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Hey ChuckMcM. Good to see you around HN again. Check this out: https://www.cbo.gov/sites/default/files/cbofiles/attachments/49440-Distribution-of-Income-and-Ta

Hey ChuckMcM. Good to see you around HN again. Check this out: https://www.cbo.gov/sites/default/files/cbofiles/attachments/49440-Distribution-of-Income-and-Taxes.pdf https://www.cbo.gov/sites/default/files/cbofiles/attachments... Specifically p.18 Figure 8. Figure 8 shows that since 1980, real income has grown 174% for the top 1 percentile of earners, 56% for the 81st-99th percentile, and 16% for anyone earning below the 81st percentile. Also note that these are 2011 numbers, and that inequality has gotten worse in the past 4 years. This is probably the most succinct and alarming graph that shows the degree to which inequality is growing and wealth is being transferred to the top 10% of earners in the US. Historically, a strong middle class has driven housing which in turn powers consumption, the engine that powers America's economy. [1] Housing construction was heavily subsidized on both the supply (construction) and demand (purchasing) front by the government after WWII - in 1940 only 44% of Americans owned a home whereas in 1960 62% could make this claim. Along with this spike in ownership came increased consumption of all goods that owning a new home implies - a car, a dishwasher, utilities, spending on children, etc. Owning a home also reflects well on an family's balance sheet: After paying off the mortgage in 10, 20, 30 years, the property is usually a middle class family's most valuable asset by far. With the decline of the middle class, less and less working class people will be able to afford to own a home. Instead, they will be forced to rent. [2] The rich will invest in real estate as they have since the beginning of time, and will seek rent as a generally reliable form of earning a return on their capital. With employment numbers improving, but income staying relatively the same, we can foresee a picture of more people working just to pay the rent, and not having enough left over to afford a mortgage, kids, etc. So to answer your question: the people with money will own the property, and the people without money will work to afford rent. Unless the government take serious steps towards reversing the rapid accretion of wealth to the upper quintile of earners, the future of housing for my generation looks very bleak in my opinion. [1] http://jcr.oxfordjournals.org/content/jcr/31/1/236.full.pdf http://jcr.oxfordjournals.org/content/jcr/31/1/236.full.pdf [2] http://www.census.gov/housing/hvs/files/currenthvspress.pdf http://www.census.gov/housing/hvs/files/currenthvspress.pdf

ChuckMcM 11y ago
I've seen the numbers, after I read Piketty's book (and the critiques) I was looking at how this plays out. On the one hand do you have the 1% buy up all the land, build castles, and the rest of us serfs work in extortionate rental units? I really don't think that is where the market ends up. So how does it change? Extra-market capital tends to distort things, like expat Chinese buying up houses in the Bay Area for cash, but given the supply of housing I can't see them or the rest of the 1% cornering the supply. I do see enclaves of the super rich, but there have always been those (think the Hamptons, or Los Altos Hills). But the miles and miles of tract houses in surburbia? Not so much. So when the middle class loses their purchasing authority, the demand for houses softens, new housing starts slow down and resale of existing homes takes longer. Then prices flatten out until they catch up with the buying power. (or drop down to a level of affordability). A lot of artificially low prices were created during the foreclosures of 2009 - 2013 but that force has largely abated. That said, a lot of my kids generation really aren't that interested in "owning" a house, but I don't know if that will change as they move into raising families or not. Good metrics to watch though seems to be days on market for existing homes and new housing starts. And that seems a good trailing indicator of how the middle class is doing.

ChuckMcM 11y ago

I've seen the numbers, after I read Piketty's book (and the critiques) I was looking at how this plays out. On the one hand do you have the 1% buy up all the land, build castles, and the rest of us serfs work in extortionate rental units? I really don't think that is where the market ends up. So how does it change? Extra-market capital tends to distort things, like expat Chinese buying up houses in the Bay Area for cash, but given the supply of housing I can't see them or the rest of the 1% cornering the supply. I do see enclaves of the super rich, but there have always been those (think the Hamptons, or Los Altos Hills). But the miles and miles of tract houses in surburbia? Not so much. So when the middle class loses their purchasing authority, the demand for houses softens, new housing starts slow down and resale of existing homes takes longer. Then prices flatten out until they catch up with the buying power. (or drop down to a level of affordability). A lot of artificially low prices were created during the foreclosures of 2009 - 2013 but that force has largely abated. That said, a lot of my kids generation really aren't that interested in "owning" a house, but I don't know if that will change as they move into raising families or not. Good metrics to watch though seems to be days on market for existing homes and new housing starts. And that seems a good trailing indicator of how the middle class is doing.