patrick.net

No it's not the only way: If you don't build enough for the population, which is increasing, the units available are increasingly affordable only by the richest people.
Thus the price increases while a portion of the population goes homeless, or lives a 4 in a garage.
No debt required.

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

Government restricts supply, and only allows few rentals be built to make landlords profits. While average person can't afford a house.

That's my view of it. I have nothing but contempt for our government.

Buyers continually overpaying for shacks cause prices to increase.
Let's flip this dump! Some sucker will buy it if we double the price.

Patrick says

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

Some people just became rich through the stock market. So, while their incomes have not changed, their ability to purchase with their net worth has shot up.
Many people inherit wealth, allowing them to purchase homes far above what their income would allow. It happened to a friend of mine. A few years ago, his wife inherited a few million. They purchased a $million + home, a porsche and what not. The rest was carefully invested, giving them the ability to live beyond what their normal incomes would allow.
Bottom line......Income is not the only variable that determines what home a person can afford. Net worth is also a determinant.

Patrick says

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

You misunderstand Heraclitus point. If the rich already have the best, in a limited supply environment then the "next richest" will get the "next best" and so on and so forth. Ordinary people and anyone below them don't matter in the equation - the ordinary people are squeezed out and forced to rent, double up, move further away etc.

Its pretty easy to understand this once you understand that price to income and any other housing rule of thumb is just that - a rule of thumb - and not any sort of fundamental principle that will apply to all or even most areas.

Supply and demand. If an increasing amount of supply is being absorbed as a luxury (second or third properties) or as empty investments (both domestic and foreign) then prices can rise faster than wages of primary buyers. The price of houses should rise or fall with wages with all other factors being constant, but the new reality is houses are both a commodity to be traded and a luxury item for the rich and kinda rich.

Supply and demand. If an increasing amount of supply is being absorbed as a luxury (second or third properties) or as empty investments (both domestic and foreign) then prices can rise faster than wages of primary buyers. The price of houses should rise or fall with wages with all other factors being constant, but the new reality is houses are both a commodity to be traded and a luxury item for the rich and kinda rich.

oops

FortWayne says

Government restricts supply, and only allows few rentals be built to make landlords profits. While average person can't afford a house.

That's my view of it. I have nothing but contempt for our government.

Democrats and Repubs both allow the special interests (wealthy and landowners) to perpetuate this inequality and artificial scarcity.

What AMERICA needs is an end of the new slavery, debt slavery.

Strategist says

Patrick says

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

Some people just became rich through the stock market. So, while their incomes have not changed, their ability to purchase with their net worth has shot up.
Many people inherit wealth, allowing them to purchase homes far above what their income would allow. It happened to a friend of mine. A few years ago, his wife inherited a few million. They purchased a $million + home, a porsche and what not. The rest was carefully invested, giving them the ability to live beyond what their normal incomes would allow.
Bottom line......Income is not the only variable that determines what home a person can afford. Net worth is also a determinant.

Exactly. and the gap between the haves and have nots is growing.

null says

Supply and demand. If an increasing amount of supply is being absorbed as a luxury (second or third properties) or as empty investments (both domestic and foreign) then prices can rise faster than wages of primary buyers. The price of houses should rise or fall with wages with all other factors being constant, but the new reality is houses are both a commodity to be traded and a luxury item for the rich and kinda rich.

The rich bastards priced me out of a Malibu mansion over the Pacific. So I make do living where peasants live. So can everyone else based on what they can afford.

Strategist says

The rich bastards priced me out of a Malibu mansion over the Pacific.

Strat. Work harder not smarter. You're doing it all wrong. You think those rich bastards are smart ;).

PeopleUnited says

Exactly. and the gap between the haves and have nots is growing.

One main problem is that they can usually count being bailed out when the "carefully selected" - sorry Strat they aren't - investments go wrong. And the have-nots pay for this with increased per-capita debt and inflation. This is preventing vertical mobility between the haves and the have-nots. 2008 was a great equalizer, but they bailed the haves out.

Well tax and spend can help. In IL many 250-400k houses can have an annual tax of 8-15k a year-yes a year. Then you have houses 500-900k paying anywhere from 18-35k a year in taxes. You think these houses will ever go up CA style-hahaha!!

Good insight mell. The bailouts were for the already well to do, not much trickled down to mainstreet. The only real trickle down was inflation as all that bailout money pushed up and propped up prices that favor the upper class.

WookieMan says

Strat. Work harder not smarter. You're doing it all wrong. You think those rich bastards are smart ;).

You mean work smarter, not harder. Those rich celebrities... movie stars, basketball players, other athletes are usually dumb as hell. But you know what? I have always been happy with what I have. Some of my happiest times when young was in college, when I had nothing. Then I was happy when I had a family, but not much money. Then I was happy when my kids were growing up, because cheering for them at soccer games was the best fun I ever had. Then, when the kids went off to college I was happy, even though I had to pay their college costs. And now I'm still happy, because my youngest 21 year old (who I thought would be a loser, even though he was identified as "gifted" in school" ) graduated, found a real job, and is making money that surprised me.
Guys, wealth does not bring happiness. It's the little things you do with family and friends that bring you happiness. Trust me on this.
'

Housing expenses / all expenditures

Deflation in other segments allows more income thrown into housing.
Plus lower interest rates continue to push price up.
Plus also dis-saving. If home prices go up & up, people's home equity becomes their life savings, augmenting if not taking the place of 401k contributions etc.

All other markets are even more nuts than the USA -- Canada, Australia, England, the Nordic countries, probably even Germany by now.

Japan crashed a long time ago but the home prices in Tokyo are still quite high compared to the US (but 1% interest rates help out there a lot)

consumer household debt ratios:

Bellingham Bill says

Housing expenses / all expenditures

Deflation in other segments allows more income thrown into housing.

Deflation makes homes cheaper. Why is that bad

Bellingham Bill says

Plus lower interest rates continue to push price up.

Which is not deflation.

Bellingham Bill says

Plus also dis-saving. If home prices go up & up, people's home equity becomes their life savings, augmenting if not taking the place of 401k contributions etc.

Which is not bad. It makes it easy for old to survive.

Bellingham Bill says

consumer household debt ratios:

All of those countries spend less on health care then we do. Still the chart makes US look pretty good.

foreign investment

Patrick says

How can housing prices grow faster than wages?

Well, if Trump would actually do something about illegal immigration instead of being a complete pussy...

Strategist says

Income is not the only variable that determines what home a person can afford. Net worth is also a determinant.

The main determinant in my humble opine.

Middle East doesn't have this problem.....but Y?

just_passing_through says

Strategist says

Income is not the only variable that determines what home a person can afford. Net worth is also a determinant.

The main determinant in my humble opine.

If what you own goes up in value all the time due to inflation you will be in great advantage to those who start out without owning anything. It is imperative for prices of different goods/services to fluctuate and any attempt at bailing out a certain sector harm vertical movement.

Patrick says

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

Patrick says

The richest people already have the best houses. They are not really a factor in housing for ordinary people.

Those certain people that have access to unlimited near 0% loans and hot money from overseas, looking for stuff to buy that generates income (rentals) could be a factor. Imagine being a working stiff trying to outbid people that get free money.

Dan8267 says

Well, if Trump would actually do something about illegal immigration instead of being a complete pussy...

You mean like obama and his 8 years in office and clinton in his 8 years too?

somecrappynumber says

You misunderstand Heraclitus point. If the rich already have the best, in a limited supply environment then the "next richest" will get the "next best" and so on and so forth. Ordinary people and anyone below them don't matter in the equation - the ordinary people are squeezed out and forced to rent, double up, move further away etc.

Exactly.

Strategist says

Guys, wealth does not bring happiness. It's the little things you do with family and friends that bring you happiness. Trust me on this.

True dat.

just_passing_through says

Strategist says

Income is not the only variable that determines what home a person can afford. Net worth is also a determinant.

The main determinant in my humble opine.

Most Americans' net worth is near or below zero.

Dan8267 says

Most Americans' net worth is near or below zero.

Probably so. The top 20% in terms of net worth or income could afford high priced homes.

mell says

If what you own goes up in value all the time due to inflation you will be in great advantage to those who start out without owning anything

My cousin Melinda and her husband Pat finally sold their home in McClain, VA that they paid $300,000 for in 1984 after sitting on it for three years and two years afte they'd moved into a condo:

https://www.zillow.com/homes/for_sale/7414-Dulany-Dr,-Mc-Lean,-VA-22101_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false&fromHomePageTab=buy

P N Dr Lo R says

mell says

If what you own goes up in value all the time due to inflation you will be in great advantage to those who start out without owning anything

My cousin Melinda and her husband Pat finally sold their home in McClain, VA that they paid $300,000 for in 1984 after sitting on it for three years and two years afte they'd moved into a condo:

https://www.zillow.com/homes/for_sale/7414-Dulany-Dr,-Mc-Lean,-VA-22101_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false&fromHomePageTab=buy

Good for them. Bad for everyone else.

Strategist says

Dan8267 says

Most Americans' net worth is near or below zero.

Probably so. The top 20% in terms of net worth or income could afford high priced homes.

the rest can rent forever or live in the shit zip codes.

PeopleUnited says

Probably so. The top 20% in terms of net worth or income could afford high priced homes.

the rest can rent forever or live in the shit zip codes.

We can't all live in $50 million mansions. Why is it wrong living in a home you can afford?
Our ancestors lived in squalor, slums, huts, caves and even trees. Most humans across the world still do.
Why are us Americans so upset with our living conditions, when we live better than the rest of the world?
We are spoilt rotten Americans.

Strategist says

PeopleUnited says

Probably so. The top 20% in terms of net worth or income could afford high priced homes.

the rest can rent forever or live in the shit zip codes.

We can't all live in $50 million mansions. Why is it wrong living in a home you can afford?
Our ancestors lived in squalor, slums, huts, caves and even trees. Most humans across the world still do.
Why are us Americans so upset with our living conditions, when we live better than the rest of the world?
We are spoilt rotten Americans.

Inreasingly the houses that are affordable require unreasonable commutes or are literally death traps, and/or require a lifetime of hard labor to "afford". The American dream of upward mobility is mostly a fairytale farce used to placate the working class. If everyone can't have access to decent affordable housing how are we any better than communists?

PeopleUnited says

We can't all live in $50 million mansions. Why is it wrong living in a home you can afford?
Our ancestors lived in squalor, slums, huts, caves and even trees. Most humans across the world still do.
Why are us Americans so upset with our living conditions, when we live better than the rest of the world?
We are spoilt rotten Americans.

Inreasingly the houses that are affordable require unreasonable commutes or are literally death traps, and/or require a lifetime of hard labor to "afford". The American dream of upward mobility is mostly a fairytale farce used to placate the working class. If everyone can't have access to decent affordable housing how are we any better than communists?

Is a 7,000 sq ft, beautiful, 20 year old house on a golf course affordable enough at $300K? My Aunt has been trying to sell it for 3 years, 3 or 4 hours South of Chicago.
Guys, if you want to live where the multi millionaires live, it might be easy if you were one. Other than that you can pray, and keep praying.
Why am i wrong?

The West in general is losing ground. The elites are moping up while the working class is on the hook for not just personal debt but national debts as well!

Debt: Use it Wisely, Fiscal Monitor, October 2016 - IMF
International Monetary Fund | October 2016 63
Table A1. Advanced Economies: General Government Overall Balance, 2007–21
(Percent of GDP)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Australia 1.5 –1.1 –4.6 –5.1 –4.5 –3.5 –2.8 –2.9 –2.8 –2.9 –2.5 –1.7 –0.8 –0.2 0.0
Austria –3.9 –3.9 –5.3 –4.4 –2.6 –2.2 –1.3 –2.7 –1.2 –1.6 –1.5 –1.1 –1.0 –0.8 –0.7
Belgium 0.1 –1.1 –5.4 –4.0 –4.1 –4.2 –3.0 –3.1 –2.6 –2.7 –2.2 –2.0 –2.2 –2.3 –2.4
Canada 1.8 0.2 –3.9 –4.7 –3.3 –2.5 –1.9 –0.5 –1.3 –2.5 –2.3 –2.0 –1.6 –1.2 –0.9
Cyprus1 3.3 0.9 –5.5 –4.8 –5.7 –5.8 –4.4 –0.2 –1.4 –0.5 –0.6 –0.5 –0.1 –0.1 –0.1
Czech Republic –0.7 –2.1 –5.5 –4.4 –2.7 –3.9 –1.2 –1.9 –0.4 –0.6 –0.6 –0.4 –0.4 –0.4 –0.5
Denmark 5.0 3.2 –2.8 –2.7 –2.1 –3.5 –1.1 1.5 –1.7 –0.9 –1.9 –1.7 –1.5 –1.3 –1.1
Estonia 2.4 –2.9 –1.9 0.2 1.0 –0.4 –0.3 0.7 0.4 0.2 0.2 0.1 –0.1 –0.1 –0.2
Finland 5.1 4.2 –2.5 –2.6 –1.0 –2.2 –2.6 –3.2 –2.7 –2.4 –2.4 –2.0 –1.5 –1.1 –0.6
France –2.5 –3.2 –7.2 –6.8 –5.1 –4.8 –4.0 –4.0 –3.5 –3.3 –3.0 –2.7 –2.1 –1.5 –1.0
Germany 0.2 –0.2 –3.2 –4.2 –1.0 0.0 –0.2 0.3 0.7 0.1 0.1 0.2 0.4 0.5 0.6
Greece –6.7 –10.2 –15.2 –11.2 –10.2 –6.5 –3.5 –4.1 –3.1 –3.4 –2.7 –1.7 –1.7 –2.0 –2.6
Hong Kong SAR 7.3 0.1 1.7 4.1 3.8 3.1 1.0 3.6 0.6 1.5 1.5 0.9 1.2 2.1 2.1
Iceland 4.9 –13.1 –9.7 –9.8 –5.6 –3.7 –1.8 –0.1 –0.5 14.7 0.5 0.6 1.1 0.7 1.1
Ireland1 0.3 –7.0 –13.8 –32.1 –12.6 –8.0 –5.7 –3.7 –1.9 –0.7 –0.5 –0.3 –0.1 0.2 0.4
Israel –0.6 –2.7 –5.6 –4.1 –3.4 –5.0 –4.2 –3.4 –3.1 –3.4 –3.9 –3.9 –3.9 –3.9 –3.9
Italy –1.5 –2.7 –5.3 –4.2 –3.5 –2.9 –2.9 –3.0 –2.6 –2.5 –2.2 –1.3 –0.5 –0.1 0.0
Japan –2.1 –4.1 –10.4 –9.3 –9.8 –8.8 –8.6 –6.2 –5.2 –5.2 –5.1 –4.4 –3.9 –3.2 –3.1
Korea 2.2 1.5 0.0 1.5 1.7 1.6 0.6 0.4 0.3 0.8 1.1 1.6 2.1 2.2 2.3
Latvia 0.6 –3.2 –7.0 –6.5 –3.1 0.1 –0.6 –1.7 –1.8 –1.2 –1.2 –0.1 –0.4 –0.5 –0.5
Lithuania –1.0 –3.3 –9.3 –6.9 –8.9 –3.1 –2.6 –0.7 –0.2 –0.3 –0.5 –0.5 –0.5 –0.5 –0.5
Luxembourg 4.2 3.4 –0.7 –0.7 0.5 0.3 0.8 1.7 1.3 1.2 0.0 –0.1 –0.3 –0.3 –0.3
Malta –2.3 –4.2 –3.3 –3.2 –2.6 –3.6 –2.6 –2.0 –1.5 –0.8 –0.7 –0.6 –0.5 –0.5 –0.5
Netherlands 0.2 0.2 –5.4 –5.0 –4.3 –3.9 –2.4 –2.3 –1.9 –1.1 –0.7 –0.4 –0.2 0.0 0.2
New Zealand 3.2 1.3 –1.7 –5.9 –5.4 –1.8 –1.0 –0.3 –0.2 –0.4 –0.3 0.0 0.6 0.9 0.9
Norway 17.0 18.5 10.3 10.9 13.2 13.5 10.5 8.4 5.5 3.0 3.2 3.5 3.6 3.5 3.5
Portugal –3.0 –3.8 –9.8 –11.2 –7.4 –5.7 –4.8 –7.2 –4.4 –3.0 –3.0 –2.9 –2.9 –2.9 –2.9
Singapore 10.1 6.1 0.0 6.0 8.7 7.9 6.7 5.5 2.6 2.4 2.4 2.5 2.9 2.8 3.2
Slovak Republic –1.9 –2.3 –7.9 –7.5 –4.1 –4.3 –2.7 –2.7 –3.0 –2.3 –2.2 –2.0 –1.9 –1.9 –1.9
Slovenia 0.3 –0.3 –5.4 –5.2 –5.5 –3.1 –13.9 –5.8 –3.3 –2.3 –2.3 –2.4 –2.6 –2.7 –2.8
Spain1 2.0 –4.4 –11.0 –9.4 –9.6 –10.4 –6.9 –5.9 –5.1 –4.5 –3.1 –2.7 –2.3 –2.2 –2.1
Sweden 3.3 2.0 –0.7 0.0 –0.1 –0.9 –1.3 –1.5 0.0 –0.4 –0.7 –0.4 0.1 0.3 0.3
Switzerland 1.6 1.8 0.6 0.3 0.5 0.0 –0.2 –0.2 –0.2 –0.3 –0.3 –0.2 –0.2 –0.2 0.0
United Kingdom –2.9 –4.9 –10.5 –9.5 –7.6 –7.7 –5.7 –5.6 –4.2 –3.3 –2.7 –2.2 –1.1 –0.7 –0.7
United States2 –2.9 –6.7 –13.1 –10.9 –9.6 –7.9 –4.4 –4.2 –3.5 –4.1 –3.7 –3.3 –3.5 –3.6 –3.7
Average –1.2 –3.5 –8.8 –7.7 –6.3 –5.5 –3.7 –3.3 –2.8 –3.0 –2.8 –2.3 –2.1 –2.0 –2.0
Euro Area –0.6 –2.2 –6.3 –6.2 –4.2 –3.7 –3.0 –2.6 –2.1 –2.0 –1.7 –1.4 –1.0 –0.7 –0.6
G7 –2.1 –4.5 –10.0 –8.8 –7.4 –6.4 –4.4 –3.8 –3.2 –3.6 –3.3 –2.8 –2.6 –2.5 –2.5
G20 Advanced –1.8 –4.2 –9.5 –8.3 –7.0 –6.0 –4.1 –3.6 –3.0 –3.4 –3.1 –2.6 –2.4 –2.2 –2.2
Source: IMF staff estimates and projections. Projections are based on staff assessment of current policies (see Fiscal Policy Assumptions in text).
Note: For country-specific details, see Data and Conventions in text, and Table B.
1
Data include financial sector support. For Cyprus, 2014 and 2015 balances exclude financial sector support.
2
For cross-country comparability, expenditure and fiscal balances of the United States are adjusted to exclude the imputed interest on unfunded pension liabilities and the imputed compensation of employees,
which are counted as expenditures under the 2008 System of National Accounts (2008 SNA) adopted by the United States, but not in countries that have not yet adopted the 2008 SNA. Data for the United States
in this table may thus differ from data published by the U.S. Bureau of Economic Analysis.

PeopleUnited says

The West in general is losing ground. The elites are moping up while the working class is on the hook for not just personal debt but national debts as well!

Stop it PU, the poor don't pay enough taxes. It's the middle class that is on the hook for all the debts.