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> where the median home price is $572,000 Where did all the money come from in last 1 year to inflate the prices to this insanity. So asset inflation is event

> where the median home price is $572,000 Where did all the money come from in last 1 year to inflate the prices to this insanity. So asset inflation is eventually going to make impact on labor prices and cause inflation. Then is why FED so cocksure that inflation is no big deal. >So yeah, I can understand why employers can't find workers... I don't understand why employers cant simply pay more and pass on the costs to their consumers. What's stoping them.

SmellTheGlove 6y ago
> Where did all the money come from in last 1 year to inflate the prices to this insanity. We've been printing trillions over the past 15 years or so. And we've disproportionately accumulated it at the top (including the audience here, although the top 1% and 0.1% are doing even better than that). That money has to go somewhere. Traditional conservative investments have low rates of return right now - think low interest rates - and housing has historically been seen as "safe". And it's providing fantastic returns. Take COVID - nobody wants to move, so housing supply is low. Tight supply is just exacerbating an existing issue, especially sharply over the past year. Totally anecdotal: I just moved from SF to Seattle, somewhat related to my job. We were outbid half a dozen times, often by cash offers. I remember one of them in particular, because we got beat way over asking by a cash buyer, and it was rented on Zillow the week after closing. Housing is an asset class, not a place we live. > I don't understand why employers cant simply pay more and pass on the costs to their consumers. What's stoping them. Passing costs onto consumers is a bit of a lie used to scare consumers into opposing wage increases. You can only pass on so much cost, and it depends in part on the elasticity of demand for your product. Anyhow, employers generally can pay more, but they are optimizing for their shareholders and return on equity. That's going pretty well if you look at the market. But that's why the market isn't reflective of the economy as a whole.
- medium_burrito 6y ago
  100% this. Quantitative easing basically caused epic asset inflation- great for the capital owning class, but royally fucking over the poors and young workers. In Seattle back in the day a teacher could own a house in the city and pay it off without a sweat. Nowadays, unless you are a doctor or software engineer or patent lawyer it's kind of ludicrous idea.
- pmoriarty 6y ago
  "Take COVID - nobody wants to move, so housing supply is low." I was under the impression that lots of people wanted to move out of the cities both because the high population of cities made living in them much riskier than living in more rural/suburban areas in terms of infection risk for COVID, and because with the economy hurting from COVID-related lockdowns living in cities (especially expensive ones like SF) was much less affordable.
  - SmellTheGlove 6y ago
    Maybe, but I suspect those are mostly renters moving out. SF single family housing supply was also fairly tight - didn’t seem like that was who was leaving. We were renters so it wasn’t too hard to bail.
cbozeman 6y ago
> > where the median home price is $572,000 > Where did all the money come from in last 1 year to inflate the prices to this insanity. This area of Texas is not well-known to most people. It's a bit of a well-kept secret. While Austin is new money and trendy, and Dallas is cosmopolitan, this area of Texas is old... old money. > I don't understand why employers cant simply pay more and pass on the costs to their consumers. What's stoping them. Our company not only has two nationwide competitors, we have significant regional competitors across America, and on top of that, we're having to fight Amazon as well. I get CC'ed and BCC'ed on most shifts in company policies because it can directly affect logistics and I need to be able to actively work around or with these policies, and things are getting so crazy that Directors of Operations at each warehouse are being tasked with asking low-level warehouse employees to clock out 15 minutes early each day just to avoid any possibility of overtime. Obviously this creates logistics problems because when a warehouse fills up, you can't send any more stock from suppliers there. So I've had to fold COVID-19 absentee reports into our data analysis, because the loss of productivity from workers can directly affect storage space. For instance, one warehouse currently has three people out with a confirmed COVID-19 diagnosis, but we contact traced another seven people between those three, so that's 10 workers out, 3 of which for at least a few weeks, possibly months. The other 7 until they're cleared by medical doctors. That could mean roughly a 30% reduction in ability to process merchandise at that location for up to a week or two, and around an 8% decline for several weeks or months. So we can't pass the cost on to consumers because why would you buy a headlamp assembly for your Audi A6 from us for $479 when you can get it from Amazon for $382?
- throwawayboise 6y ago
  I think the question "why employers cant simply pay more and pass on the costs to their consumers" was rhetorical. Of course most employers cannot do this because their competitors will undercut them. They can only do it for costs that are imposed on all players, like government mandated minimum wage.
  - deleted 6y ago
    [deleted]

SmellTheGlove 6y ago

> Where did all the money come from in last 1 year to inflate the prices to this insanity. We've been printing trillions over the past 15 years or so. And we've disproportionately accumulated it at the top (including the audience here, although the top 1% and 0.1% are doing even better than that). That money has to go somewhere. Traditional conservative investments have low rates of return right now - think low interest rates - and housing has historically been seen as "safe". And it's providing fantastic returns. Take COVID - nobody wants to move, so housing supply is low. Tight supply is just exacerbating an existing issue, especially sharply over the past year. Totally anecdotal: I just moved from SF to Seattle, somewhat related to my job. We were outbid half a dozen times, often by cash offers. I remember one of them in particular, because we got beat way over asking by a cash buyer, and it was rented on Zillow the week after closing. Housing is an asset class, not a place we live. > I don't understand why employers cant simply pay more and pass on the costs to their consumers. What's stoping them. Passing costs onto consumers is a bit of a lie used to scare consumers into opposing wage increases. You can only pass on so much cost, and it depends in part on the elasticity of demand for your product. Anyhow, employers generally can pay more, but they are optimizing for their shareholders and return on equity. That's going pretty well if you look at the market. But that's why the market isn't reflective of the economy as a whole.

medium_burrito 6y ago
100% this. Quantitative easing basically caused epic asset inflation- great for the capital owning class, but royally fucking over the poors and young workers. In Seattle back in the day a teacher could own a house in the city and pay it off without a sweat. Nowadays, unless you are a doctor or software engineer or patent lawyer it's kind of ludicrous idea.
pmoriarty 6y ago
"Take COVID - nobody wants to move, so housing supply is low." I was under the impression that lots of people wanted to move out of the cities both because the high population of cities made living in them much riskier than living in more rural/suburban areas in terms of infection risk for COVID, and because with the economy hurting from COVID-related lockdowns living in cities (especially expensive ones like SF) was much less affordable.
- SmellTheGlove 6y ago
  Maybe, but I suspect those are mostly renters moving out. SF single family housing supply was also fairly tight - didn’t seem like that was who was leaving. We were renters so it wasn’t too hard to bail.

cbozeman 6y ago

> > where the median home price is $572,000 > Where did all the money come from in last 1 year to inflate the prices to this insanity. This area of Texas is not well-known to most people. It's a bit of a well-kept secret. While Austin is new money and trendy, and Dallas is cosmopolitan, this area of Texas is old... old money. > I don't understand why employers cant simply pay more and pass on the costs to their consumers. What's stoping them. Our company not only has two nationwide competitors, we have significant regional competitors across America, and on top of that, we're having to fight Amazon as well. I get CC'ed and BCC'ed on most shifts in company policies because it can directly affect logistics and I need to be able to actively work around or with these policies, and things are getting so crazy that Directors of Operations at each warehouse are being tasked with asking low-level warehouse employees to clock out 15 minutes early each day just to avoid any possibility of overtime. Obviously this creates logistics problems because when a warehouse fills up, you can't send any more stock from suppliers there. So I've had to fold COVID-19 absentee reports into our data analysis, because the loss of productivity from workers can directly affect storage space. For instance, one warehouse currently has three people out with a confirmed COVID-19 diagnosis, but we contact traced another seven people between those three, so that's 10 workers out, 3 of which for at least a few weeks, possibly months. The other 7 until they're cleared by medical doctors. That could mean roughly a 30% reduction in ability to process merchandise at that location for up to a week or two, and around an 8% decline for several weeks or months. So we can't pass the cost on to consumers because why would you buy a headlamp assembly for your Audi A6 from us for $479 when you can get it from Amazon for $382?

throwawayboise 6y ago
I think the question "why employers cant simply pay more and pass on the costs to their consumers" was rhetorical. Of course most employers cannot do this because their competitors will undercut them. They can only do it for costs that are imposed on all players, like government mandated minimum wage.
- deleted 6y ago
  [deleted]