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> It'll be brutal. Bay area home prices will fall by at least 40% from 2021 highs by end of 2024. This is a perfect distillation of "bad news leads". A year a

by ajross 4y ago

> It'll be brutal. Bay area home prices will fall by at least 40% from 2021 highs by end of 2024. This is a perfect distillation of "bad news leads". A year ago, threads like this were filled with complaints that bay area housing development and pricing was completely unsustainable and that the values and rents were simply too high to permit the needed workforce to live there. Now fast forward, the situation is correcting itself, and... that's not good. In fact it's "brutal". Really, what did we actually want? This is what dropping housing prices looks like. Any time prices change some people win and some people lose. (From my perspective, FWIW: yeah, this is a sorely needed correction and while it must suck to be a property owner right now there's no way we were ever going to sustain that ridiculous bubble.)

bombcar 4y ago
Probably the "best result" for everyone would be prices stagnating for 10-20 years (could this happen? maybe) and let inflation slowly bring them back to a sane percentage of income.
- lumost 4y ago
  My suspicion is that this is what the Fed wanted, but that meant inflation at 8%+ for 5-10 years to crush non productive asset prices.
- djmips 4y ago
  Doesn't that presume that salaries will keep up with inflation?
  - bombcar 4y ago
    Broadly, they have to but that doesn't mean that tech salaries will - they've so far outstripped inflation over the last 20 years that they could stagnate or drop for 10-20 years and still be way ahead.
  - ajross 4y ago
    That's "bad news leads" again! Discussion about "inflation" always presumes that it hurts everyone, even though (by definition) it's just a rescaling of an existing economy and that for every loser there's a winner. In fact salaries in the bay area have been rising ahead of and faster than inflation, so yes, it seems like a good bet. Also property owners (remember them from upthread?) are broadly helped by inflation as their mortgages aren't inflation-indexed (i.e. inflation makes their total debt go down in real value). But none of that nuance matters, because bad news leads.
    - bombcar 4y ago
      In general inflation helps those with debt and hurts those with savings. But even if raises and such occur, they don't happen instantaneously, and so people don't like inflation. Gas prices can go up tomorrow, but you won't get a cost-of-living increase for half a year or more. For those who have the vast majority of their debt in a 30 year fixed loan on a house, inflation is kinda nice once you get past the rough parts.
      - ajross 4y ago
        > Gas prices can go up tomorrow, but you won't get a cost-of-living increase for half a year or more. And what if prices are going up tomorrow BECAUSE everyone got a "cost-of-living" increase last year? They did! And they tried to buy stuff with the excess cash, and there wasn't enough stuff, so prices went up. (Obviously real causes are complicated, and supply shock is a big part of the current inflation drivers and not just demand, but you get the point.) This is exactly what I'm saying: bad news leads. We don't want to talk about the flip side of natural relationships, we just want to complain. [1] That's not a thing, by the way. All raises are for cause, even if they call it "cost of living" what they really mean is "retention".

by ajross 4y ago

bombcar 4y ago

Probably the "best result" for everyone would be prices stagnating for 10-20 years (could this happen? maybe) and let inflation slowly bring them back to a sane percentage of income.

lumost 4y ago
My suspicion is that this is what the Fed wanted, but that meant inflation at 8%+ for 5-10 years to crush non productive asset prices.
djmips 4y ago
Doesn't that presume that salaries will keep up with inflation?
- bombcar 4y ago
  Broadly, they have to but that doesn't mean that tech salaries will - they've so far outstripped inflation over the last 20 years that they could stagnate or drop for 10-20 years and still be way ahead.
- ajross 4y ago
  That's "bad news leads" again! Discussion about "inflation" always presumes that it hurts everyone, even though (by definition) it's just a rescaling of an existing economy and that for every loser there's a winner. In fact salaries in the bay area have been rising ahead of and faster than inflation, so yes, it seems like a good bet. Also property owners (remember them from upthread?) are broadly helped by inflation as their mortgages aren't inflation-indexed (i.e. inflation makes their total debt go down in real value). But none of that nuance matters, because bad news leads.
  - bombcar 4y ago
    In general inflation helps those with debt and hurts those with savings. But even if raises and such occur, they don't happen instantaneously, and so people don't like inflation. Gas prices can go up tomorrow, but you won't get a cost-of-living increase for half a year or more. For those who have the vast majority of their debt in a 30 year fixed loan on a house, inflation is kinda nice once you get past the rough parts.
    - ajross 4y ago
      > Gas prices can go up tomorrow, but you won't get a cost-of-living increase for half a year or more. And what if prices are going up tomorrow BECAUSE everyone got a "cost-of-living" increase last year? They did! And they tried to buy stuff with the excess cash, and there wasn't enough stuff, so prices went up. (Obviously real causes are complicated, and supply shock is a big part of the current inflation drivers and not just demand, but you get the point.) This is exactly what I'm saying: bad news leads. We don't want to talk about the flip side of natural relationships, we just want to complain. [1] That's not a thing, by the way. All raises are for cause, even if they call it "cost of living" what they really mean is "retention".