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You're confused about affordability with inflation vs. affordable house. Sounds like your real question should be can anything is affordable in a hyper-inflati
by bitcuration 5y ago
You're confused about affordability with inflation vs. affordable house.
Sounds like your real question should be can anything is affordable in a hyper-inflation time.
Housing is anchored in inflation, no better or worse. Therefore housing built in with wealth as inflation doesn't hurt housing. By destroying wealth it doesn't make house affordable, only make worse hyper-inflation.
Come on, thought this is ecom 101. What do colleges teach these days?
- ianai 5y agoAgree. I seem to remember RE being “on average” an inflation hedge. Though locality of course matters hugely. RE somewhere a lot of people want to be will be bid up. RE in the middle of nowhere can be built and sold pretty much at whatever it cost.
- mindslight 5y agoWell they certainly haven't been teaching system dynamics. The price of manufactured goods has dropped significantly, thanks to technological progress and offshoring. The Fed has a mandate that average consumer prices must always be going up. Housing is one of the few areas where the Fed can create monetary inflation that reaches consumers, since instead of giving away newly-created money it generally has to be in the form of loans. Therefore, the price of housing will shoot up to compensate for manufactured goods dropping. And the more efficient technology becomes, the worse the effect will be.
- cyber_kinetist 5y agoWhy does the Fed has a mandate to make average consumer prices increase in the first place? What does the increase of CPI have to do anything with the growth of an economy? And why is the Fed including housing (which is not a consumer good) to calculate CPI?