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I can get behind your theory. But I don't know how well it holds for housing, because of the technique described in the longer article posted in another thread

I can get behind your theory. But I don't know how well it holds for housing, because of the technique described in the longer article posted in another thread. [0] Specifically, housing is 40% fair market rent on a three-bedroom apartment. So while it's certainly possible that the things you talk about housing are true for apartments, it's a different argument to make. Certainly at least some of the things you discuss are applicable, like central AC. Some others, like size, are probably less applicable. > Adjusted for CPI, the median cost per square foot for housing only rose by 5% between 1990 and 2010 Minor nit, but it seems like poor form to take someone who's arguing against CPI, and then to use CPI-adjusted numbers in a counter-argument. [0] https://news.ycombinator.com/item?id=22378311 https://news.ycombinator.com/item?id=22378311

dcolkitt 7y ago
> Minor nit, but it seems like poor form to take someone who's arguing against CPI, and then to use CPI-adjusted numbers in a counter-argument. That's fair enough. But let's use the author's preferred denomination of nominal median household income. From 1985 to 2018 this number rose 21% faster than CPI.[1] Given this it means the median cost per square foot fell by 15% over the period. > Specifically, housing is 40% fair market rent on a three-bedroom apartment. Thanks for linking that. That article found a 172% increase in nominal terms for its "typical example" of a 3 bedroom apartment in Raleigh, NC. In nominal terms, median real household incomes at a national level rose by 196%[1]. Data for Raleigh specifically doesn't go back to 1985. But since 2006, Raleigh incomes have risen 0.5% faster than the national average.[2] Therefore using the author's preferred metric rental housing has actually become 8-19% more affordable. Finally focusing on rent ignores the fact that 65% of American households are owner-occupied. Over the same period the cost of rent has risen substantially faster than the cost of ownership, not least because mortgage rates fell 12.5% to 4.5%[3]. If you take a weighted average of renters and owners, you'll find housing costs grew at substantially slower rates than simply picking a single metro's rental costs over time. [1] https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N [2] https://www.deptofnumbers.com/income/north-carolina/raleigh/ https://www.deptofnumbers.com/income/north-carolina/raleigh/ [3] https://www.valuepenguin.com/mortgages/historical-mortgage-rates https://www.valuepenguin.com/mortgages/historical-mortgage-r...

dcolkitt 7y ago

> Minor nit, but it seems like poor form to take someone who's arguing against CPI, and then to use CPI-adjusted numbers in a counter-argument. That's fair enough. But let's use the author's preferred denomination of nominal median household income. From 1985 to 2018 this number rose 21% faster than CPI.[1] Given this it means the median cost per square foot fell by 15% over the period. > Specifically, housing is 40% fair market rent on a three-bedroom apartment. Thanks for linking that. That article found a 172% increase in nominal terms for its "typical example" of a 3 bedroom apartment in Raleigh, NC. In nominal terms, median real household incomes at a national level rose by 196%[1]. Data for Raleigh specifically doesn't go back to 1985. But since 2006, Raleigh incomes have risen 0.5% faster than the national average.[2] Therefore using the author's preferred metric rental housing has actually become 8-19% more affordable. Finally focusing on rent ignores the fact that 65% of American households are owner-occupied. Over the same period the cost of rent has risen substantially faster than the cost of ownership, not least because mortgage rates fell 12.5% to 4.5%[3]. If you take a weighted average of renters and owners, you'll find housing costs grew at substantially slower rates than simply picking a single metro's rental costs over time. [1] https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N [2] https://www.deptofnumbers.com/income/north-carolina/raleigh/ https://www.deptofnumbers.com/income/north-carolina/raleigh/ [3] https://www.valuepenguin.com/mortgages/historical-mortgage-rates https://www.valuepenguin.com/mortgages/historical-mortgage-r...