4 ms·

How will someone lower prices when the government has done nothing but print money in the last 4 years...let alone the free cash giveaways in the last 18 months

How will someone lower prices when the government has done nothing but print money in the last 4 years...let alone the free cash giveaways in the last 18 months. People are using that money to buy bigger or more houses...thus driving up the price of real estate.

sanxiyn 5y ago
It's mostly not inflation. Inflation-adjusted house price is also up.
- j_walter 5y ago
  Depends on your definition of inflation... >In economics, inflation (or less frequently, price inflation) is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.
rtpg 5y ago
yes the ... one-time $3400 checks and a major economic contraction. That definitely caused 10+% price increases on $500k+ homes. Beyond everything else, this is just mathematically absurd.
- missedthecue 5y ago
  There was also boosted unemployment. In some states people were taking in over $4000 per month in unemployment. That's a lot of money to not work.
  - forz877 5y ago
    It's still not enough to dispute the parent's comment. There isn't anyone poor getting rich off unemployment. It's not the reason for the housing boom.
    - onlyrealcuzzo 5y ago
      You could buy houses in cash in half the cities in Ohio for 6 months unemployment + 3 stimulus checks. There are plenty of places like this in the US - Alabama, Mississippi, etc. Sure - that is not the reason house prices in Marin are up 30%. That's probably got more to do with central banks pushing up equities >30%. And probably because when you cut mortgage interest rates by 1 percentage point (which they did), you can afford ~15% more house. In real terms - monthly payments for new housing purchases are down.
      - forz877 5y ago
        Sure, you could buy a house in the extremely small cities of Ohio with little to no jobs or economic future. I doubt many are. Almost all the population growth in the US is in major metro areas. If those cities are close to commute to Cleveland, Columbus, or Cincinnati, sure.
        onlyrealcuzzo 5y ago
        You could literally buy houses in Cleveland for less than $30k. 6 months of unemployment plus stimulus in Ohio was >$25k. This is even more true for Detroit.
        forz877 5y ago
        I live in the rust belt. No one is buying those 30k homes. Why? They're unmaintained, falling apart, need completely rewired, completely new plumbing. The housing stock in the rust belt is OLD. This is what makes prices "so cheap" to you lot looking in from the coasts. But the reality is no one is buying the discount properties that need major work. They're in run down neighborhoods with vacancies everywhere and sit on the market for months. They're almost unsellable - many are held onto with the hope that a neighborhood will get gentrified. Cities like Detroit and Cleveland see Pittsburgh's resurgence and think that will happen there. But for every expensive Pittsburgh neighborhood there's a Clairton and McKeesport.
- wincy 5y ago
  I don’t know how but my sister and my brother in law bought a brand new Harley in the middle of the pandemic, while they were both unemployed and collecting benefits. Pretty discouraging to me, I feel like a sap that I kept working. Why do they get twice as much assistance when my wife doesn’t work because we decided to have her be a stay at home mom?
  - rtpg 5y ago
    Even $20,000 is not $500,000. The obvious answer to your last question is not that your sister and BIL should not get assistance, but that your wife should also get more assistance. We don't do enough to support people across the country. 2020 showed some rare aid to people in a reasonable fashion (at least for a couple of months). We can do more of that. We have fiat currency after all, let's take advantage of it!
- j_walter 5y ago
  You think that's the only money that got issued? The loans that went to companies was absurdly abused and had almost no oversight. Trillions of dollars went into the economy in a matter of months...
api 5y ago
Good point, which is why wages have to go up. Eventually everyone will make six figures and a loaf of bread will be $16 but housing will be rationally priced again with starter homes at $500k.

sanxiyn 5y ago

It's mostly not inflation. Inflation-adjusted house price is also up.

j_walter 5y ago
Depends on your definition of inflation... >In economics, inflation (or less frequently, price inflation) is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.

rtpg 5y ago

yes the ... one-time $3400 checks and a major economic contraction. That definitely caused 10+% price increases on $500k+ homes. Beyond everything else, this is just mathematically absurd.

missedthecue 5y ago
There was also boosted unemployment. In some states people were taking in over $4000 per month in unemployment. That's a lot of money to not work.
- forz877 5y ago
  It's still not enough to dispute the parent's comment. There isn't anyone poor getting rich off unemployment. It's not the reason for the housing boom.
  - onlyrealcuzzo 5y ago
    You could buy houses in cash in half the cities in Ohio for 6 months unemployment + 3 stimulus checks. There are plenty of places like this in the US - Alabama, Mississippi, etc. Sure - that is not the reason house prices in Marin are up 30%. That's probably got more to do with central banks pushing up equities >30%. And probably because when you cut mortgage interest rates by 1 percentage point (which they did), you can afford ~15% more house. In real terms - monthly payments for new housing purchases are down.
    - forz877 5y ago
      Sure, you could buy a house in the extremely small cities of Ohio with little to no jobs or economic future. I doubt many are. Almost all the population growth in the US is in major metro areas. If those cities are close to commute to Cleveland, Columbus, or Cincinnati, sure.
      - onlyrealcuzzo 5y ago
        You could literally buy houses in Cleveland for less than $30k. 6 months of unemployment plus stimulus in Ohio was >$25k. This is even more true for Detroit.
        forz877 5y ago
        I live in the rust belt. No one is buying those 30k homes. Why? They're unmaintained, falling apart, need completely rewired, completely new plumbing. The housing stock in the rust belt is OLD. This is what makes prices "so cheap" to you lot looking in from the coasts. But the reality is no one is buying the discount properties that need major work. They're in run down neighborhoods with vacancies everywhere and sit on the market for months. They're almost unsellable - many are held onto with the hope that a neighborhood will get gentrified. Cities like Detroit and Cleveland see Pittsburgh's resurgence and think that will happen there. But for every expensive Pittsburgh neighborhood there's a Clairton and McKeesport.
wincy 5y ago
I don’t know how but my sister and my brother in law bought a brand new Harley in the middle of the pandemic, while they were both unemployed and collecting benefits. Pretty discouraging to me, I feel like a sap that I kept working. Why do they get twice as much assistance when my wife doesn’t work because we decided to have her be a stay at home mom?
- rtpg 5y ago
  Even $20,000 is not $500,000. The obvious answer to your last question is not that your sister and BIL should not get assistance, but that your wife should also get more assistance. We don't do enough to support people across the country. 2020 showed some rare aid to people in a reasonable fashion (at least for a couple of months). We can do more of that. We have fiat currency after all, let's take advantage of it!
j_walter 5y ago
You think that's the only money that got issued? The loans that went to companies was absurdly abused and had almost no oversight. Trillions of dollars went into the economy in a matter of months...

api 5y ago

Good point, which is why wages have to go up. Eventually everyone will make six figures and a loaf of bread will be $16 but housing will be rationally priced again with starter homes at $500k.