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But this doesn't seem to have been the case since I bought my first house 25 years ago. Prices have constantly been going up. I'm living in a west coast tech ci

by rnk 3y ago

But this doesn't seem to have been the case since I bought my first house 25 years ago. Prices have constantly been going up. I'm living in a west coast tech city, but it looks to me like all the tech cities have seen very steady home prices on a few years moving average, more than inflation. My house is 4x over those 25 years. A 3% annual increase would be about 2x over 20 years. Am I missing something in my inflation calculation, have we divided into areas with steady growth and increasing incomes vs say non tech cities without rising incomes and people moving there or is it something else? Because there are lots of cities, like stereo-typically mid-west cities that have struggled to maintain their population after major manufacturers leave.

bombcar 3y ago
You're missing across the entire country and long enough period. Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.
- refurb 3y ago
  Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological. The conclusion goes beyond that. The argument is that local areas may see price inflation, but over time they trend towards the mean (you can't have the average be inflation otherwise). So basically people may enjoy an increase worth of their property, but it's not a long term trend but rather something that happens in distinct periods, usually followed by a price drop or stagnation that pulls the average back towards the mean.
  - bombcar 3y ago
    And that is a necessity or you quickly reach absolutely insane conclusions, such as the average house costing 500x the average salary, and 200x the average income to rent. It's simply impossible on a long term over a long area. And, as HN commentators, we have been accustomed to appreciation in "our areas" for nearly 40 years now - and that has covered many "mistakes" that may not be covered in the future.
    - refurb 3y ago
      I think the point is that telling people that real estate, over the long term, appreciates barely more than inflation is something most people don't realize.
      - bombcar 3y ago
        It's worse than that, they refuse to believe it - no matter how much data you pour on them, or point out, etc, the myth that real estate is the easy path to perpetual riches is ingrained in (US) society.
    - rnk 3y ago
      I disagree that desirable places aka tech cities are decreasing to the mean on price increases over the last 25 years. But I really need evidence instead of my opinion. I think that in the expensive tech cities (for lack of a better description), like seattle, austin, SF/bay area, prices have generally increased over time much faster than inflation, and they aren't losing that lead. It's actually true that people can hardly afford to live in those places because hourly wages of $20+/hour is just not enough to pay for housing. Using a multiple of avg salary seems wrong because where does the average come from, because avg in that area? It's simply too expensive for most regular workers, teachers, police, but also that person working at a coffee shop can't afford to live there. It's not a good thing. I recognize we need to build more housing and I'm part of the problem because I bought a house in mine a long time ago.

by rnk 3y ago

bombcar 3y ago

You're missing across the entire country and long enough period. Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.

refurb 3y ago
Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological. The conclusion goes beyond that. The argument is that local areas may see price inflation, but over time they trend towards the mean (you can't have the average be inflation otherwise). So basically people may enjoy an increase worth of their property, but it's not a long term trend but rather something that happens in distinct periods, usually followed by a price drop or stagnation that pulls the average back towards the mean.
- bombcar 3y ago
  And that is a necessity or you quickly reach absolutely insane conclusions, such as the average house costing 500x the average salary, and 200x the average income to rent. It's simply impossible on a long term over a long area. And, as HN commentators, we have been accustomed to appreciation in "our areas" for nearly 40 years now - and that has covered many "mistakes" that may not be covered in the future.
  - refurb 3y ago
    I think the point is that telling people that real estate, over the long term, appreciates barely more than inflation is something most people don't realize.
    - bombcar 3y ago
      It's worse than that, they refuse to believe it - no matter how much data you pour on them, or point out, etc, the myth that real estate is the easy path to perpetual riches is ingrained in (US) society.
  - rnk 3y ago
    I disagree that desirable places aka tech cities are decreasing to the mean on price increases over the last 25 years. But I really need evidence instead of my opinion. I think that in the expensive tech cities (for lack of a better description), like seattle, austin, SF/bay area, prices have generally increased over time much faster than inflation, and they aren't losing that lead. It's actually true that people can hardly afford to live in those places because hourly wages of $20+/hour is just not enough to pay for housing. Using a multiple of avg salary seems wrong because where does the average come from, because avg in that area? It's simply too expensive for most regular workers, teachers, police, but also that person working at a coffee shop can't afford to live there. It's not a good thing. I recognize we need to build more housing and I'm part of the problem because I bought a house in mine a long time ago.