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also unclear what it even means It's very clear what it means - inflation. Consider a farmer in Zimbabwe who buys a used truck for 10000 Zimbabwe dollars to br

also unclear what it even means It's very clear what it means - inflation. Consider a farmer in Zimbabwe who buys a used truck for 10000 Zimbabwe dollars to bring his produce to market. A few years later, he sells his truck for a million Zimbabwe dollars. He is a millionaire! But he still is a farmer and needs a truck to move his produce. Another used truck would set him back 5 million Zimbabwe dollars. It can't go on like that. At some point the chunk of money that shelter takes out of the monthly paycheck can't grow further.

notch656a 5y ago
The biggest driver, arguably, of elevated home prices in the past 2 years has been [real ] interest rates that are effectively negative against inflation. The result is buying of property under fixed rate loan to short the USD.
- Ericson2314 5y ago
  That's not true. Most homes are still being bought to live in. The supply of SFH in decent places is just always too puny to meet housing needs. Cashing out comes with the hassle to move, and is less attractive during pandemic. Rich people that want to decamp boost up demand in the select few popular remote places. That was the 2020 story. Recently I am less sure exactly what's going, but yeah, single family homes are the worst!
  - notch656a 5y ago
    People have always wanted to buy homes to live in. I'm talking about the large increase in prices in the last 2 years. [negative real] Interest rates are definitely a big reason for the asset appreciation.
    - Ericson2314 5y ago
      Even if that is the case, SFH for being stupid not interest rates for being low is the proper scapegoat. The rest of the inflation is due to pandemic-related supply side dysfunction, and fossil fuels which are even more subject to random things like OPEC whims. Raising rates to bring down SFH prices and not reforming the SFH system would be colossally stupid.
briffle 5y ago
In my area, homes have doubled in the past 4 years since I bought my house. its great, seeing the neighbors sell their home for what seems like crazy money, except, while I could do that, I would then need to buy a home. Only way it makes sense, is to sell and move somewhere much less costly, but right now, even remote places are crazy expensive.
- drdec 5y ago
  It depends on if you are trading up or down. If you are trading up, the house you are buying is more expensive than the house you are selling. In this case you want a down market. Yes, you get somewhat less for your existing house, but you more than make up for it in what you save on the new house. If you are trading down, the opposite is true. A hot market has increased the value of the house you are selling more than the house you are buying.
Ericson2314 5y ago
Sorry I mean it is unclear what the price of ownership being correct means. Yes I absolutely agree, the greater extent "homeownership is a middle class right", the more housing price rising just is an across-the-board inflation. To the extent that the poor / non-whites are not involved, it is stealing from them. This is why fixed asset ownership is just a rotten scheme, inflation or theft, nothing good comes from it. "store of value" is highly overrated. Public goods and infrastructure are what materially derisks the future. Not some bidding rat race.

notch656a 5y ago

The biggest driver, arguably, of elevated home prices in the past 2 years has been [real ] interest rates that are effectively negative against inflation. The result is buying of property under fixed rate loan to short the USD.

Ericson2314 5y ago
That's not true. Most homes are still being bought to live in. The supply of SFH in decent places is just always too puny to meet housing needs. Cashing out comes with the hassle to move, and is less attractive during pandemic. Rich people that want to decamp boost up demand in the select few popular remote places. That was the 2020 story. Recently I am less sure exactly what's going, but yeah, single family homes are the worst!
- notch656a 5y ago
  People have always wanted to buy homes to live in. I'm talking about the large increase in prices in the last 2 years. [negative real] Interest rates are definitely a big reason for the asset appreciation.
  - Ericson2314 5y ago
    Even if that is the case, SFH for being stupid not interest rates for being low is the proper scapegoat. The rest of the inflation is due to pandemic-related supply side dysfunction, and fossil fuels which are even more subject to random things like OPEC whims. Raising rates to bring down SFH prices and not reforming the SFH system would be colossally stupid.

briffle 5y ago

In my area, homes have doubled in the past 4 years since I bought my house. its great, seeing the neighbors sell their home for what seems like crazy money, except, while I could do that, I would then need to buy a home. Only way it makes sense, is to sell and move somewhere much less costly, but right now, even remote places are crazy expensive.

drdec 5y ago
It depends on if you are trading up or down. If you are trading up, the house you are buying is more expensive than the house you are selling. In this case you want a down market. Yes, you get somewhat less for your existing house, but you more than make up for it in what you save on the new house. If you are trading down, the opposite is true. A hot market has increased the value of the house you are selling more than the house you are buying.

Ericson2314 5y ago

Sorry I mean it is unclear what the price of ownership being correct means. Yes I absolutely agree, the greater extent "homeownership is a middle class right", the more housing price rising just is an across-the-board inflation. To the extent that the poor / non-whites are not involved, it is stealing from them. This is why fixed asset ownership is just a rotten scheme, inflation or theft, nothing good comes from it. "store of value" is highly overrated. Public goods and infrastructure are what materially derisks the future. Not some bidding rat race.