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Good comment. To be honest I got puzzled by this as well. My explanation is that it is just artificial based on low interest rates and high competition for real

Good comment. To be honest I got puzzled by this as well. My explanation is that it is just artificial based on low interest rates and high competition for real estate. So basically the cost of build stuff maybe remained kind of the same but people have more money and can get higher credits so the prices are dictated by this competition instead of real build costs + it is not always possible to build a lot of new houses in nyc for example.

RhodesianHunter 5y ago
It's simple really, the things that can't be offshored have gotten more expensive. Real estate, education, healthcare...
- StillBored 5y ago
  Its not that they have necessarily gotten more expensive, its just that there is a global rate of inflation and a local one, which results in higher cost/standard of living countries being crushed because their local inflation rate will exceed the global one until the country is pulled to the average. So its just as valid to say that the global products continue to get cheaper. And that was entirely predictable, when a country allows the free flow of capital, and goods but not people then it becomes a race to the bottom in sectors which can move to lower cost areas. There is a certain amount of price suppression for some local goods and the demand dries up, but for things which aren't optional the price will continue to inflate until the system breaks. Infant child care is in this position, the workers competing internationally can't afford to pay for the care of their infants because its local labor intensive. Basically its broken economic policy and its just a matter of time before it explodes. And its probably not fixable because if the cost of labor ever gets equal, then capital is just going to move to the country that say has the smallest carbon tax/whatever. Basically a prereq for free trade should be a common government, and free movement of people.
neilwilson 5y ago
It's not that deep. During the pandemic the price of used cars started to rise. Did we attribute that to people with more money who can then get higher credit on the now more expensive cars? No, we attributed it to a lack of supply of cars, and worked to free up the blockages so that the market would return to its correct state where cars depreciated. It's the same problem with housing. We need to build an awful lot more, and we need to move the work to where we build the houses. Once we cross the rubicon and house prices start to depreciate, as they should because they wear out, then we'll see a phase shift in the market and vastly more supply. It'll be like the latent heat of condensation.
- phkahler 5y ago
  Housing prices vary inversely with interest rates. Monthly payments are and always have been between 1/4 and 1/3 of income. This is actually up right now due to the bubble which cant last.
  - extra88 5y ago
    More people are paying more for rent than they used to. In 2015, of all renter households: * 38% were rent burdened (defined as spending 30% or more of pretax income on rent), an increase of about 19% from 2001. * 17% were severely rent burdened (spending 50% or more), an increase of 42% from 2001 (the 38% rent burdened includes the 17% severely burdened). For households headed by someone 65+, 50% are rent burdened, ~20% severely rent burdened. https://www.pewtrusts.org/-/media/assets/2018/04/rent-burden_report_v2.pdf https://www.pewtrusts.org/-/media/assets/2018/04/rent-burden...
imtringued 5y ago
Interest rates are lowest in the most developed countries. The only exception is the US because it has a structural deficit. It's actually the opposite. Countries have tried to artificially raise interest rates above liquidiry preference via inflation targeting and stimulus for the last 40 years.

RhodesianHunter 5y ago

It's simple really, the things that can't be offshored have gotten more expensive. Real estate, education, healthcare...

StillBored 5y ago
Its not that they have necessarily gotten more expensive, its just that there is a global rate of inflation and a local one, which results in higher cost/standard of living countries being crushed because their local inflation rate will exceed the global one until the country is pulled to the average. So its just as valid to say that the global products continue to get cheaper. And that was entirely predictable, when a country allows the free flow of capital, and goods but not people then it becomes a race to the bottom in sectors which can move to lower cost areas. There is a certain amount of price suppression for some local goods and the demand dries up, but for things which aren't optional the price will continue to inflate until the system breaks. Infant child care is in this position, the workers competing internationally can't afford to pay for the care of their infants because its local labor intensive. Basically its broken economic policy and its just a matter of time before it explodes. And its probably not fixable because if the cost of labor ever gets equal, then capital is just going to move to the country that say has the smallest carbon tax/whatever. Basically a prereq for free trade should be a common government, and free movement of people.

neilwilson 5y ago

It's not that deep. During the pandemic the price of used cars started to rise. Did we attribute that to people with more money who can then get higher credit on the now more expensive cars? No, we attributed it to a lack of supply of cars, and worked to free up the blockages so that the market would return to its correct state where cars depreciated. It's the same problem with housing. We need to build an awful lot more, and we need to move the work to where we build the houses. Once we cross the rubicon and house prices start to depreciate, as they should because they wear out, then we'll see a phase shift in the market and vastly more supply. It'll be like the latent heat of condensation.

phkahler 5y ago
Housing prices vary inversely with interest rates. Monthly payments are and always have been between 1/4 and 1/3 of income. This is actually up right now due to the bubble which cant last.
- extra88 5y ago
  More people are paying more for rent than they used to. In 2015, of all renter households: * 38% were rent burdened (defined as spending 30% or more of pretax income on rent), an increase of about 19% from 2001. * 17% were severely rent burdened (spending 50% or more), an increase of 42% from 2001 (the 38% rent burdened includes the 17% severely burdened). For households headed by someone 65+, 50% are rent burdened, ~20% severely rent burdened. https://www.pewtrusts.org/-/media/assets/2018/04/rent-burden_report_v2.pdf https://www.pewtrusts.org/-/media/assets/2018/04/rent-burden...

imtringued 5y ago

Interest rates are lowest in the most developed countries. The only exception is the US because it has a structural deficit. It's actually the opposite. Countries have tried to artificially raise interest rates above liquidiry preference via inflation targeting and stimulus for the last 40 years.