4 ms·

> rents are set by wages as you have to pay them out of your wages. Are you implying that there's some sort of grand-scale collusion on rent prices? If most re

by gragas 10y ago

> rents are set by wages as you have to pay them out of your wages. Are you implying that there's some sort of grand-scale collusion on rent prices? If most rent takers think "hey, the median salary is X so I'll just charge X * 0.33" then what's stopping another rent taker from drastically undercutting that price?

13of40 10y ago
You could argue that home prices are tied to wages and rent is tied to home prices.
- ehnto 10y ago
  I would say that easy access to loaned capital has perversed the connection between wages and house prices a bit.
  - gragas 10y ago
    >easy access to loaned capital has perversed the connection between wages and house prices a bit Only to a certain extent. Loaned capital is still limited by wages (no one is going to give a $1 million mortgage to someone who makes $40k per year). But again, I don't think wages has hardly anything to do with house prices; it's all about supply and demand. Sure, most people might only be willing to pay 1/3 their salary on housing. That doesn't mean that the price for housing is that number. If a huge supply of housing for less than that price floods the market, then why would everyone continue to pay 1/3 their salary for housing when they could pay 1/4 or 1/6?
- gragas 10y ago
  I'd like to see that argument. The median home in California is not by any means affordable. The median home in many other states is absolutely affordable. Furthermore---and back to my original argument---suppose that home prices are X * C where X is the median salary and C is some number between 0 and 1. What's stopping someone from drastically undercutting the artificially-high home price? I have no reason to believe that either home prices or rent are set by wages.
- branchless 10y ago
  Nope. Loose money (low rates) mean yiu can borrow more for the same cost on the interest portion.
branchless 10y ago
I've no idea where to start with this. Prices are set by what the market can bear.

by gragas 10y ago

13of40 10y ago

You could argue that home prices are tied to wages and rent is tied to home prices.

ehnto 10y ago
I would say that easy access to loaned capital has perversed the connection between wages and house prices a bit.
- gragas 10y ago
  >easy access to loaned capital has perversed the connection between wages and house prices a bit Only to a certain extent. Loaned capital is still limited by wages (no one is going to give a $1 million mortgage to someone who makes $40k per year). But again, I don't think wages has hardly anything to do with house prices; it's all about supply and demand. Sure, most people might only be willing to pay 1/3 their salary on housing. That doesn't mean that the price for housing is that number. If a huge supply of housing for less than that price floods the market, then why would everyone continue to pay 1/3 their salary for housing when they could pay 1/4 or 1/6?
gragas 10y ago
I'd like to see that argument. The median home in California is not by any means affordable. The median home in many other states is absolutely affordable. Furthermore---and back to my original argument---suppose that home prices are X * C where X is the median salary and C is some number between 0 and 1. What's stopping someone from drastically undercutting the artificially-high home price? I have no reason to believe that either home prices or rent are set by wages.
branchless 10y ago
Nope. Loose money (low rates) mean yiu can borrow more for the same cost on the interest portion.

branchless 10y ago

I've no idea where to start with this. Prices are set by what the market can bear.