4 ms·

> 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 value

> 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
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- 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.
  - arcticbull 7y ago
    > 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%. Yep, good point. > 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. IMO what it showed was that house prices are dependent on people's ability to obtain financing, and when the financing market ground to a halt, people weren't able to obtain the leverage necessary to sustain the price point. That doesn't mean anything about the intrinsic value of the home, IMO. 2008 is not a good example because there was fundamental, structural problems in the market facilitating such transactions. I think the dot-com pop was a much better comparison because there were no structural issues fundamental to the market but rather a drop in desirability.

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.
- arcticbull 7y ago
  > 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%. Yep, good point. > 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. IMO what it showed was that house prices are dependent on people's ability to obtain financing, and when the financing market ground to a halt, people weren't able to obtain the leverage necessary to sustain the price point. That doesn't mean anything about the intrinsic value of the home, IMO. 2008 is not a good example because there was fundamental, structural problems in the market facilitating such transactions. I think the dot-com pop was a much better comparison because there were no structural issues fundamental to the market but rather a drop in desirability.