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Housing prices will find whatever level is necessary to price out the excess housing seekers relative to available homes. Higher wages simply mean a bigger numb
by closeparen 5y ago
Housing prices will find whatever level is necessary to price out the excess housing seekers relative to available homes. Higher wages simply mean a bigger number.
- jjk166 5y agoAvailable homes is not a constant. New structures can be built, inefficiently utilized land can be rezoned, and transportation infrastructure can be improved to increase the effective size of an area. You might seriously run out of living space in an area like Manhattan, but in 99.9% of cases increased demand should lead to increased supply in a functioning market.
- lumost 5y agoAt any given snapshot of time this is true. In the long-term there is a lot of policy controlling the supply of housing to benefit existing home owners as well as a steady lowering of interest rates which improves the nominal home price a buyer is able to procure. Given that humans have finite lives the increase in home prices benefits owners who are near retirement the most. When you combine these effects you have an intergenerational wealth transfer machine that rewards existing home owners. The only reasons for home prices to rise as they have in the US are due to policy decisions, if these policy decisions never occurred the baby boomer generation would be unable to retire without changes to entitlements or improvements to working wages.