4 ms·

Why can't it simply be that as most households moved from 1 to 2 income, the market adapted? What policies and/or regulations can we make to incentivize a mark

by jp555 11y ago

Why can't it simply be that as most households moved from 1 to 2 income, the market adapted? What policies and/or regulations can we make to incentivize a market where house prices reduce over time? Is that the goal? Houses are on average twice as big as they were not too long ago. How much of the increase is due to people wanting bigger homes?

branchless 11y ago
You can't have a free market in land. There are too many constraints such as planning permissions and the fact that the supply is fixed overall. Therefore to have a free market in credit with these constraints it's inevitable that it will be used for speculation. We should have land value tax to win back our right to exist instead of credit fueled full land enclosure. It's an unmitigated disaster - the defining issue of our times. Credit is near infinite as thanks to fractional reserve banking banks can create as much of it as demand requires. They are not constrained by savings. Most bank lending is against land, it's how money is being printed. How has the market adapted when we are working 25 times 2 years for the same pile of bricks our parents worked for 15 years for? It's simply the banks taking more of a share of your labour. You get nothing else back. There is no point in being more productive. It will feed through into land prices as disposable income (briefly) increases and then land prices go up and we are back where we started. This is how banks capture all productivity. Read http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... ps in the UK house sizes are falling, in part because of smaller families / divorces but mostly because of land price ramping
pjmorris 11y ago
I once owned a townhouse in South Florida. Here are the sale prices over time: 1999 (built): 99,000 2001: 140,000 2005: 309,000 2010 230,000 I drove by it recently, and can say that the square footage hasn't changed. Don't take anecdote for data, only illustration, but my scenario was repeated hundreds of thousands of times in South Florida alone. (Some) houses are getting bigger, but that doesn't explain house prices.
- branchless 11y ago
  Guess what did get bigger? Bank receptions. The modern day churches. As you note land prices per square foot have increased massively.
- akgerber 11y ago
  My parents owned a house in Milwaukee. They paid $30,000 or so for it, in 1980. They sold it for $30,000 or so, in 1988. It's still worth $30,000 or so. This scenario was repeated hundreds of thousands of times in Milwaukee alone. My parents paid $80,000 for a house in 1988. They haven't sold it, but it's probably worth around $200,000 today, which is an increase very slightly higher than the rate of inflation. House prices (or, more significantly, house/land/building-permission bundles) where demand exceeds supply (in the US, generally rich coastal areas with tight zoning) are determined by available credit. House prices elsewhere are determined by marginal construction cost. There are a lot of additional complications, many involving the use of single-family-only zoning and the cost of new construction as an implicit or explicit mechanism of segregation in the fair housing era.
mariodiana 11y ago
I think easy credit has a lot to do with the rise in housing prices, as does the additional income earned by two spouses, but it's not quite so simple to compare housing, say, 30 or 40 years ago to today. What we call a house, and the amenities we put in the home, are quite different. I was a kid in the 1970's and grew up in a middle to upper-middle class neighborhood in, what was at the time, a newly-minted suburb of New York City. I was pretty fortunate, but back then I remember neighbors who didn't have central air conditioning, and whose kids slept two to a bedroom (sometimes, three), and who -- if they took a vacation -- went camping for vacations. Hand-me-downs were no big deal. And not everyone drove a new car. The really well off drove Cadillacs. We got McDonalds or Pizza once a week, to give mom a break. If you take the equivalent lifestyle today, things are much different. Homes are bigger and better equipped. Cars are nicer -- and just about everyone in the family of driving age has one, of some kind. Vacations are more extravagant. People eat out more. Clothes are stylish. The middle and upper-middle class don't aspire to the standard of living we had 40 years ago. Many of them would turn their noses up at it. But, truthfully, a number of them could get by on one income, if they lived more modestly. I had a cousin of mine complain, a few years back, about how it takes two incomes to "survive." Do you want to know her idea of "surviving"? They have a big house with an in-ground pool, and an outdoor Tiki bar. They drive Volvos, and take nice vacations. For me, that about sums it up.

by jp555 11y ago

branchless 11y ago

You can't have a free market in land. There are too many constraints such as planning permissions and the fact that the supply is fixed overall. Therefore to have a free market in credit with these constraints it's inevitable that it will be used for speculation. We should have land value tax to win back our right to exist instead of credit fueled full land enclosure. It's an unmitigated disaster - the defining issue of our times. Credit is near infinite as thanks to fractional reserve banking banks can create as much of it as demand requires. They are not constrained by savings. Most bank lending is against land, it's how money is being printed. How has the market adapted when we are working 25 times 2 years for the same pile of bricks our parents worked for 15 years for? It's simply the banks taking more of a share of your labour. You get nothing else back. There is no point in being more productive. It will feed through into land prices as disposable income (briefly) increases and then land prices go up and we are back where we started. This is how banks capture all productivity. Read http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... ps in the UK house sizes are falling, in part because of smaller families / divorces but mostly because of land price ramping

pjmorris 11y ago

I once owned a townhouse in South Florida. Here are the sale prices over time: 1999 (built): 99,000 2001: 140,000 2005: 309,000 2010 230,000 I drove by it recently, and can say that the square footage hasn't changed. Don't take anecdote for data, only illustration, but my scenario was repeated hundreds of thousands of times in South Florida alone. (Some) houses are getting bigger, but that doesn't explain house prices.

branchless 11y ago
Guess what did get bigger? Bank receptions. The modern day churches. As you note land prices per square foot have increased massively.
akgerber 11y ago
My parents owned a house in Milwaukee. They paid $30,000 or so for it, in 1980. They sold it for $30,000 or so, in 1988. It's still worth $30,000 or so. This scenario was repeated hundreds of thousands of times in Milwaukee alone. My parents paid $80,000 for a house in 1988. They haven't sold it, but it's probably worth around $200,000 today, which is an increase very slightly higher than the rate of inflation. House prices (or, more significantly, house/land/building-permission bundles) where demand exceeds supply (in the US, generally rich coastal areas with tight zoning) are determined by available credit. House prices elsewhere are determined by marginal construction cost. There are a lot of additional complications, many involving the use of single-family-only zoning and the cost of new construction as an implicit or explicit mechanism of segregation in the fair housing era.

mariodiana 11y ago

I think easy credit has a lot to do with the rise in housing prices, as does the additional income earned by two spouses, but it's not quite so simple to compare housing, say, 30 or 40 years ago to today. What we call a house, and the amenities we put in the home, are quite different. I was a kid in the 1970's and grew up in a middle to upper-middle class neighborhood in, what was at the time, a newly-minted suburb of New York City. I was pretty fortunate, but back then I remember neighbors who didn't have central air conditioning, and whose kids slept two to a bedroom (sometimes, three), and who -- if they took a vacation -- went camping for vacations. Hand-me-downs were no big deal. And not everyone drove a new car. The really well off drove Cadillacs. We got McDonalds or Pizza once a week, to give mom a break. If you take the equivalent lifestyle today, things are much different. Homes are bigger and better equipped. Cars are nicer -- and just about everyone in the family of driving age has one, of some kind. Vacations are more extravagant. People eat out more. Clothes are stylish. The middle and upper-middle class don't aspire to the standard of living we had 40 years ago. Many of them would turn their noses up at it. But, truthfully, a number of them could get by on one income, if they lived more modestly. I had a cousin of mine complain, a few years back, about how it takes two incomes to "survive." Do you want to know her idea of "surviving"? They have a big house with an in-ground pool, and an outdoor Tiki bar. They drive Volvos, and take nice vacations. For me, that about sums it up.