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> And somehow the public narrative has shifted so that high interest rates (not even actually high by historic standards) are to blame for the affordability pro

by ajross 3y ago

> And somehow the public narrative has shifted so that high interest rates (not even actually high by historic standards) are to blame for the affordability problem, and not the bubble in housing prices that was created by low interest rates (compounded by low supply) in the first place. This is true, but tends to be overstated also. Here's a FRED graph of US data, showing median home price as a fraction of median household income: https://fred.stlouisfed.org/graph/?g=1aHX4 https://fred.stlouisfed.org/graph/?g=1aHX4 The ratio was ~4 through the 90's, jumped up to ~5 over the dot com boom, dropped back to 4.5 over the financial crisis, rose back to 5 through the recovery, and is now a little above 6 in the post-covid world. A 50% change in affordability over 30 years (or even the 19% rise since 2017) is a real effect. It's worth discussing and probably addressing. But it's not the disaster it's being presented as. In point of fact things are great right now. The global industrial economy is growing rapidly, inflation has largely halted, unemployment is low and still dropping, wages are rising. But no one wants to talk about that. Really the Big Story about economics news in the modern world is how shockingly disconnected public perception is from the metrics that we used to think drove it.

toyg 3y ago
> wages are rising. The problem is that wages are rising in absolute terms, but tanking or stagnating in relative ones. The rise is also very, very unevenly distributed; the top percentile are making great strides but the so-called "low skilled" are getting shafted badly.
- ajross 3y ago
  > The problem is that wages are rising in absolute terms, but tanking or stagnating in relative ones. Again, that's not true, at least not to the extent you think. It's a meme. It's something you believe because everyone else believes it. > the top percentile are making great strides but the so-called "low skilled" are getting shafted badly. Tell that to the UAW and the monster contract they just negotiated. Or the minimum wage laws that keep getting passed in almost every major metro area. (Again, this is all US stuff because those are the facts in my head, but this is a global phenomenon). I mean, how about you personally: are you personally making more or less in nominal terms than you were ~6 years ago. By how much? If it's not less than the 26% rise in CPI inflation since then, you are doing better, not worse. Again, the data doesn't support your impression. It just doesn't. And I find it absolutely fascinating that these impressions persist in the complete absence of evidence.
  - toyg 3y ago
    Overall wage growth in real terms has been stuck for some time - now that it's 1% (1%!), it's considered among the highest for 20 years (for 20 years!). Absolute numbers have been fired up by inflation, but in real terms we're as stuck as ever. Source: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/latest https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor... , look at Fig.2. For the record, I currently make what I was making 6 years ago in absolute terms (pathetic, I know), but I am just about in the top 10% of wage-earners in the country I live in (UK), so it doesn't really matter. As far as I know, the story is not particularly different across the big European countries.
    - ajross 3y ago
      > Overall wage growth in real terms has been stuck for some time - now that it's 1% (1%!), it's considered among the highest for 20 years (for 20 years!). Yes! Exactly! This is the disconnect right here. First: real wage growth is always a good thing. It's not always above zero, by definition. Sometimes real wages contract. This i good news you're posting. And specifically it's historically good news: making a reasonable assumption about your age, wages are growing faster for your market right now than they have at any time in your career so far. And... you're trying to spin that... as... "bad" news? Seriously, how? Again, this is a meme. Someone sold you a line and you bought it. Seriously, what number do you think should be in that box to make you happy if "best in two decades" doesn't qualify?
      - toyg 3y ago
        > This i good news you're posting. Not good news, it's "slightly better than it could be" news. > wages are growing faster for your market right now than they have at any time in your career so far. Best in two decades doesn't mean "best in the postwar era", which is the usual horizon for labor conditions. And yeah, having started working in 2000, I've been blessed with real-terms wage stagnation for most of my working life. What luck! Why am I not grateful to unbridled capitalism?!?
- bryanlarsen 3y ago
  The bottom 10% are also doing quite well. Help-wanted signs in every shop window mean the bottom 10% have their pick of jobs.
cmrdporcupine 3y ago
You're linking to US data in a discussion about Canadian housing prices, which look nothing like that. We never had the 2008 correction, and things have gotten absolutely insane here. Here is a chart for Canada: https://nitter.net/pic/orig/media%2FE0PIr9kXoAQvbeR.jpg https://nitter.net/pic/orig/media%2FE0PIr9kXoAQvbeR.jpg unfortunately only goes up to 2020. Things got even crazier in 2021/2022 (though have leveled off this fall, but just a bit) Now tell me again how disconnected my thinking is. In Canada it actually is a disaster. We have people unable to make their rent (because naturally landlords are passing on inflated housing prices to tenants).
- ajross 3y ago
  Yikes. That graph is straight up lying to you. "Disposable income" is a delta measurement. By definition, it will show wild relative swings when the two values being subtracted are close to each other. You absolutely can't put it on the same chart with a value measured in absolute units, and whoever tried that shit was trying to sell you something. Where did you get that? Please (please) stop trusting whoever gave it to you. I don't know if Canada has an equivalent to FRED and I'm too lazy to do your research for you, but I'm 100% convinced that if you find a measurement in the right units (c.f. "median household income" that I used -- be sure that if you find a graph that is inflation-corrected ("real median household income" in FRED-speak) that you use corrected values for both your data points!) you will find that Canada and the US look broadly the same throughout the past century or so. I mean, come on. You guys are literally right there, we read the same media. You really think that if things were that different we wouldn't notice? You don't think americans whine about housing prices too?
  - cmrdporcupine 3y ago
    I'm willing to admit the graph I linked to is entirely dubious. It still remains the case that housing prices in Canada did not go through the downward correction that US housing prices did in 2008. That and our immigration rates are very high, so pressure from population growth has also been high. I gotta get back to work, so can't go hunting for raw data right now. I think you'll find though that US and Canadian data don't co-relate in the way you're assuming they should.

by ajross 3y ago

toyg 3y ago

> wages are rising. The problem is that wages are rising in absolute terms, but tanking or stagnating in relative ones. The rise is also very, very unevenly distributed; the top percentile are making great strides but the so-called "low skilled" are getting shafted badly.

ajross 3y ago
> The problem is that wages are rising in absolute terms, but tanking or stagnating in relative ones. Again, that's not true, at least not to the extent you think. It's a meme. It's something you believe because everyone else believes it. > the top percentile are making great strides but the so-called "low skilled" are getting shafted badly. Tell that to the UAW and the monster contract they just negotiated. Or the minimum wage laws that keep getting passed in almost every major metro area. (Again, this is all US stuff because those are the facts in my head, but this is a global phenomenon). I mean, how about you personally: are you personally making more or less in nominal terms than you were ~6 years ago. By how much? If it's not less than the 26% rise in CPI inflation since then, you are doing better, not worse. Again, the data doesn't support your impression. It just doesn't. And I find it absolutely fascinating that these impressions persist in the complete absence of evidence.
- toyg 3y ago
  Overall wage growth in real terms has been stuck for some time - now that it's 1% (1%!), it's considered among the highest for 20 years (for 20 years!). Absolute numbers have been fired up by inflation, but in real terms we're as stuck as ever. Source: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/latest https://www.ons.gov.uk/employmentandlabourmarket/peopleinwor... , look at Fig.2. For the record, I currently make what I was making 6 years ago in absolute terms (pathetic, I know), but I am just about in the top 10% of wage-earners in the country I live in (UK), so it doesn't really matter. As far as I know, the story is not particularly different across the big European countries.
  - ajross 3y ago
    > Overall wage growth in real terms has been stuck for some time - now that it's 1% (1%!), it's considered among the highest for 20 years (for 20 years!). Yes! Exactly! This is the disconnect right here. First: real wage growth is always a good thing. It's not always above zero, by definition. Sometimes real wages contract. This i good news you're posting. And specifically it's historically good news: making a reasonable assumption about your age, wages are growing faster for your market right now than they have at any time in your career so far. And... you're trying to spin that... as... "bad" news? Seriously, how? Again, this is a meme. Someone sold you a line and you bought it. Seriously, what number do you think should be in that box to make you happy if "best in two decades" doesn't qualify?
    - toyg 3y ago
      > This i good news you're posting. Not good news, it's "slightly better than it could be" news. > wages are growing faster for your market right now than they have at any time in your career so far. Best in two decades doesn't mean "best in the postwar era", which is the usual horizon for labor conditions. And yeah, having started working in 2000, I've been blessed with real-terms wage stagnation for most of my working life. What luck! Why am I not grateful to unbridled capitalism?!?
bryanlarsen 3y ago
The bottom 10% are also doing quite well. Help-wanted signs in every shop window mean the bottom 10% have their pick of jobs.

cmrdporcupine 3y ago

You're linking to US data in a discussion about Canadian housing prices, which look nothing like that. We never had the 2008 correction, and things have gotten absolutely insane here. Here is a chart for Canada: https://nitter.net/pic/orig/media%2FE0PIr9kXoAQvbeR.jpg https://nitter.net/pic/orig/media%2FE0PIr9kXoAQvbeR.jpg unfortunately only goes up to 2020. Things got even crazier in 2021/2022 (though have leveled off this fall, but just a bit) Now tell me again how disconnected my thinking is. In Canada it actually is a disaster. We have people unable to make their rent (because naturally landlords are passing on inflated housing prices to tenants).

ajross 3y ago
Yikes. That graph is straight up lying to you. "Disposable income" is a delta measurement. By definition, it will show wild relative swings when the two values being subtracted are close to each other. You absolutely can't put it on the same chart with a value measured in absolute units, and whoever tried that shit was trying to sell you something. Where did you get that? Please (please) stop trusting whoever gave it to you. I don't know if Canada has an equivalent to FRED and I'm too lazy to do your research for you, but I'm 100% convinced that if you find a measurement in the right units (c.f. "median household income" that I used -- be sure that if you find a graph that is inflation-corrected ("real median household income" in FRED-speak) that you use corrected values for both your data points!) you will find that Canada and the US look broadly the same throughout the past century or so. I mean, come on. You guys are literally right there, we read the same media. You really think that if things were that different we wouldn't notice? You don't think americans whine about housing prices too?
- cmrdporcupine 3y ago
  I'm willing to admit the graph I linked to is entirely dubious. It still remains the case that housing prices in Canada did not go through the downward correction that US housing prices did in 2008. That and our immigration rates are very high, so pressure from population growth has also been high. I gotta get back to work, so can't go hunting for raw data right now. I think you'll find though that US and Canadian data don't co-relate in the way you're assuming they should.