwide web. You see very view poorly listed underpriced houses any more. They get bought up insanely quickly.
You also need to align housing policy to demographic changes such as family size, length of time that children remain living with parents, relatives or carers, as well as prevalence of work from home, availability of “local” work within affordable commute range, availability of public transport.
In other words, “planning for the future”.
The neo-liberal project destroyed more than western industries, it bankrupted our perception that there are more than just market incentives that can build healthier, happier, more resilient and, yes, wealthier societies.
Your first statement is flat-out wrong. The supporting citation does not actually support it, though it hints at how institutional housing ownership has contributed to housing price inflation. To wit: it explains how innovations during the GFC turned direct investment into an appealing proposition for investors. These investors helped to backstop housing values that would have fallen even further than they already had. In other words, the much-needed correction to the pre-GFC bubble that the GFC represented was disrupted and reversed.
The actual solution to housing price inflation is a full correction that wipes out the inflated value of housing in this country, cutting each property's worth back down to its intrinsic value. Affordability and use would reset to what the real market actually can sustain, as when the income tax forced wealthy property owners to divest of and demolish or convert their grand mansions into apartments for people to actually live in.
There is no housing shortage (Zillow has an obvious conflict-of-interest). There is no need to load even more money into the system by providing cheap money to builders (a naked corporate giveaway that will surely represent yet another wealth transfer from taxpayers to business-owners). Pop the bubble. Planning considerations can follow, once land and property values actually reflect their intrinsic worth. If you do it before that, you throw billions of dollars worth of resources and labor into misbegotten initiatives that do no good for the communities that they're supposed to serve (e.g., highway expansion).
Fannie Mae [1], a GSE, and the Federal Reserve [2] also provide data that confirms a housing shortage. I agree Zillow is potentially non biased, they are simply the most recent data point I've come across wrt to total shortage amount vs the slightly stale citations below.
> The actual solution to housing price inflation is a full correction that wipes out the inflated value of housing in this country, cutting each property's worth back down to its intrinsic value. Affordability and use would reset to what the real market actually can sustain, as when the income tax forced wealthy property owners to divest of and demolish or convert their grand mansions into apartments for people to actually live in.
Your thesis is not grounded in reality, and will never occur due to how durable the economy is (preventing mortgage defaults) due to structural demographics as well as how much equity exists in housing in the aggregate (~$17T as of this comment), preventing a correction from MBS investment failures. As long as demand outstrips supply, no correction will occur, as owners and sellers can outlast buyers. There is no bubble, housing is what housing is worth based on limited supply. The market can sustain this as long as people are willing to buy at the prices on offer, and if demand diminishes (unlikely due to population growth, household formation, and immigration), prices will slowly deflate over years as sellers organize themselves in time series by motivation. Gotta live somewhere.
"We are selling to willing buyers at the current fair market price."
>While the United States does indeed have a national shortage of affordable housing
Note, an affordable housing shortage, not a housing shortage. In other words, there are not enough suitable houses on the market at affordable price points, not an absolute shortage of housing. This does not need new builds to remedy, in full; transfer or rehabilitation of underutilized housing would be a major component of a solution. A major and full correction incentivizes owners and investors to sell-at-loss or walk away from unsustainable ownership of housing that then becomes available as affordable units. Affordable unit count must increase with the basic affordability of units.
>as owners and sellers can outlast buyers.
That's a big assumption to make. Unfortunately for owners, their housing values are tied to other parts of the economy that are not as resilient, and vulnerable to developments that are already well underway. For example, the commercial real estate market is going to correct, if not collapse. This is a certainty. Admittedly, the timeline has been shifted back, but through tactics that, ironically, reveal the fundamental weakness of the market. These are foundational holdings that support - as collateral, as capital - the positions of the entities who themselves support residential property values with their activities.
You should also look for the rental market cartel to be broken soon. The RealPage lawsuits will dismantle the unlawful pricing power property managers have wielded. That will increase competition and affordability. Hopefully attacks on unfair pricing schemes ("specials" that amount to lowered rents that only apply for the first year) follow, further increasing affordability.
>There is no bubble
I'm just highlighting this so that others can see how disconnected your argument is from reality.
>"We are selling to willing buyers at the current fair market price."
Now you're just taking the piss. I'll bite the bait. We're both aware of the context of that quote and how it refers to grossly unethical, quasi-legal actions taken by a desperate entity on the precipice of biting the curb for their financial hubris and malfeasance. I don't know that you want to be taking that affect? It would mean that your stance is one that's in grave jeopardy if people figure out what you're doing before you can lie and cheat your way to safety.
A 4.5M unit shortage wouldn't be present if the past several administrations hadn't allowed huge amounts of immigration in the past decade. Reality isn't constrained to "you have to build as fast as possible since your population is going to increase very quickly and there's nothing you can do about that".
If every person who came to the US in the past ten years went home, there would be a colossal increase in housing availability and rent prices would crater.
And prices for much of what we buy would instantly double. The US is addicted to cheap immigrant labor for a huge number of jobs that Americans largely aren’t willing so do.
> The US is addicted to cheap immigrant labor for a huge number of jobs that Americans largely aren’t willing so do.
Maybe more like "business owners are 'addicted' to paying cheaper wages that only immigrants from poor countries are willing to do at the offered rate."
For better or worse, US consumers are addicted to the low prices those low wages enable. Just look at how upset people are at the relatively modest inflation of the past four years. Thats nothing compared to the shock that ending immigration would create.
Since we live in a democracy, such a plan would be swiftly reversed because of the pain it would cause.
> For better or worse, US consumers are addicted to the low prices those low wages enable
You cannot convince me that low prices require low wages when companies are raking in record profits. We could have better wages, the same prices and lower profits. That is a sacrifice I would be happy to have businesses make
Immigration into the US was curtailed in the 1920s and then reopened in 1965. This period was one of relative wealth for the middle class. Since the late 60s to early 70s, the middle class has suffered an ever-decreasing quality of life. It doesn't seem like a foregone conclusion that reducing immigration will necessarily lead to a decrease in quality of life. Increase in the cost of some items (the ones whose price hinges on cheap immigrant labor) would be met by increase in wages, especially for people in the lower socio-economic rungs.
Yes; the increase of prices alongside domestic labor cost is part of the necessary "immune system of capitalism" that is suppressed by immigrant labor. If a first-world business cannot survive without offering very low wages, it needs to die off and make way for new businesses, even if that lowers material product and service availability.
Who do you think is building the houses that are being built? Without immigration we'd still have massive housing shortages because internal migration is much larger than external migration -- people moving from the hinterland to cities with jobs. But housing would be a lot more expensive because we would no longer have cheap labour to build & renovate our houses.
This is the constant refrain of pro-illegal/poor/migrant immigration. My answer is: "in the first world, businesses should operate by offering competitive wages, and the lifestyle costs of first worlders should be balanced against those wages". I am uninterested in living in a materially wealthy society that can only operate on the back of a recently-arrived serf class, and it's bizarre to me that so many people defend this system as desirable and morally righteous.
"serf class"? Immigrants to America come here because they choose to. They're not serfs, they're not locked to the land. They move freely, and at much higher rates than other Americans do.
No it's not. We're offering additional choices to the immigrants, all the moral blame lies on the people who are persecuting the immigrants so much that they are forced to flee.
Yes, we often exploit illegal immigrants, but legal immigration is not exploitation.
given the context of paying less than what residents are willing to work for I assumed we were talking about undocumented folk, in which case i would say moral blame lies with bosses willing to pay under the table
Those people would still exist though, just live in places with (even) less possibilities.
And even without immigration, the first world is still very dependent on low cost labor, because of all the material goods produced abroad.
> Reality isn't constrained to "you have to build as fast as possible since your population is going to increase very quickly and there's nothing you can do about that".
If all of the job growth is happening in select metro areas around the country, the existing domestic population is going to move into those areas, regardless of the level of immigration
This is true, but "Americans aren't able to move to major metropolitan areas because it's too expensive" is an easier problem to solve than "every year there are 800k-1.4M new people to house, and they tend to also want to go to the major metropolitan areas".
Fortunately there is a lot of job growth outside the major metro areas. Look what's happening now with oil and gas extraction in North Dakota or plastics manufacturing in Ohio.
I believe you are correct that if every immigrant of the last ten years left the US abruptly, rent prices would be among the things that would crater, yes.
Are you suggesting that 10 years of immigrants going home would be a net positive for the US?
It depends on what "net positive for the US" means. There would be immediate product and service shortages and lost intellectual capital, but a huge explosion in available housing, spots at universities, open jobs desperate for labor, etc.
I use the dramatic case of "all immigrants going home" to illustrate that immigration affects the housing crunch and it's ridiculous to talk about it without mentioning the population increase. Personally I think the government should intensely crack down on illegal immigration, destroy business that use illegal labor (even if that's to the detriment of the consumer), and then make legal immigration tuned to attract high-skill immigrants easier.
Immigration has always been big and has gradually picked up speed. The idea of immigrants going home does not make any historical sense, neither does stopping immigration.
We've never done it that way -- there's no historical precedent. America has done well, so it doesn't make a lot of sense to change that particular thing so radically after over 130 years of similar, but varying, immigration rates to today.
There is some truth to their point. The economy in aggregate is receiving the benefit of immigration labor (through reduced labor costs and inflation) while socializing the harm on everyone who is competing for this housing (because, obviously, there are only so many affordable housing units available). There is probably a discussion to be had about governing immigration quotas according to available (not planned, available; hope is not a strategy) affordable housing. This would internalize the externalities currently being shifted around on the macro balance sheet.
A close relation of mine worked in a very, very high-up position in the Department of Agriculture. He has been farming-adjacent for his entire career, and years before he joined DoA he explained to me how meatpacking and butchery has slowly been taken over by a central set of massive corporate conglomerates who destroyed competition in the beef industry by pricing then out.
All of these major central corporations are completely dependent on illegal labor, and if they hadn't been able to pay lower wages, their takeovers couldn't have occurred at the speed or scale they did. My relation talked about this issue in the DoA and many senior officials pushed back and said that since addressing this issue of illegal labor in the beef industry would cause a rise in beef prices, threatening the availability of the migrant labor base is a no-go. (Biden admin, not that it matters--I'm sure the answer would have been the same under any admin through at least GWB).
That's where we are now, in US agriculture, residential construction, etc.. Prices must be kept low, and therefore the stream of low-skill desperate labor must not be turned off. Massive companies enjoy enduring near-monopolies because no one is willing to threaten the comfort of the American consumer.
All excellent points, a fair assessment of the situation. But, I would also say corporate profits of these firms rely on this low skill desperate labor that cannot organize and will not speak up (versus being shipped back to whatever terrible place they fled from). ADM, Bunge, Tyson, Koch Industries, etc are what come to mind in the ag sector, but is certainly not all inclusive.
I don't have a solution, but I hope smarter people than me with leverage figure it out, because it isn't sustainable.
The problem is the people running the show don't care if it's sustainable. They just want to get theirs and get out. Earn enough money and you can insulate yourself from consequences
There's far too much of this happening across all sectors, including government
> Institutional housing ownership in the US is not a material contributor to housing price inflation
This statement and citation fail to account for the impact of AirBnB and other STR market-makers on the housing market.
I strongly suspect a big part of housing price increases is the "small business" equivalent of institutional investors - someone buys 1-2 units that they do not plan to occupy and rent them as STRs. Similarly, vacation homes (aka homes that will go unused for the vast majority of the time) are now much, much more affordable if you can book a couple rentals a month to supplement a mortgage.
I'm *sure* AirBnb has some fascinating data on this, but I don't expect to ever see it in the public eye without government intervention (much as we'll likely never see Meta's studies on teen users' mental health).
> I strongly suspect a big part of housing price increases is the "small business" equivalent of institutional investors - someone buys 1-2 units that they do not plan to occupy and rent them as STRs.
This does not pass the smell test to me. Small businesses somehow are more inventivized to do this than institutional investors? Because the margins are not sufficient to attract the large businesses?? That needs evidence.
In general, small landlords don't make sense to me as something to ban.
Someone buys a two flat, lives in one and rents the other to help pay for the mortgage. That has classically been ok. You're only objecting to the short term ones?
> Small businesses somehow are more inventivized to do this than institutional investors? Because the margins are not sufficient to attract the large businesses?
Yes. When Joe is buying a couple homes, he doesn't have to pay for HR, business dev, legal, compliance, etc etc. And -
> That needs evidence.
Fair enough! I care about this topic, but not enough about this thread to make a carefully cited case here (no offense to you, friend). I'm sharing from anecdotes and personal (albeit unscientific) research.
> Someone buys a two flat, lives in one and rents the other to help pay for the mortgage. That has classically been ok. You're only objecting to the short term ones?
Yep, and I've come around on this. I used to think landlord = bad (in college, we're all young and naive at some point), but I've come around to the real economic need for an LTR market. I'm thinking of cases where an individual buys up a handful of properties to use as STRs, removing them from the LTR market (which reduces supply which increases rates of the remaining units). I have seen this happen in my area in real time but I recognize that it is scientifically unsound to extrapolate that to other areas.
Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell. If prices of luxury units are high enough, you're talking a significant percentage of units that can just be held while investors still break even or profit. Why lock in a loss or low profit (and, in doing so, hurt the value of your other holdings)?
>Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell.
Source this is happening?
>Why lock in a loss or low profit (and, in doing so, hurt the value of your other holdings)?
Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place?
>Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place?
If you raise rates on the buyers that do exist, you can cover these expenses.
"Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell."
Their claim:
"If it costs more to maintain a unit — and keep it in compliance with housing codes — than rental income justifies, it only makes sense to padlock it.
In other words, an anti-warehousing law would force owners to lose money every month — or rent a substandard unit at the risk of being in violation of housing laws."
Those aren't exactly the same thing. You're talking about developers/owners refusing to sell a luxury condo, whereas the "conservative think-tank" is talking about landlord refusing to rent a unit below his costs. Besides the difference between selling a unit vs renting it out, there's a huge gap in the middle between "minimum cost to the landlord of having a tenant" and "whatever the market rate for rent is". Even if we assume whatever the "conservative think-tank" said is true, it doesn't apply above that lower bound.
>If you raise rates on the buyers that do exist, you can cover these expenses.
Are you talking about renters or buyers? Your usage of "rates" imply that you're talking about renting, but "buyers" implies you're talking about buying.
I don't assume that what they say is true; in fact, I think that they're wrong. It was an example of even the people in whose interests it is to deny that warehousing happens, not denying that it happens.
As for the difference between renting and selling, luxury and non-luxury, apparently "supply is supply", so it doesn't matter in the aggregate. The details kind of don't matter, because at market scale, some factor should make "move it or lose it" on empty units the norm. Homes are to live in; if you're not filling them with people who are living in them, something has failed, socioeconomically. It used to be a matter of taking a lower profit in the interests of community stability and vibrancy (which a local landlord or seller would want; many aren't local), but now that everything is hyper-efficient, perhaps the cost of holding unproductive property isn't high enough.
>I don't assume that what they say is true; in fact, I think that they're wrong. It was an example of even the people in whose interests it is to deny that warehousing happens, not denying that it happens.
They're saying that happens, but only in a very specific case that doesn't apply to the claim that you're making. Claiming that developers/owners are "warehousing" units, because owners don't rent out their units for less than it costs to them, is a non-sequitur.
There was a point when they claimed it wasn't happening at all (as you are). When that became untenable, they switched to, "It's good, actually." We are at the "Big Tobacco funding medical studies" step of the process.
We are also at the point where I question what your interests are in prolonging this conversation. Mine are that I'm a renter whose finances have been damaged by the uncontrolled increases in rent caused by unscrupulous property owners, and a Millennial who can't escape to home ownership because of the inflation of the prices of properties for sale. Being clear about why I've been forced into this position is important to me. And you?
Warehousing can work to an extent, but eventually there is enough supply to overpower it. Again, the answer is to just keep building. There's also very little evidence that it is happening. NYC has vacancy rates below 3%, its extremely difficult to get much lower than that.
I'll be happy to see when it does. We're not there. And, anyway, a break of that strategy probably means that inventory gets flooded to the point that you needn't have overbuilt at all.
Building more social housing is a noble goal, but attaching stuff like that to zoning approvals is a great way to ensure nothing gets built. Your pet cause might be housing for poor people, someone else's might be housing for LGBT you, undocumented migrants, or drug addicts. All of those are noble causes too, but all make housing less attractive for developers to build. Given that we're already not building enough housing, making it less attractive to build is the last thing we want.
>Or you can rent that house after the PE firm buys it and rents it out...
That's fine? It's still contributing to the housing supply, it's not like they're hoarding the houses. Moreover unless you want to ban rentals entirely, you're going by definition need people owning more than one house. Finally, the fact that rents are sky-high as well, suggests that housing is expensive in general, not only home ownership.
Homeownership is one of the main ways that Americans transfer wealth, as it's usually the only asset that adults nowadays have that can be transferred outside of whatever's in their bank accounts.
When homeownership becomes restricted due to PE firms and Investment firms buying up entire communities to turn into rentals, the wealth transfer is hampered. Well-off adults are still having to rent and are now directly competing with younger Americans who are still growing in their careers and pay scale.
This puts older Americans in a tough spot of not being able to generate wealth or equity that can be transferred to their children. And this puts their children and younger Americans in a spot where they cannot afford to live where they work, and cannot afford to save enough to begin the journey to homeownership. And the promise of a wealth windfall when their parents pass is becoming less and less common.
What is worse the PE firms can collude (internally and/or externally) to withhold units for rent to influence prices once they capture enough of the market.
Constructing new buildings would be contributing to the housing supply.
Buying an existing home, so long as it's rented out is yes technically providing housing supply, but it is unhelpful rent seeking.
That big investors would rather buy up existing homes rather than invest in building new ones is a pretty clear sign that the housing system is dysfunctional and requires work on the taxation/regulation side that would encourage more productive use of investor dollars.
I believe the correct response here is "That's wonderful! It lets everyone get in on the benefit of being a slumlord without the hassle of shaking down your tenants. Now you can just buy shares in this instead!"
How much of zoning laws are lobbied by peopke with 100 houses? People owning the houses is not the problem, as other people still live in those houses. The incentives to keep it a good investment is still a problem.
>How much of zoning laws are lobbied by peopke with 100 houses?
Dunno, in my experience all the NIMBYs in my area look like some rich person with way too much time on their hands attending city planning meetings, not some slick lobbyist. If anything the discourse goes both ways, with some alleging that "greedy developers" are the ones doing the lobbying.
What’s ironic[1] about these comments is they set up these ignorant-sheep narrative about how the villagers are bickering among themselves. Which begets more finger-pointing among the villagers instead of looking at the real source of their problems.
[1] Not ironic if you don’t think you’re one of the villagers.
It is a narrative, yes, but are you asserting that the narrative is not substantially true? I struggle to think of anyone I know of, let alone know personally, that is mostly on the systems analysis side of the spectrum vs the story telling and bickering side.
Culture is constantly running in the background, teaching us not only what to think, but also how to think. And changing culture is hard.
I assert that there is no good evidence that it is true and that in lieu of good evidence it’s a limiting perspective to propagate.
I know how the real world works and am not fooled by the bread and circus—of course I am! :) And how often do I reveal that in real life? Very rarely because I don’t have any sympaticos in my life right now. But how many people do I know who are like me? And to how many people do I look like an unconscious NPC on this issue?
It’s a limiting perspective because you stay stuck in the mode of bickering among yourselves about who has seen the light and who hasn’t. Instead of the more useful perspective: that a non-insignificant people already know or that if they don’t then it won’t take much to convince them (X years of brainwashing does not take X years to undo).
> I assert that there is no good evidence that it is true
And what evidence could you provide (say, a description of your methodology, hours of search, resources searched, notes you've taken along the way, etc) can you offer to support your "is no good (how convenient) evidence"?
> It’s a limiting perspective because you stay stuck in the mode of bickering among yourselves about who has seen the light and who hasn’t.
That may seem to be the case, but maybe ~no one has seen the light (perhaps due to a culturally infused unwillingness to try)?
> Instead of the more useful perspective...
You have no way of knowing the utility of either approach. Realizing this (including how to realize it) is highly useful.
> then it won’t take much to convince them (X years of brainwashing does not take X years to undo).
I agree with this, except for the "won’t take much to convince them", as it could be mistaken to mean that finding the method also won't take much. But I will always upvote optimism!
> And what evidence could you provide (say, a description of your methodology, hours of search, resources searched, notes you've taken along the way, etc) can you offer to support your "is no good (how convenient) evidence"?
What evidence do I have prepared for random strangers on the Internet who are as disagreeable as me? None!
I will protest bare (uncited, shooting from the hips) “common wisdom” and counter with my own uncited perspective; mine is on the face of it no less wrong!
Why the hell would I just let such misanthropic, holier-than-thou garbage philosophies remain unexamined?!
EDIT: Three sentences in a row with exclamation marks might have been overkill. :smile:
How do you imagine villages actually worked? An extremely common way was that the entire village would be owned by one man who would collect rent from all of the villagers.
Instead of "house", you could also imagine a similar analogy around "amount of apples one person needs to eat to live".
The sociopathic villager who went to the village's communal trees, and took way more apples than they can ever eat, while others don't have enough apples to eat, should be tossed into the lake.
But the sociopathic villager tells stories in the village square, of how those villagers who are starving are lazy, and trying to eat apples without working to gather them.
A village elder starts to say they saw the sociopath going and taking the apples under the cover of darkness, and that's why some people are starving.
But the sociopath quietly welcomes the elder into the fold of those who have cellars full of more apples than they can eat. Then apple hoarding is suddenly the noble way of the ancestors, according to the elder. And, hey, look over there, at those lazy people over there trying to eat apples while working only a half day! Hate those greedy freeloaders, over there!
The housing crisis is one example, but I'm not talking about which parties have literally 100 houses in real society (nor want to get diverted with "just let developers make more money, by building more, and stop looking at any other factors of the problem"). I'm talking about essentials, greed, and corruption more generally.
I have a better analogy. It’s the analogy of a guy who got up every morning to plant apple trees in his orchard. When the time came for harvest, he picked all of the apples and sold them to market. With his proceeds, he bought some more land from his neighbor and planted even more apple trees. The next year there were too many apples for him to pick by himself so he hired a few people to help out, and used the proceeds to expand his orchard.
There was another man in the village who never planted a tree or picked an apple. Instead he sat in his house filled with envy and resentment at the apple farmer, and made up a bunch of ridiculous stories about how the apple farmer was stealing from everyone else. And so he found all of the other villagers he could sway, and inspired envy in their hearts. And the envy and resentment and hatred grew and grew until one night, they went to the orchard and burned down all the apple trees and the man’s house while he and his family slept inside. And then they all celebrated their crime.
Of course, when no one else in the village ever planted an apple orchard ever again, there were murmurs of complaint. The town baker couldn’t bake his famous apple pies the next fall, but he knew better to complain because he didn’t want the envious mob showing up at his bakery in the middle of the night. So he kept quiet.
The housing crisis is one example, but I’m not talking about which parties have obstructed the creation of wealth in real society. I’m talking about essentials, envy and corruption more generally.
As you adapt my quote, for contrast, you substitute "envy" for "greed", which seems meaningful.
So is the gist of your analogy that, in reality, the problem of what might appear to be greed, is actually strictly envy, by the people who don't merit the wealth?
And when you made the envious people outright psychotically homicidal, was that for a bit of levity? Or do you feel that strongly that irrational envy underlies real world complaints that people might have about inequity?
> And when you made the envious people outright psychotically homicidal, was that for a bit of levity?
More like realism. Read a history book sometime.
The main difference between your parable and mine is that yours assumes a zero-sum world in which there is a fixed number of apples that are grown and the only question is how to divide them. In reality, that’s not how it works. In reality, wealth can be created. A greedy person is a problem if he takes things away from other people, but if he does productive work that creates more wealth for the world, even we allow him to keep much of that wealth for himself, the rest of us are still better off with him around than without. Conversely, if we destroy him or his ability to create wealth out of a shortsighted envy because we falsely believe in a zero-sum world, we also ultimately impoverish ourselves out of spite.
Even your own parable ends up proving my point. Your parable is essentially the “tragedy of the commons”, and the point of the tragedy of the commons is that when productive assets (like apple trees) are commonly owned, the individual incentives go against the common good and also the stewardship of the asset. Conversely, if the orchard is private property, the owner’s incentives instead favor both of these things. This is why virtually all productive agricultural land is privately owned and worked for profit, and if you look back at those same history books I mentioned earlier, most attempts to abolish private ownership of farmlands—most of which were ideologically motivated by various rationalizations for envy—have resulted in lower food production and often outright famine.
Gen Z are the richest generation in all of American history on a median per-capita real income basis, compared to older generations when they were the same age. And it's not even close. Millenials are the second richest in American history.
The only problem is housing. Any discussion not focused 100% on housing is not grounded in reality.
Income isn't the only measure of wealth. Also, there are two major expenses affecting Gen Z:
1. Education
2. Housing
Both have been increasing at a rate faster than inflation for some time now. While Gen Z may have a greater income, their major expenses are even greater. When all is said and done, they're poorer as a result. Turns out that simply having money is insufficient to solving all financial problems.
Great point - the cost of childcare is insane right now! But at least the states using the force of law to make women carry their embryos to term will be paying for it, right? Right?
Right now, the ideal political-economic platform will de-emphasize inflation, inequality, etc. all in favor of the five horsemen: housing, education, childcare, eldercare, healthcare.
It doesn't matter how cheap iPads and gasoline are - as long as the five persist, life is an anxiety-inducing gauntlet of financial trials-by-fire for most people.
> Gen Z are the richest generation in all of American history on a median per-capita real income basis, compared to older generations when they were the same age.
Per capita? Not at all. What source says that?
More of Generation Z lives with their parents than previous generations, often because they can't afford housing, or even rent, high college debt etc. They live with their parents, and thus in households with higher income, so only in that sense are they "rich" - the household income is higher than if they could afford their own house.
Per capita real income higher? No. What source claims that?
Every time someone says this, if there is a source, this always come back to them living with parents and household income being higher. Not per capita.
Your numbers are by definition wrong, since young people would not have a problem to afford housing if they were "the richest generation".
I guess this is the progress of new-speak? We've had a decade of people saying "oh, people are so rich today that they don't want to have children". Now it's "oh, people are so rich today that they don't want to have homes". In a few years it will be "oh, people are so rich today that they don't want to eat food or have medical care".
>Gen Z are the richest generation in all of American history on a per-capita real income basis, compared to older generations when they were the same age.
If you looked at the source paper, they do the same analysis on "couple sharing unit", which doesn't have this problem. Confusingly, their definition of "couple" also includes singles, so genZ getting married later or whatever isn't an issue either.
>Subsequent references in this paper to couple incomes always refer to the income of the individual alone if single,
and the equal-split income of the individual and their spouse if married.
I think wealth should be measured by how many hours at the median wage do you need to achieve a socially acceptable standard of living. Unfortunately, our standards have gone up and there are things that are now necessities that weren't before.
>I think wealth should be measured by how many hours at the median wage do you need to achieve a socially acceptable standard of living.
That's a weird definition of "wealth". Wealth is generally understood to mean how much assets you have accumulated, not your free cash flow. What you're describing is properly referred to as discretionary income.
It's a real problem that you absolutely have to have money for living (food, housing, healthcare), but it's the same money you use to buy computer games or supercars.
If that's the case, everyone in postwar Germany or modern Zimbabwe should be the wealthiest people to ever exist and therefore have the highest quality of life.
There's a lot more to it than how many beans you have in the bank.
>If that's the case, everyone in postwar Germany or modern Zimbabwe should be the wealthiest people to ever exist and therefore have the highest quality of life.
If you're trying to imply that wealth = number in your bank account and 10x inflation makes you 10x wealthier, that's a massive misunderstanding of what "how much assets you have accumulated". Even though it wasn't explicitly stated, it's generally understood that the assets are valued in some meaningful way (eg. CPI or GDP deflator), rather than just looking at the raw numbers in your bank account.
> Wealth is generally understood to mean how much assets you have accumulated
...by accountants.
"Wealth" as used by most people is related to quality of life. It even shows up in the phrase "house poor" where maybe someone has great net assets but cannot live comfortable life due to the drain of the house. Wealth is not money.
"House poor" is an oxymoron. They have the option at any time to sell their house to get liquid. I can have ten gold bars and choose to live like a miser because I don't want to touch my gold, but everybody would call that ridiculous. Just as ridiculous are "house poor" who don't want to touch their real estate wealth. But we can't say that, because everybody reading this has relatives who are "house poor", and we all have to work together to keep up the lie.
Life is composed of many factors of which one is carbon, but you need carbon to have life.
There, carbon is life.
---
No, life is the combination of carbon and other things, so wealth is the combination of money and other things. It's the combination and interaction with other things that is important and focussing just on money is missing the forest for the trees.
You introduced the word wealth to the discussion and then proceeded to complain about its definition. What's the point of this?
Just use the definitions of words that are in the dictionary and widely agreed upon, so that conversations with other people can be meaningful. If you want to talk about how cost of living is high, or how it's not high but people think it's high because (insert your reason), just use the words we all use and let's talk about that.
Yea, the world of the actual-rich is like Elysium, but (for now) without outer space as the physical separation. They live in an entirely different world, fully detached from our reality. They don't need to care about "a functional society" because they make their own society and very rarely have to land on planet Earth and interact with our dysfunctional one.
I want a financial person to explain to me why we continue to expect exponential growth of companies’ revenue year after year, and why that makes any logical sense in a world with finite resources.
A trivial example is information distribution. Another one is how we turned sand into thinking machines. Myriad more examples exist.
2) We have vastly more resources than people think. Our deepest mines are ~5km. There’s a hell of a lot of planet below that, with increasing % valuable metals. There’s enough room on the planet - you can give everyone on earth a big house with a yard and we’ll all fit into a single Canadian province, or into Texas. We can generate 100% of our power needs with solar, nuclear, and batteries. And as we get richer, there are more and more people with the time and ability to make greener choices.
Our systems are proving to be flexible - look at the price of solar + battery over time; look at the deluge of funding for nuclear research. People are working on bio jet fuel. Other people are working on carbon capture tech and geo-engineering ideas for the worst case scenario.
3). We’re not stuck down here. There’s a whole universe out there. A tiny but growing % of our economy happens off-planet. A private company recently landed on the moon. SpaceX is dramatically lowering launch costs. In a few decades, we’ll be mining materials up there and manufacturing goods in space.
Exponential revenue is easy - you just need exponential inflation and it comes for free.
Increased productivity is maybe the goal - but how it's measured is up for discussion. If you do it in dollars, then do you adjust for inflation? If you do, what inflation? (inflation on the price of bread or super-yachts etc).
Or do you do it in value? What can you get for your work? In the 1990s a "machine in your pocket that can play any music ever recorded" would have been near-impossible/priceless. 25 years later it costs maybe a dollar a day and we can all have it.
If we can always get the same stuff for an ever-decreasing amount of effort, then that could be seen as exponential growth. You could argue that you could measure growth by technological advancement.
Conversely if your rent is going up 10% a year, then who cares that you're 5% more productive and making 5% more money every year. That doesn't feel like growth.
Unless you're not renting and you're the landlord and then you're experiencing sweet sweet growth.
The thing is, if more of the value produced by labor was directed back towards labor instead of equities, you're going to see far fewer people asking "how is this sustainable?", because they're on the gravy train too, but the equities holders have now gotten so used to being the special kid in the class that they can't fathom not trying to keep labor costs as low as possible.
Value growth isn't tied to physical resources anymore, it's increasingly ascribed to intangible things, such as intellectual property. I'm not saying that growth is guaranteed to continue, just that economies have already been growing based on more abstract values; it's not all about food and fuel anymore.
The biggest IP bubble now is AI, and the main bottleneck of AI is energy to power those datacenters. Doesn't google use as much energy as a few small countries now?
Biggest pharma IP now is Ozempic, which let's be honest here, is because westerners are addicted to processed corn and fried stuff. And hectares of monoculture corn sprayed with Roundup and sprinkled with just the right amount of laboratory-calibrated satiating salt is far easier to produce than a balanced diet. And what is needed to grow all that corn, soy, and alfafa feed? The tapped-out Colorado or the dwindling Ogallala...
I'm sure there are a couple of pure IP-value plays out there, but look deep enough and most everything is tied back to food, fuel, or the finite ability of the ecosystem to maintain infinitely-exponential growth.
>Biggest pharma IP now is Ozempic, which let's be honest here, is because westerners are addicted to processed corn and fried stuff. And hectares of monoculture corn sprayed with Roundup and sprinkled with just the right amount of laboratory-calibrated satiating salt is far easier to produce than a balanced diet. And what is needed to grow all that corn, soy, and alfafa feed? The tapped-out Colorado or the dwindling Ogallala...
Doesn't Ozempic make people eat less? If anything it's disproving your point. It's providing value, but at the same reducing the amount of "food and fuel" consumed.
To me it's more like slapping an expensive patch on an imperfect solution. Instead of encouraging healthier diets which have lots of follow-on nutritional and long-term medical benefits, we're paying pharma a huge monthly subscription price to keep doing something that's causing the problem in the first place. It's better than nothing, sure, but holistically it looks more like a rent-extraction trap to me.
It does work for a small minority of society. For the rest it does not.
Also, it's very hard to make something work which huge monied interests design products in a manner to ensure you fail. Are you just going to ask your grocery store to stop putting salt-fat-sugar in bright packages right by the checkout, packages and foods that are being developed by well paid groups to get you to consume as much as possible.
It's also very hard when your body is designed to do one thing. Consume as many calories as possible so you don't starve to death, because your genes are screaming at you "Starvation is coming, it always does".
So the only 'cool' statement is yours by completely not understanding the situation at all.
Junk food is convenient and more enjoyable, at least in the moment of eating. In the last 60 years there have been changes to the environment that reduce physical activity (more automobiles, less walking, less strenuous physical labor on the job) but I think that the most relevant change is the abundance of highly palatable calories. 60 years ago we largely didn't have "convenience foods" and the fastest snack you could make yourself (like a cold sandwich or a piece of fruit) didn't have the "craveability" of Doritos or microwaveable egg rolls. Back then the average American could afford to buy far more calories than needed, but those calories would take prep labor and/or not be highly palatable, so in practice many fewer Americans overate buttered popcorn the way that people overeat Doritos today.
America was on-average wealthier than most of the world and an early adopter of highly palatable convenience foods, so its obesity problem came on earlier. Global obesity rates are rising as more people globally can afford microwave ovens, frozen pizzas, drive-through restaurants serving french fries, and other such aids for high speed ingestion of delicious, calorie-dense foods.
Most people who need to lose weight cannot willfully maintain diet alterations in the long term. They go back to old habits. For 99.9% of human existence starvation was a much more common health threat than obesity and we're just not "wired" to experience excess food intake as a threat. The GLP-1 drugs like semaglutide reduce the desire to overeat, regardless of how palatable the food is, so people who could not lose weight before are able to eat less without having to consciously suppress desire every day.
Advice doesn't work that well in general, especially when it's vague and general advice like that. I would also guess that there are competing forces trying to make you eat their product and that they put a lot of money into that.
Because humans (like most animals) are optimized at a deep level to seek high-energy foods, and neither encouragement or shame are powerful enough to override that.
Yes, everything is ultimately dependent on physical resources, but the value creation is at a higher level, and you hopefully get more value out of less resource as things advance. I don't consider AI a positive example, it's a hype bubble for sure. But think how much computing power per watt you get compared to 30 years ago.
The Haber–Bosch process that powered the green revolution is merely a way of converting fuel into heat into fertilizer.
Calories per hectare is one way of measuring food systems, and a great way when we assume fuel inputs are infinite, inexhaustible, and cheap. Calories per unit of inputs is another way.
The green revolution was not only a result of the Haber-Bosch process, although that's an aspect I wasn't thinking about.
Hybridization of crop plants increased the calories per hectare per year produced. Again, I don't know if the plants were actually producing more edible nutrients per pound of fertilizer.
> And hectares of monoculture corn sprayed with Roundup and sprinkled with just the right amount of laboratory-calibrated satiating salt is far easier to produce than a balanced diet
Man, i wish Americans were just eating the corn with salt. Would be a lot healthier than corn starch+syrup whatever.
> Value growth isn't tied to physical resources anymore, it's increasingly ascribed to intangible things, such as intellectual property
No this isn’t accurate. No one values IP for its own sake; it is still responsible for generating revenue and being translated into profit. The process by which this happens is still resource extraction (raw materials into chips, energy into processors, etc etc etc).
And you are really only talking about tech. Every other industry has the same demand for infinite growth and can’t hide behind an IP abstraction layer.
Even so, the IP is used to make things which require resources. Disney IP is used to make toys, movies, books, etc, that all require electricity, paper, computers, employees sitting and eating, commuting into the office. Or a vaccine patent will be used to make a vaccine which requires a factory to be built and operated, the product produced, stored, shipped, used, and disposed into a landfill.
That's true, but more and more products are moving away from dependence on the physical resources. Kids don't buy toys much anymore, they play digital video games. You can see a doctor on Zoom instead of driving to their office. I'm not saying that's better, but it's happening.
The real problem I see is when people use wealth generated from intangibles to put the squeeze on physical resources, such as buying up land as an investment to drive up the price when people need a place to live.
Obviously physical limits will bind at some point; indefinite exponential growth implies at some point that each electron in the observable universe is outputting the entire current world GDP every year, which is pretty unlikely under our current understanding of physics. But it's for you to explain why the physical limits bind at the point we happen to be at right now. Why does the observed historical trend break now, rather than (say) in fifty years' time?
That's close but not quite. In older times, this economic profit is an accumulation of wealth, instead of having the apples just pay for the daily laborer's calories, it means, maybe they can take a few apples home to make apple sauce and that the farm owner can sell the extras in a market. You paid for the maintenance (ie. workers not starving, replacing machinery, ) and you had some left. Land is a whole other problem. The Wealth of Nations has a pretty good description of the interactions between labor, landowners, capital.
The recent problems is the disconnect between money and actual food/materials/energy production.
If your grandfather lived in a 100kw village with a 100 dollars circulating, and made 1 dollar, it is reasonable to think he could buy 1kW for his family.
If we live in a 100kw village (because no, we should reduce energy production) with 100,000 dollars circulating and you make 500, you can buy 500w.
Now do it for turkeys, or steel, or etc... Degrowth is impoverishment in most cases. Things haven't gotten much more productive, and we are more people
(But the total number of births per year fell throughout the 1990s ... mainly because of the birth rate falling in China? ... before rising to that global maximum in 2012.)
I always describe it as a range, as estimates differ and the true peak might have happened even outside it.
It's a historical milestone and I'm surprised there's so little awareness of it.
There will most likely never be this many people born in a year ever and we crossed this point without much fanfare.
Personally I think the predictions are overblown - as they assume that the generation "peak" will have 90% the children their parents had. Fertility rates in countries like Niger and Nigeria are already dropping at a faster rate than that and it's these places where the most people are currently born.
I think you need to take your comparison further back. As I understand it, before the Industrial Revolution, people had plenty of free time. For instance, looking at the Middle Ages, many spent the morning tending to their fields and then the rest of the day was theirs.
Yes but my point was not about a specific time in the past, it was about how that free time wasn’t captured by the market - in ways it is now and will continue to be in the future.
Yeah, but they were all illiterate and politically powerless, not to mention spiritually oppressed, so what were the actual, tangible options for things they could do with ‘their day’? They didn’t even own their own land.
Inflation (so numbers grow), different companies at different stages, etc? Also not exponential growth, but just significant growth and crashes every X years
>I want a financial person to explain to me why we continue to expect exponential growth of companies’ revenue year after year, and why that makes any logical sense in a world with finite resources.
Because entropy. When a living organism stops its exponential cell division, we call that death. In an economy, when things cease to grow, we call it recession. When that growth is in balance with the decay, we call it a healthy economy. When it outstrips it, we call that inflation, which the monetary system is designed to fight against.
>Adult living organisms don't have exponential cell division.
Sure they do. Your cells are dying and being replaced constantly. Cancer is just when the instructions for said division get messed up, i.e. runaway inflation in this analogy.
I think you missed the word "exponential". Adult living things don't have exponential cell division. If they did, they would continue to grow in size. But they don't. They have cell division at a constant rate, not an exponential rate.
> We wanted ever-increasing returns for shareholders
And ever-decreasing prices for consumers. Don’t forget that!
Free trade results in more goods for everyone, by enabling different places to focus on what they do best.
> while doing nothing on the whole to retrain the workforce.
I completely agree that some more attention needs to be paid to retraining. The answer to disappearing jobs is to prepare folks for new ones, not to artificially preserve the old ones. One has to be careful, though, not to distort the market for retraining itself.
> And ever-decreasing prices for consumers. Don’t forget that!
Except that's not happening for major purchases. Housing is more expensive than ever. Education is more expensive than ever. Healthcare is more expensive than ever. Cars and Trucks are more expensive than ever.
Besides taxes, the above are the biggest slice of the consumer's wallet, and those prices have almost never decreased. Shareholder returns keep going up, up, and up though.
> Housing is more expensive than ever. Education is more expensive than ever. Healthcare is more expensive than ever.
Housing, education and healthcare are to a very great extent to amenable to globalisation, since houses have to be built on a local plot of land, education is for most folks done in-country and healthcare too is delivered locally. Not that all three, too, are subject to massive amounts of subsidies.
> Cars and Trucks are more expensive than ever.
A Henry J in 1950 was $1,299 (according to https://www.gobankingrates.com/saving-money/car/heres-much-c...), or $16,934 in 2024 dollars; a Nissan Versa is $17,820 today. While more expensive, that doesn’t seem crazy, just 5.23% more — and of course that Versa is a much better car.
Agree that housing, education and healthcare are more expensive than ever.
But I lived through the 1980s and let me tell you, in many ways consumer goods are better and cheaper than ever before. It was just normal and expected that cars would have holes rust in them, and sunroofs that would leak. A home computer was an exotic rarity, and a monitor with a 15" viewable area was considered big. There was an entire industry dedicated to renting TVs, not just because of the high upfront cost but also because they often broke down, and the rental company would provide the repair or replacement.
free trade sounds great in theory. unfortunately what we see are imbalances for a myriad of reasons for example one of the largest economies government owns or heavily subsidizes companies or entire industries in order to maintain control.
I can easily afford a home, but I have no interest in buying one.
I'd rather take all the extra money I save by renting and invest it in other assets. I also value my time and I don't want to have to do all the chores and upkeep a house needs. Sure I could pay someone to do all those things I suppose, but then it makes renting even that much cheaper.
Owning a house used to be a goal of almost everyone? But I wonder if like me younger generations don't even have an interest in buying a house and maybe that also affects the homeowner rate.
You could hire your landlord to do all the chores and upkeep for your house. I'm sure he would do it for cheaper than your rent. How many times has he been around this year to fix things for you?
My landlord is excellent IMO. They always fix any issues I have usually by the next day. I can't say I have had a ton of issues though.
But I mean stuff like mowing the lawn, shoveling the snow, cleaning out the gutters, and various other repairs and such that happen over time. That is what I mean by I value my time, and those things can take a considerable amount of time.
Also my rent is only ~$1000 per month for a 2-bedroom. It would cost me like 3x that for a basic house in mortgage plus property tax plus utilities plus maintenance etc. Sure a house is much larger space, but I don't really need all that space... And I don't find any smaller homes really. Property taxes alone would be like 1/3 to 1/2 my rent...
Sure, but is it worth $1000 per month to have the lawn mowed and snow shoveled? Repairs and improvements are not a service he does for the renter, it is something that he does to keep or increase the value of his real estate investment.
Your $1000 per month rent can only be compared with the interest part of a mortgage you'd get for the exact same housing you are paying rent for. If the rent is less than the interest would be, then yes, you are better off renting. You also have to be able to invest any money that would have gone to a mortgage to make more than the price of your rent in profit every month, because that is your loss each month on rent. It is achievable if you're shrewd and can stay cold headed. Compounding effects help you, but you're also vulnerable to rent hikes. If you stay for more than a few years with the same landlord, they will catch on to that you have a stable situation and are saving/investing, and they won't be able to sleep at night thinking about all that juicy income that you're saving and investing, that could belong to them.
I've shoveled snow and cleaned gutters, even put on a new coat of paint a few times. It is not worth paying somebody $1000 per month for that. That's a salary for somebody working 50% of full time just taking care of maintenance on the unit you're renting. You're also comparing renting a smaller place vs buying a bigger house. That's also part of the problem. Landlords have hogged all of the apartments and smaller housing in order to extract the lifeblood of young workers, when such units would also be available for sale and not rent in a healthy environment.
"Your $1000 per month rent can only be compared with the interest part of a mortgage you'd get for the exact same housing you are paying rent for. If the rent is less than the interest would be, then yes, you are better off renting."
Why just the mortgage interest? Why not the property taxes, the utilities, the repair costs, the time to perform the upkeep and maintenance (which for me has a monetary value).
I have been renting where I am at for 14 years now and there have been no crazy rent hikes.
It was ~800/mo 14 years ago and has climbed slowly to ~1000/mo currently.
I have looked many times at buying a home in my area, but there is nothing in a similar area, and a nice house that I would actually want to own for less than about 2000/mo for a mortgage (probably more like 2500/mo now). That doesn't even count property taxes which would be like another 500/mo.
Then, if I value my time, I would need to pay someone to do the mowing and shoveling and other maintenance beyond that...
It's way more expensive than renting.
With renting I'm paying about $12,000 a year and that's it. That includes water and heat too and me not having to spend any time or money on upkeep or maintenance.
With all the money I save, I do multi-family real-estate investing and development. That generates me a passive income plus huge deductions from asset and property depreciation. And when the property is improved and sold after several years nets a large gain which I move into a new property thus not having to pay taxes on that transaction either. The return on this is far greater than the average rate of a home appreciation minus mortgage interest.
So long as you make your payments on time, the lienholder cannot confiscate your property to make the pie whole. The money might be theirs, but the property is yours.
> Roughly 30% of 25-year-olds in 2022—the oldest of the Gen Z (born between 1997 to 2013)—owned their home in 2022, a slightly higher percentage than the 28% of Millennials (born between 1981 to 1996) who owned homes at that age and the 27% of Gen Xers (born between 1965 and 1980)—but lower than the rate for Baby Boomers (born between 1946 and 1964), 32% of whom owned homes at age 25.
Family wealth is the most common. That doesn’t mean “mommy and daddy gave me a house” as often as it means things like living rent-free on your parents’ property so you can save money, having them co-sign a loan, or cash gifts helping with the down payment.
The other thing is remembering that cost of living varies significantly. Even 25yo FAANG engineers struggle in San Francisco but there are other parts of the country where someone with middle class income can buy if they live modestly and are thinking along the lines of a basic condo in a non-luxury neighborhood.
32%->27%->28%->30% appear to be just rounding errors, especially considering the number of individuals concerned.
If anything, such numbers indicate to me that homeownership rates haven't meaningfully changed and the only thing that did change is the advent of noisey narratives.
> appear to be just rounding errors, especially considering the number of individuals concerned
Isn't it in fact the opposite? The bigger population, the easier to find a significant signal? Those are variances of millions of people. We wouldn't treat a 5% swing in unemployment as a rounding error, would we?
> If unemployment keeps hovering around 30% +/-5% over basically a century, that is in fact a rounding error.
“rounding error” isn’t typically used to describe double-digit percentage changes. You might say within normal variation but it’s a significant change and, ignoring the fact that those numbers are much greater than the actual unemployment rate, it’s well over the measurement precision and real shifts of millions of people are going to be scrutinized.
>“rounding error” isn’t typically used to describe double-digit percentage changes.
What? We're talking about a 5 percentage points variance, that is a single digit percentage point change. This is regarding a 29 percentage points average over a span of like 80 years concerning millions if not billions of people.
That is a rounding error, whether it's home ownership or unemployment or whatever you want those numbers to be.
35 is 15% larger than 30. Our measurements for unemployment are precise enough that it’s not just margin of error.
At the moment, that’s a change of 16 million people. A century ago, it was 5 million people. Both of those numbers are large enough that they absolutely would get attention and public discussion.
If something trends give or take 30% for 80 years or more, a +/-3% variance is a fucking rounding error. I don't care if it's home ownership or unemployment or whatever the number is, it is a rounding error not worthy of concern.
It's like the lowering and rising of the tides. It goes up and down, but the sea level remains basically the same overall; thus, nobody cares about the exact tide at an exact time for figuring out sea level because it's a rounding error.
Put more bluntly: The trend has not changed, what is there worthy of my concern?
Because the economy is a complex system which is constantly changing, and it’s important not to lose track of why we measure it. A 5% charge likely isn’t evenly distributed, and the real impacts are often masked – if a major industry moves offshore, there are inevitably regional impacts more significant than the national average and if a bunch of people get new jobs working at McDonald’s or delivering Amazon packages it matters that they and their communities are poorer even if it looks like the unemployment rate is back to where it was 3 years ago. The minor fluctuations are the cue to look at the responsible factors, not to say “meh, it’s 15%, not 50%” and ignore it.
> The name "homeownership rate" can be misleading. As defined by the US Census Bureau, it is the percentage of homes that are occupied by the owner. It is not the percentage of adults that own their own home. This latter percentage will be significantly lower than the homeownership rate.
To add to what you said, and make it a little easier to visualise why it's misleading:
If you have one person living on their own in a house they own, and four people renting bedrooms in a shared house, the home ownership rate is 50% despite only 20% (1 of the 5) of the people being home owners.
If the home owner then rents out one of their bedrooms to someone expanding the population between the two houses from 5 to 6, then home ownership rate is still 50% but now it's 16.6% (1 in 6) of people who own a home.
It'd be interesting to see what would happen to 35 and up if you excluded everyone born before, idk, 1980, and then again if you excluded everyone born before 1965.
> It'd be interesting ... if you excluded everyone born before ... 1980, and then again .. .before 1965
On one income, I owned my first house in 1994 for $425/mo and next in 2001 for about 2x that. Hurricanes hit elsewhere in 05 & 07 (last here 1921) & I lost the 2nd when my (mandated) insurance doubled my monthly house payment.
By 2021 we could minimally survive on 1.5 incomes (did 1). Today it's 3.5 incomes (have 4).
Your instinct that those numbers don't match the reality you see is probably right. But it's less likely the #s are made up and more likely there are qualifiers.
I don’t think you have grasped the catastrophic damage the housing crisis has done to trust in the western economic system. At this point younger generation would put the CCP in charge in they knew they’d fix housing. And they would.
You're on point on this. It is the largest upheaval of things since the industrial revolution. The idea that most adults would work 9-5 with weekends off in a job that could be stable for years has not been the standard historically. People would work seasonally, fixed employment was rare unless you were a slave or a serf.
Right now today, and for the past decade, the reality is that two employees doing the same work for the same company for the same pay can have totally different living standards. For one of the employees, maybe half or more of his salary goes to rent, what's left after living expenses he tries to save for a down payment. For the other of the employees, his full time job is not even his main source of income. His main source of income is his home increasing in value every year by more than what he makes from working. He keeps all of his salary after tax, because he doesn't pay rent. Maybe a small fraction of his income goes to pay for the last scraps of an ancient mortgage on his home.
For the business employing these two people, it is the same. They pay the same salary, get the same output from their employees. They can't do anything about outside factors if they want to treat their workers fairly. This is also why they think "young people don't want to work" and such.
The industrial (or post-industrial if you want to call it that) economy is built around labour. That is completely gone by now. Young people growing up knows that working is for complete suckers and that a person has made some major fuck up in their life if their income depends on working.
Have you seen the sacrifices made to afford those homes? Just because someone owns a home doesn't show the whole picture.
There are plenty of Americans that own homes and are struggling to make ends meet elsewhere.
Home ownership is set up to consume a person. Miss a payment and there are serious repercussions to one's financial well being, so it becomes a priority.
Up to a point, miss a credit card payment and it's extra fees. Miss a utility bill a month, and it's the same. Buy less food and you'll survive, albeit less comfortably.
Seven of us were living in a 3/3 - when I could no longer afford the monthly payments that doubled via insurance increases. What would you have us downgrade to?
> Not everyone needs to live in 5 bed mcmansion.
This seems like a unproductive assumption and one unlikely to be the rule. Why introduce it into the conversation?
This is not unique to US in any way I can see. Also, doing by far the biggest financial decision of a lifetime should expect some serious financial analysis beforehand, and plenty of extra buffer for 'what if' situations. Quadruple that for US due to healthcare (and education for potential children) costs.
But what I see sounds mostly as FOMO and emotional decisions. Having home ain't some basic human right but a luxury, where I come from (central Europe) it was like that for hundreds of years. All generations living in 1 tiny basic house was the default, inheritance with many kids was very tricky and thus often cousins were forced to marry. Maybe there was some period in US where things were significantly cheaper, but what were the reasons? Maybe US wasn't so full of people. Maybe poor blue collar construction workers were squeezed much more harshly so that things were done cheaper. Also, construction got (at least in Europe) massively more complex and thus expensive due to regulations, materials etc. There can be 10,000 other reasons. But it seems otherwise smart folks here are mostly looking for first target to blame.
Cheap housing is a pipe dream in strongly capitalistic society like US. I know everybody not having it wishes for it dearly, at least until the moment they cross the fence to home ownership and then suddenly want to see their biggest investment appreciate sky high. Seems like human nature, me first and then the rest (I am not an exception, but then again stuff above doesn't make me lose sleep, life has way more important qualities than hoarding wealth at other's expense).
Nobody can afford it, to the point where we’ve done dark bloodpacks with banks and financial institutions to try and get the average family into what used to be an average priced home.
A mortgage is 30 years. Who thinks most people will have well-paying jobs in 20 years? In 10? In 5? What's the current percentage of American workers who can afford a house, a car, and a single child responsibly? What's the average income-to-mortgage ratio in America, is it sustainable?
What rationalization are we supposed to have for self-worth when robots and AGI do all of "our" labor?
This entire society is melting down so that a handful of billionaires can have and do whatever they dream of, the rest of us are supposed to do what exactly?
We're supposed to find meaning and worth in the scraps that are left?
edit downvotes without rebuttals are equal to "shut up and keep working"
Yeah, it's more or less same mess in Europe too. Young people are supposed to take 20-30 year mortgages that require a stable career to pay back, while corporations do their best to make everyone unemployed via advances in AI and robotics. Hell, my country also shares more than 1000km of with Russia, and who says we won't have WW3 in 20-30 years?
At this point the main economic improvement in my life will probably come when I inherit my paren't house. Career, work, that is all uncertain to build a life upon, so I will just rent and downshift.
Oh yeah, you're right. Rising rates basically crashed the entire construction sector in my country for that reason, since few people can afford the rates, so no new mortgages.
Stop being a turkey voting for Christmas. Lose the puritanical outlook on life and start considering the myriad ways a few hundred billionaires could be stopped by the general population at large.
We wanted ever-increasing returns for shareholders, and that meant moving factories (where these young men's grandfathers were working 60 years ago) overseas while doing nothing on the whole to retrain the workforce.
We got the shareholder returns. Too bad that can't buy a functional society for people born after 1980.