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Meanwhile in western countries the prices go up for no reason! That 30 year old house? It's worth double what it was 10 years ago! And now it's a 30 year old ho

Meanwhile in western countries the prices go up for no reason! That 30 year old house? It's worth double what it was 10 years ago! And now it's a 30 year old house instead of a 20 year old house. This is reality where I grew up. Most of my peers are priced out too. And I grew up out of the city centre...

kurthr 4y ago
And interest rates went from 20% in 1980 to 2% in 2021. Like fashion bags and NFTs they were financialized. The market can remain irrational longer than you can remain solvent. Seen China and the massive building there, but it didn't lower prices... they're higher than SF or NY! It's not just housing. Look at bare land or abandoned buildings in CA. Those also grew by similar amounts or even more! Why develop it when it goes up in value? Why not own multiple empty homes when they "only" go up in price. Well, welcome to higher interest rates and likely a less deflationary world (deglobalization) with non-wage inflation that prevents the Fed put.
- arcticbull 4y ago
  Interest rates don’t really matter to housing prices when supply and demand are at equilibrium. It may shift that equilibrium point but Japan has had the same exact interest rate policy as the US over the same time period but the price of a house in Japan hasn’t increased in nominal terms since 1990. Everything you point out isn’t driven by interest rates but instead by artificial supply constraints on housing.
  - kurthr 4y ago
    Well, actually Japan's interest rates haven't been falling they have been below the inflation rate (eg mostly below 1) for the last 30 years. That is literally the lost 3 decades since 89, when they had a huge housing crash. https://tradingeconomics.com/japan/interest-rate https://tradingeconomics.com/japan/interest-rate No housing is not a financial asset in Japan. However, China where they have built massive quantities of housing, it is an exceptionally expensive financialized asset, because that is where lending went.
    - arcticbull 4y ago
      Housing isn’t a financial asset in Japan because you can build as much as you need so it doesn’t appreciate. Once supply caught up and overshot in china prices plummeted. It really is that simple.

kurthr 4y ago

And interest rates went from 20% in 1980 to 2% in 2021. Like fashion bags and NFTs they were financialized. The market can remain irrational longer than you can remain solvent. Seen China and the massive building there, but it didn't lower prices... they're higher than SF or NY! It's not just housing. Look at bare land or abandoned buildings in CA. Those also grew by similar amounts or even more! Why develop it when it goes up in value? Why not own multiple empty homes when they "only" go up in price. Well, welcome to higher interest rates and likely a less deflationary world (deglobalization) with non-wage inflation that prevents the Fed put.

arcticbull 4y ago
Interest rates don’t really matter to housing prices when supply and demand are at equilibrium. It may shift that equilibrium point but Japan has had the same exact interest rate policy as the US over the same time period but the price of a house in Japan hasn’t increased in nominal terms since 1990. Everything you point out isn’t driven by interest rates but instead by artificial supply constraints on housing.
- kurthr 4y ago
  Well, actually Japan's interest rates haven't been falling they have been below the inflation rate (eg mostly below 1) for the last 30 years. That is literally the lost 3 decades since 89, when they had a huge housing crash. https://tradingeconomics.com/japan/interest-rate https://tradingeconomics.com/japan/interest-rate No housing is not a financial asset in Japan. However, China where they have built massive quantities of housing, it is an exceptionally expensive financialized asset, because that is where lending went.
  - arcticbull 4y ago
    Housing isn’t a financial asset in Japan because you can build as much as you need so it doesn’t appreciate. Once supply caught up and overshot in china prices plummeted. It really is that simple.