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This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have
by matthewdgreen 1y ago
This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have been standard in the US for most of my life, and houses have gotten a lot more expensive during that time.
- Retric 1y agoMortgage loans have been getting cheaper due to automation and the commoditization of loans / increase in surplus capital. That then pushes up home prices over time relative to inflation.
- matthewdgreen 1y agoHome prices have doubled in most areas since 2009 (and worse in many areas.) when people complain about prices in 2025, this is what they’re talking about. This is not driven by the novel existence of 30-year mortgages and interest rates are at a near-term high.
- Retric 1y agoHalf of that is inflation. Most of what remains is the anomaly in housing prices in 2009 https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS Inflation adjusted median US home prices Q4 2024 where 419,300 vs Q4 2006 ~382,00 that isn’t flat but the difference is far less interesting.
- matthewdgreen 1y agoMedian home prices aren’t very interesting because most of the increase is limited to specific competitive areas, and median US home prices hides that effect. I’m sure houses in deeply rural areas haven’t gotten much more expensive, but it isn’t relevant to me.
- Retric 1y agoWell over half of Americans are living in Urban areas so median here is a measure of urban home prices. Further average home prices reflects overall economic gains. The top 10%, 1%, 0.1%, etc getting richer buy nicer stuff driving up the average but that says little about overall affordability.
- Uvix 1y agoThe effect may pause when interest rates change, but it's unlikely to reverse significantly. People who have homes now aren't going to want to sell for less than they paid for them, so there's a lot of inertia against prices going down.
- schmidtleonard 1y agoThe home ownership rate in the USA is 65%. If house prices start going down, money will be printed until they start going back up.