patrick.net

What I summarize from the comments is that
1) High paying jobs supporting ballooned prices are gone.
2) Even if UE rate goes back to normal,it'll be due to low paying jobs(certainly a guys who lost 100K+ jobs and now working 40K+ will not help home prices)
3) Due to 1) and 2) above banks main business of lending is suffering severely. Banks just don't want to lend against overpriced wooden box.
4) Super low rates is the government's way of keeping the balloon inflated - JAPAN style. It has not worked for Japan,it will not work for USA or any economy in the world.

I don't know about California, but I would have to say it's basically a true statement for my area. I purchased my first house in Pleasantville, NJ for 90k in 1999, it had 800 sq ft with a basement. Same size house in the same area, larger lot, with a basement and a one car garage is going for 99k. With a little haggling I'm sure if I was to buy a house in the 99k range, I could get it for 90k or so. So compared to what I purchased in 1999 I could get more house for the same price. Yes it's more affordable. Add in my salary increased about 35% since then, and a 4% mortgage interest rate compared to the 8% mortgage interest rate I had in 1999, it's definitely more affordable for me.

zzyzzx says

Exactly how is this different from the US right now???

What is the point of this question? I mean technically its actually better over there right now since they have a UHS and their government actually encouraged companies to higher more people wether they needed them or not.

But that doesn't mean their situation is at all good or desirable or sustainable for that matter.

Philistine says

Will we go the route of Japan, back to 5% unemployment but with menial labor taking the place of yesteryear's glamor professions?

Unemployment will likely go down over time but underemployment will likely stay permanently high and the quality of jobs will be worse. As the other guy noted less blue collar "middle class" jobs to go around, more McJobs that keep the food coming and pay the rent but little or nothing else.

Philistine says

What we're really missing in these kinds of numbers is the *under*employment rate. Nobody at the BLS is running those statistics

U6 is the BLS stat you want. Its still juked though since people aren't counted after a while of being out of work.

Philistine says

If we are replacing roughly 25% of our workforce with lower paying jobs to get back to 5% unemployment, I am not sure where all the inflation is going to come from.

Wage inflation isn't the only means inflation can occur though. Cost push inflation occurred in living memory here in the US, the 1970's, yet everyone seems to forget it. The rising cost of materials due to devaluation is slowly but surely being felt despite central bankers efforts to prevent the effects from entering the real economy.