5 ms·

No? You're looking at an extremely local level at SF, which is obviously influenced by the tech industry which is hosting some of the world's largest companies

No? You're looking at an extremely local level at SF, which is obviously influenced by the tech industry which is hosting some of the world's largest companies like Apple, who's revenue tenfolded since 2007. If you look at median home sales prices in the US in general however, you get this picture (just compare the peak of 2007 till today): https://fred.stlouisfed.org/series/MSPUS?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories https://fred.stlouisfed.org/series/MSPUS?utm_source=series_p... I'm not seeing an 88% increase. Now if you correct that picture for median household income in the US, for the same period: https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N You'll see, income-adjusted home prices haven't shot up that much since the last peak. Then you have to contextualise further, and look at interest rates. After all, you're not buying homes in cash. For almost all of us, when we 'buy' a home, we're really just signing a rental contract for cash (a loan), and our housing costs consists of servicing this loan, the mortgage payments. The principal sum matters of course, which went up as prices grew, but so does the interest rate, which is at a historic low and responsible for the prices growing. You can't just ignore interest rates. So if you actually look at monthly payments, which is by definition corrected for interest rates, and correct that for income increases, really what we talk about when we say 'housing costs', really isn't anywhere near the record levels usually talked about in the media, discussion forums etc. And THEN you correct that for the larger homes etc. Now I tried to give a longer historical perspective of price increases for a few generations beyond mine, but if you want to nitpick that and make a joke about jacuzzis, fine by me. My point is that if we break down what a 'change in housing costs' really should mean, we typically want to talk about: income-adjusted, monthly (periodical) cost for a square foot. What we tend to do is: ignore the fact our incomes rose greatly in nominal terms, yet express increases housing in nominal terms, ignore interest payments dropping for decades reducing the costs to finance these homes, and then ignore the fact these homes have doubled in size in the post-war era and typically have much better amenities. And that's not a fair representation, I think.

tom_mellior 7y ago
> for the same period One of the links you posted goes from 1963 to 2018, the other from 1984 to 2019. Not the same period. For the record, comparing the values for 1963-01-01 and 2018-01-01 gives an increase of 2.8x in median income and 4.2x in median house price sales. You're right that other things like amenities and house sizes might factor into this in some way, but I doubt that explains everything. It's especially interesting to note that median incomes from 2007 to 2008 did not decrease, and only decreased about 2% from 2007 to a local minimum in 2010. Yet house prices decreased by 19% from a local maximum in Q1 2007 to Q1 2009. You will find it very hard to argue that that had something to do with a very sudden shift to smaller/less well equipped homes. I find it a lot more likely that the main reason is speculation. Yes, including speculation related to interest rates.
- arcticbull 7y ago
  > For the record, comparing the values for 1963-01-01 and 2018-01-01 gives an increase of 2.8x in median income and 4.2x in median house price sales. You're right that other things like amenities and house sizes might factor into this in some way, but I doubt that explains everything. It actually does, the link I provided shows the average square footage went up 50% from 1600 sqft to 2400. This accounts perfectly for the difference you cited (4.2x is 50% larger than 2.8x). > It's especially interesting to note that median incomes from 2007 to 2008 did not decrease, and only decreased about 2% from 2007 to a local minimum in 2010. Yet house prices decreased by 19% from a local maximum in Q1 2007 to Q1 2009. Not sure if you heard there was a mortgage crisis with tons of defaults ravaging neighborhoods. Macroeconomic conditions were responsible there. The entire market for lending and consequently for housing broke down.
  - deleted 7y ago
    [deleted]
  - tom_mellior 7y ago
    > It actually does, the link I provided shows the average square footage went up 50% from 1600 sqft to 2400. This accounts perfectly for the difference you cited (4.2x is 50% larger than 2.8x). The article at https://www.supermoney.com/inflation-adjusted-home-prices/ https://www.supermoney.com/inflation-adjusted-home-prices/ talks about the sizes of "new homes" that have increased in this way since 1979. But the median price increases seem to take into account all home sales. If most homes sold are not "new", then the comparison is invalid. For example, if 80% of homes sold in this period were not new, then "total square feet sold" only increased by 20% of 50%, i.e., 5%. Indeed it is an easily observable fact that the prices of old houses and apartments go along with general price rises in an area. Without the old house's size changing. > Not sure if you heard there was a mortgage crisis with tons of defaults ravaging neighborhoods. I did hear. And this showed that at least 20% of a home's sale price is not determined by its value as measured in units of surface area. Rather, it's a vulture economics seller's market in which prices are determined by what people are able to pay for a necessary good, not by what is a fair price for that good.

tom_mellior 7y ago

> for the same period One of the links you posted goes from 1963 to 2018, the other from 1984 to 2019. Not the same period. For the record, comparing the values for 1963-01-01 and 2018-01-01 gives an increase of 2.8x in median income and 4.2x in median house price sales. You're right that other things like amenities and house sizes might factor into this in some way, but I doubt that explains everything. It's especially interesting to note that median incomes from 2007 to 2008 did not decrease, and only decreased about 2% from 2007 to a local minimum in 2010. Yet house prices decreased by 19% from a local maximum in Q1 2007 to Q1 2009. You will find it very hard to argue that that had something to do with a very sudden shift to smaller/less well equipped homes. I find it a lot more likely that the main reason is speculation. Yes, including speculation related to interest rates.

arcticbull 7y ago
> For the record, comparing the values for 1963-01-01 and 2018-01-01 gives an increase of 2.8x in median income and 4.2x in median house price sales. You're right that other things like amenities and house sizes might factor into this in some way, but I doubt that explains everything. It actually does, the link I provided shows the average square footage went up 50% from 1600 sqft to 2400. This accounts perfectly for the difference you cited (4.2x is 50% larger than 2.8x). > It's especially interesting to note that median incomes from 2007 to 2008 did not decrease, and only decreased about 2% from 2007 to a local minimum in 2010. Yet house prices decreased by 19% from a local maximum in Q1 2007 to Q1 2009. Not sure if you heard there was a mortgage crisis with tons of defaults ravaging neighborhoods. Macroeconomic conditions were responsible there. The entire market for lending and consequently for housing broke down.
- deleted 7y ago
  [deleted]
- tom_mellior 7y ago
  > It actually does, the link I provided shows the average square footage went up 50% from 1600 sqft to 2400. This accounts perfectly for the difference you cited (4.2x is 50% larger than 2.8x). The article at https://www.supermoney.com/inflation-adjusted-home-prices/ https://www.supermoney.com/inflation-adjusted-home-prices/ talks about the sizes of "new homes" that have increased in this way since 1979. But the median price increases seem to take into account all home sales. If most homes sold are not "new", then the comparison is invalid. For example, if 80% of homes sold in this period were not new, then "total square feet sold" only increased by 20% of 50%, i.e., 5%. Indeed it is an easily observable fact that the prices of old houses and apartments go along with general price rises in an area. Without the old house's size changing. > Not sure if you heard there was a mortgage crisis with tons of defaults ravaging neighborhoods. I did hear. And this showed that at least 20% of a home's sale price is not determined by its value as measured in units of surface area. Rather, it's a vulture economics seller's market in which prices are determined by what people are able to pay for a necessary good, not by what is a fair price for that good.