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One of the things that I believe is that decent homes in established areas shouldn’t change in price substantially, at least compared to inflation, without majo
by village-idiot 8y ago
One of the things that I believe is that decent homes in established areas shouldn’t change in price substantially, at least compared to inflation, without major external events that adjust the desirability of said city/neighborhood.
Watching home prices skyrocket in CA while the state’s population has leveled off has me very concerned.
- deleted 8y ago[deleted]
- phendrenad2 8y agoWhat do you think is causing it?
- maimeowmeow 8y ago100k salary is equivalent to minimum wage jobs elsewhere. So people have high salaries, and there must be enough people that are getting paid enough disposable income to sustain 2-3k a month rent. Meanwhile, the average software salary across us is 105k
- village-idiot 8y agoHonestly, I’m not sure. I think the power of property holders in local zoning is part of it, along with foreign investment properties taking up available units. The middle class using their property to bolster stagnant wages is probably a part too. I have no clue if any or all of those is sufficient to explain it. Particularly worrying is that suburban homes should be falling in price, since most American municipalities have unfunded obligations to maintain infrastructure like roads and pipes, which are insanely expensive per person in low density suburbs. The expectation of future tax raises or infrastructure decline should be priced in by the market, but it isn’t.
- fipple 8y agoThe supply curve is ~0 due to homeowner capture of laws, so the price elasticity is huge. Very basic stuff.
- village-idiot 8y agoCan you explain more please?
- fipple 8y agoHomeowners create laws that benefit them at the expense of non homeowners. The two biggest are refusing to expand supply and Prop 13 (they enhance each other’s effects which is why the California situation is the worst).
- village-idiot 8y agoI’m familiar with both of those, prop 13 in particular has made a landed gentry in my area with million dollar run down bungalows. What I’m more interested in is this elasticity thing. Are you saying that the effective 0 supply has unmoored the price and it can wander, or is it that 0 supply sends the price up into the stratosphere?