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> Increasing median income and economic growth both increase affordability, even if housing costs track inflation. Given 1% growth a year that would take close

> Increasing median income and economic growth both increase affordability, even if housing costs track inflation. Given 1% growth a year that would take close to a lifetime to just halve current home prices per income. It isn't a solution for the people living today.

s1artibartfast 2y ago
"just halving" is a radical change that will never happen on a short timeline. With a more realistic number of 2% (for the US), you are talking about a 35% reduction in Price/income in 20 years. I think that is a very optimistic case to shoot for socially and politically.
- leereeves 2y ago
  If home prices can rise 5% or more per year, why can't they also fall 5% per year?
  - s1artibartfast 2y ago
    I dont know what point you are trying to make, but housing prices fluctuate all the time. I am talking about long term averages.
    - leereeves 2y ago
      So am I. The median home price rose from 221k in Q4 2011 to 442k in Q4 2022. That's doubling in 11 years, thus rising 6.5% per year on average over the long term. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS Over the same time period, the value of existing homes, as measured by the Case-Shiller U.S. National Home Price Index (which measures the price of repeat same home sales) more than doubled. https://fred.stlouisfed.org/series/csushpinsa https://fred.stlouisfed.org/series/csushpinsa
      - s1artibartfast 2y ago
        I still don't know what point you are trying to make or refute. If you asking why I think it is completely unrealistic to expect a 50% decline on a short timeline, there are tons of reasons. You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse. 1) First, US GDP/capita went up by 60% in those 11 years.[1] 2) Similarly, US inflation in those 11 years was 40% [2] 3) US urban population increased by 25 million in those 11 years [3] 4) Construction costs/sqft are up about 90% in those 11 years [4] 5) More generally, Most Americans have 30 year fixed rate mortgages. This means they can and will avoid selling at a loss, so prices are sticky. These are all factors without "quick fixes". Slow change can happen, but the fundamentals are sticky. If my house burnt down, it would cost $1M in materials and labor to replace. https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/ https://www.statista.com/statistics/985183/size-urban-rural-population-us/ https://www.statista.com/statistics/985183/size-urban-rural-... https://www.mortenson.com/cost-index https://www.mortenson.com/cost-index
        yterdy 2y ago
        >You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse. Massive monetary expansion via QE and low interest rates. Resolved by raising interest rates and taxes on wealth holders (and particularly those holding unused or underutilized real estate) to deflate the asset bubble. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
        s1artibartfast 2y ago
        Strongly disagree. That is an additional factor, but doesnt change most of the factors I mentioned. It doesnt change population or urbanization. It doesnt change the cost of labor or materials. Underutilized RE is a red herring. As long as construction costs remain high, supply remains low, and there are enough buyers that afford the price, you wont see changes.

s1artibartfast 2y ago

"just halving" is a radical change that will never happen on a short timeline. With a more realistic number of 2% (for the US), you are talking about a 35% reduction in Price/income in 20 years. I think that is a very optimistic case to shoot for socially and politically.

leereeves 2y ago
If home prices can rise 5% or more per year, why can't they also fall 5% per year?
- s1artibartfast 2y ago
  I dont know what point you are trying to make, but housing prices fluctuate all the time. I am talking about long term averages.
  - leereeves 2y ago
    So am I. The median home price rose from 221k in Q4 2011 to 442k in Q4 2022. That's doubling in 11 years, thus rising 6.5% per year on average over the long term. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS Over the same time period, the value of existing homes, as measured by the Case-Shiller U.S. National Home Price Index (which measures the price of repeat same home sales) more than doubled. https://fred.stlouisfed.org/series/csushpinsa https://fred.stlouisfed.org/series/csushpinsa
    - s1artibartfast 2y ago
      I still don't know what point you are trying to make or refute. If you asking why I think it is completely unrealistic to expect a 50% decline on a short timeline, there are tons of reasons. You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse. 1) First, US GDP/capita went up by 60% in those 11 years.[1] 2) Similarly, US inflation in those 11 years was 40% [2] 3) US urban population increased by 25 million in those 11 years [3] 4) Construction costs/sqft are up about 90% in those 11 years [4] 5) More generally, Most Americans have 30 year fixed rate mortgages. This means they can and will avoid selling at a loss, so prices are sticky. These are all factors without "quick fixes". Slow change can happen, but the fundamentals are sticky. If my house burnt down, it would cost $1M in materials and labor to replace. https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/ https://www.statista.com/statistics/985183/size-urban-rural-population-us/ https://www.statista.com/statistics/985183/size-urban-rural-... https://www.mortenson.com/cost-index https://www.mortenson.com/cost-index
      - yterdy 2y ago
        >You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse. Massive monetary expansion via QE and low interest rates. Resolved by raising interest rates and taxes on wealth holders (and particularly those holding unused or underutilized real estate) to deflate the asset bubble. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
        s1artibartfast 2y ago
        Strongly disagree. That is an additional factor, but doesnt change most of the factors I mentioned. It doesnt change population or urbanization. It doesnt change the cost of labor or materials. Underutilized RE is a red herring. As long as construction costs remain high, supply remains low, and there are enough buyers that afford the price, you wont see changes.