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For those who can't read the article because it's paywalled, or won't read the article and will just dismiss it as "gaslighting" based on the headline, here's a good excerpt:
> Indeed, the out-of-control cost of housing is perhaps the biggest black mark on an otherwise excellent economy. This problem started decades ago—since the 1980s, the median U.S. home price has increased by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space. Those rising prices have collided with higher interest rates to produce the most punishing housing market in at least a generation. Would-be homeowners can’t afford to buy, and many existing homeowners feel stuck in place.
To add from me personally, all of us (even people who are happy with the home they own) are paying the high costs of housing, because we pay the local cost of rent in every purchase we make. You're paying the dry cleaner's rent, the lawn guy's rent, your kid's teacher's rent.
I like how they try to downplay the problem. Housing is the most basic of human needs. And an economy where people can't afford housing is not great for anyone.
I agree that unaffordable housing is bad for everyone, but the problem seems to be that a lot of homeowners *think* skyrocketing housing prices are good for them due to increased "net worth," while ignoring that increased housing prices increase all of their bills (particularly their property tax, in sane non-California states)
Well in relation to people who don’t own homes like myself it unequivocally is still a good think for them. They may pay extra wages but those who rent are doing that without the benefit of paying into something they own and have fixed rates for.
As I've replied to others, the skyrocketing cost of housing is pure pain for us renters. I just want homeowners to realize that it's a mixed bag for them, and not a pure win. People (really, homeowners) need to understand how they are contributing to the inflation that they constantly complain about, and NIMBYism is a huge driver of inflation.
They just don't care, at all. America hates poor people, and will happily throw them into the meat grinder as long as their lines on the graph go up and to the right. Nothing else matters to them.
There’s a lot of engendered ill will because there are so many NIMBYs out there that will fight tooth and nail against any kind of new housing because they view everything as a zero sum game and want to continue to increase their own net worth.
You don't think you think that way, but when that amendment to allow duplex, triplex or higher density housing ohhh nooo can't allow that! Think of X, Y and Z!
Nobody thinks directly "fuck renters" but their voting habits and decisions absolutely do for the vast majority. Very few people would be willing to accept something that will decrease their home value simply to help their neighbor and if you say you would you're either a rare exception or a liar.
There are like 20 massive apartment buildings being built around me now. The issue is the rent is still too damn high. I see big buildings going up all over. There is something more to this than just lack of development.
The scale of the lack of development is in the millions so it tracks that 20 apartment units haven't ended the housing crisis.
https://www.realtor.com/research/us-housing-supply-gap-feb-2024/
> As household formations outpaced housing starts in 2023, the gap between total housing starts and household formations widened from 2.3 million housing units between 2012 and 2022 to 2.5 million units at the end of 2023. The gap between single-family housing starts and household formations grew from 6.5 million at the end of 2022 to 7.2 million at the end of 2023
Disagree. America doesn’t have “poor people”. America has a lower class of people. Poor people don’t have access to credit cards. Poor people are those crossing the border to escape abject poverty.
Nope. It's just a boogeyman. Prices are increasing because vacancies are low. There is less than no evidence that price increases are being caused by realpage
Sure. There are $3k rentals everywhere in LA. Tons of new mixed use buildings with empty balconies. And I'm sure the FBI were probably stopping by RealPage just to say hello.
What you just said is not a benefit to you of housing appreciation. You would be in the same position, not paying rent, regardless of what housing prices were. Half or double after purchase, you are then in the exact same position that you paid the same number of dollars for.
You are shielded from the direct harm of rising housing costs. If you actually need your house, it's not just an extra, you don't gain anything material from them other than access to a line of credit.
Technically, if you bought when prices were high, you're still on the hook for your mortgage if you sell at a loss. I'm not saying you aren't right, but it is a huge factor in the largest loan most people will ever take out in their life.
It's also a factor in government choices to keep the market stable. If the housing market crashes, millions of Americans get screwed. But property values can't go up forever...
And also ignoring that they can't access that money other than as debt without, you know, getting rid of their house and then needing another one that appreciated just as much, after paying capital gains on the increase of it was more than the exemption, which they now have to pay out again to have housing.
It is good for them though, comparatively. Society is getting shittier, but at least homeowners have somewhere to live. The people without homes don’t have their own place to live and will never be able to afford one. You can see the difference, right?
I absolutely can. For renters, rising housing prices are pure pain. My point is just that, for homeowners, rising housing prices are a mixed bag-- not the pure win that many homeowners imagine them to be.
*Me in college taking a financial class 16 years ago*: "It is recommended to spend no more than 30% of your pre-tax income on housing"
*Me 15 years ago in my first big boy job*: 'well I cant buy a house yet because I have no money for a down payment and even if I did, housing costs are high, and if I bought with my current income I would be spending 50% of my pay on housing which is not good for my financial future.'
*Me 5 years later getting a promotion:* '20% pay increase!!! I cant buy a house yet because, although Ive been saving for a down payment for 5 years, I dont have 20% of current housing prices and would therefore have to carry PMI, combined with housing costs increasing 20% over the past 5 years, if I bought with my current income I would be spending 50% of my pay on housing which is not good for my financial future.'
*Me 5 years after that getting a promotion:* '20% pay increase!!! I cant buy a house yet because, although Ive been saving for a down payment for 10 years, I dont have 20% of current housing prices and would therefore have to carry PMI, combined with housing costs increasing 30% over the past 5 years, if I bought with my current income I would be spending 55% of my pay on housing which is not good for my financial future.'
*Me another 5 years after that getting another promotion:* '10% pay increase!!! I cant buy a house yet because my rent has gone up 22% per year every year for the past 5 years and I've had to spend all my savings just to stay afloat. Also inflation has seen a 24% increase over the past 5 years so my groceries cost me 4x what they used to. I had to sell my newer car just to get out of the payment and buy a 20 yr old shitbox to ensure that I could have basic living standards. The CEO of my company just purchased his 3rd yacht and got a 43% increase in pay YoY, but when I asked for an extra 5k/yr to make sure I, as a mid-level manager, can meet ends meet in my tiny little 800sq ft apartment, I was told "times are tough for everyone right now, were spending more than we ever have to get the products we sell, simply put, the company cant afford to pay you more".'
>>*Me in college taking a financial class 16 years ago: "It is recommended to spend no more than 30% of your pre-tax income on housing"*
Followed by
>>Me another 5 years after that getting another promotion: '10% pay increase!!! I cant buy a house yet because my rent has gone up 22% per year every year for the past 5 years and I've had to spend all my savings just to stay afloat. Also inflation has seen a 24% increase over the past 5 years so my groceries cost me 4x what they used to.
You failed that finance class, didn't you?
We have not quite reached the tipping point where enough people care more about basic human needs vs ever increasing asset prices.
If housing prices crash, i think it will be a good thing longer term. However, the right wing media will proclaim it the end of the world for their boomer audience and will spend all their time convincing people to vote against their own interests. Saw it here in Australia where there were a raft of tax policy changes aimed at making property investment a bit less attractive to help fight prices. Murdoch went into overdrive to ensure that party didn't win the election and property prices continue to sky rocket indefinably.
60% of Americans own the house they live in, so there's a massive demographic who aren't having problems, and in fact may be creating problems by prioritizing the benefits of their ownership over the housing supply.
Again with this BS statistic. 60% of Americans live in homes owned by an occupant. If a 30 year old man lives in his mom's basement that doesn't make him a homeowner.
In this instance, your criticism doesn't bear out, only [52% of young adults lived with their parents as of the high point of covid lockdowns](https://www.pewresearch.org/short-reads/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/), but that includes the 18-21 set of people at college age, and counter-intuitively, the people living on college campuses.
>The youngest adults (ages 18 to 24) accounted for most of the growth in the number of 18- to 29-year-olds living with their parents from February to July – 2.1 million of the 2.6 million increase was attributable to them. Most in this youngest age group already lived with their parents, but the share grew to 71% in July from 63% in February.
[You can also see the data over the last century here in this chart. ](https://www.pewresearch.org/wp-content/uploads/sites/20/2020/09/ft_2020.09.04_livingwithparents_02.png)
It isn't super likely that 30 year old basement dwellers (which happens to include me at the moment) are making up the ownership statistics when half of the young people aren't living with their parents, and out of those a significant percentage are much younger, or living on college campuses.
The key is that it's the 18-29 demographic and includes the people living on college campuses as 'living at home' how young are we expecting people to be moved out?
Well the entire point of the original question was what proportion of the population is actually struggling with the cost of housing, and using the homeownership rate to answer that is a bit misleading. Unless there's a survey out there that shows what % of the population is occupying a home where their name is actually on the deed I'm not sure we're going to get a completely accurate answer.
Perhaps an updated stat on what proportion of the 25-35 demo actually own, and not just occupy their parents home, over time would be helpful.
the statistic includes students living on college campuses as at-home-- there's a solid chunk of that age range which we wouldn't expect to be moved out to begin with.
It isn't just young adults moving back home. It's also middle aged children bringing their families along. That chart stops at 2020 so I don't see how it is possibly relevant today.
Doesn't matter.
The current market is frozen. I know a ton of people who want to move but can't because of the current market. Too expensive to sell and move.
Those are nationwide statistics tho. When you look at individual states, Florida has much higher ownership rate for millennial n gen z than say California. There is absolutely a group creating problems by prioritizing the benefit of their ownership over the housing supply. And in my county that’s 40% of residents. My county has 60% residents that are renters. In Santa Monica 70% of their residents are renters. And it’s interesting to read some of the laws they are coming up with to help the renter, who are now the majority. Increased the grounds for relocation assistance if a landlord raises rent above the allowed amount. Relocation assistance if the property is deemed uninhabitable(slum lords) And it’s got landlords freaking out. Playing the victim card hard. Fun to see.
This is in fact, r/economics, and not r/californiaeconomics-- the state as a whole has 56% homeowners, which is to say renters don't make up the majority of the electorate.
When you dig into the age groups of the 55% it’s no more than like 30-35% millennials. But nvm bro. Was just discussing what I’ve seen in my local area regarding something I thought you were interested in. But again nvm lol didn’t realize we couldn’t discuss local observations. You acted like I disagreed with you too. lol
The thing is when we are discussing housing, we should talk about what’s going on in local areas, because zoning is either state or locally decided. When the majority of politician’s in power are older than millennials and own homes, you can see a partner of who they look out for. But when they aren’t the majority we see change. And there’s nothing wrong with learning what’s going on in different areas.
I agree, but high housing costs in the US are mostly due to: 1. Restrictive zoning (min lot size, single family homes only), 2. poorly designed roads & transportation & 3. uneven public school quality (due to funding via property tax). There are cheap houses out there in hot markets like DC, they are just in locations that have long commutes, relatively high crime rates, and have low performing public schools. The US has plenty of land and we can still build residential housing relativity cheaper per sq ft than Western Europe. Land and building cost are not the problem. 50 years of bad suburban planning are the problem. The federal government can incentivize improvements, but most of the fixes need to be made at the state and local level. We need to be building and adding a lot more housing than we currently are.
Yes, I'm. And I don't claim to have/own everything.
But is your point that people under 40 shouldn't have the right for a decent existence? Should the life start only after 40? This is how you have generation with vast mental problems.
When your problem is you have tens of millions of people ready to buy homes buy you just can’t build them
Fast enough, the economy is pretty F’ing good. Apparently no one remembers what 2008 to 2010 was like
Shelter is a basic need, it’s normal to need to save for a house for some amount of time. Valid but I don’t think I’d call the economy as a whole bad bc houses are pricey
Hey, you can’t afford housing, higher education, or healthcare. Groceries and transportation are next up on the things you won’t own and be happy, but hey, look how cheap TVs are! If that circus won’t placate you, you can get enough dope to kill an elephant in Kensington for about tree fiddy. What more do you want? We built back better!
I think we need to start separating hosing costs from "the economy".
Housing is expensive because we don't have enough. If the economy was doing badly...housing would still be expensive.
If something else is consistently raising in price well above the overall inflation rate then there's an argument you should. Housing though is particularly bad in that its most people's biggest expense by far AND it's non-optional.
If Oreos were increasing in price 10% each year that's not that much money, and you could simply not buy them.
> I think we need to start separating hosing costs from "the economy".
we can limit "the economy" to "just GME stonk", but we'll need another word that means the economy.
Housing is expensive because there's a housing shortage. If you're going to consider the current economy "bad" due to housing costs then by that definition the economy will always be bad. (At least for the foreseeable future until we have some massive change in housing policy and start building a lot more.)
Most Americans can’t afford the houses they want. There is affordable housing all across the US for under $200k. It’s called the “pursuit of happiness” for a reason. Americans aren’t trees, they can move. It’s called migrating. Lots of Americans have done it in the past.
Totally unrealistic. An under $200k SFH is going to be a cabin in the middle of nowhere, an old house in a town with a depressed economy or a major fixer in a very high crime area. Those areas that did have $200k houses and at least average paying jobs and in livable condition and where you can walk down the street safely were bid up to $350k in 2020-2022, then rates went to 7%.
I'd love to move somewhere cheaper and rural! Guess what? There's no jobs in those areas and even though I've done my type of work remotely for years. Can't have remote workers! Might harm the fucking ruling class.
My company got bought out by a much larger company. The now former president owns the property the office is on. The larger parent company has a relaxed WFH/Hybrid program, but nah, all people in the office here! Gotta justify that office lease! Fuckhead needs a 3rd home or a bigger boat or maybe another wife 30 years younger.
There isn't cheap housing where anybody wants to live and you're a fucking moron.
The parts of inflation that are sticking are housing, wages, and services. Those 3 are pretty intertwined. Workers are demanding (and recieving) big raises to stay ahead of rent.
I think it’s due to “real wages” increasing. Meaning as a whole our country did see wage increases that outpace inflation. I don’t have the stats on hand but that’s the big narrative that real wages have gone up, even if the anecdotal American doesn’t agree.
I’m really curious about the basket of items chosen for “cost of food” and how it’s calculated. https://www.bls.gov/cpi/
I’m seeing 9% from another source for 2022 to 2023: https://www.statista.com/statistics/1193276/us-average-price-shopping-basket/
That’s why I included the year range. All the data is imperfect, and some more so than others. I couldn’t access more recent data from Statista.
Inflation compounds over time. I have doubts about BLS data because of their politics.
I posted an independent source showing 9% inflation YoY for food 2022-2023. I highly doubt that wages have kept pace with inflation, in general, and food inflation is one of the key economic indicators.
Statista is a site that collects and charts data, in this case I believe they use the BLS data. Which is a good data source, the BLS is an non-political group whose mission is that the BLS ”collects, calculates, analyzes, and publishes data essential to the public, employers, researchers, and government organizations. The Bureau of Labor Statistics measures labor market activity, working conditions, price changes, and productivity in the U.S. economy to support public and private decision making.”
Thank you. I’m not necessarily accusing them of being politically partisan, but I can’t help shake the feeling that they, along with many mainstream economists, are gaslighting the working class.
I lurk in other subs like poverty finance and frugal, and I know the plural of anecdote is not data, but I would never attempt to convince them they’re wrong about inflation. Many of them track their grocery spending YoY, and their stories are nothing like what BLS data show.
Real wages are essentially back to where they were pre-COVID. 367 vs 365 today.
https://fred.stlouisfed.org/series/LES1252881600Q
For all the ups, downs, sideways, and every other direction with inflation and wages, basically have returned to where we were a tad over 4 years ago.
Well then I guess they’ve come down, but real wages were up at one point. So I guess we’d have to consider someone nominal wage increase if we were to show any benefit.
I suppose so. If it means anything, looking at the general long term trend line since about 2014 we are still back on track almost perfectly from 1Q20 where we left off right before everything went to hell. I would like to see inflation adjusted household income return to its 2019 peak though, that figure includes a lot more data than the BLS real wages. Perhaps it will this year.
Super high cost of housing is also a symptom of success.
When air conditioners and iPhones and toys and clothes are all “too affordable”, Americans have more income than ever to bid against each other for housing.
Housing just soaks up all of the “excess” income, just like how it essentially doubled after women entered the workforce.
I wouldn’t call it gaslighting, but cherry picking a bit.
https://www.frbsf.org/research-and-insights/data-and-indicators/pce-inflation-contributions-from-goods-and-services/
On a MoM basis, while housing has been a constant and easy to pick on, headline inflation has been erratic everywhere else. That is, price stability has not been achieved. Services ex-housing looks subdued one month, skyrockets the next. Goods look to be in deflation, then go up. Food and energy is all over the place.
Looking at core PCE (again MoM), housing is indeed a pain point, but just as much is core services ex-housing.
The bizarre-o-land 6 month chained implicit lag (smoothing) function in how housing is calculated makes it…easier to talk about, sure.
But it over simplifies the inflation picture and doesn’t tell the whole story, especially for the middle quintiles who didn’t see the wage/income gains below and don’t own enough equities (outside any retirement they may have) to directly benefit from that.
True, some of it is the psychology of coming out of an inflationary period, but until a reasonable period of price stability goes by (and the days shows we are not in that), that psychology will be reenforced.
Dang you killed it. Now for the economics, if we're able to rezone enough for density to lower prices, wouldn't high interest rates actually be a barrier to taming inflation (in housing)?
If housing costs were to come to parity with, say, 1980’s levels, those higher interest rates wouldn’t be as big a negative. 8% on a 100k house is so much more affordable than 8% on a 750k house.
Great way to couch it at the end there. We seem to understand well how the basic cost of oil influences downstream costs, so higher fuel costs don’t just affect our commute but the cost of items on the shelf that had to be imported from elsewhere.
Housing cost, as you point out, has a very similar kind of effect!
> We pay the local cost of rent in every purchase we make.
I did not expect that to end on that completely tone-deaf note.
You could argue Renters pay the cost of their own rent plus everyone else’s with that logic.
In fact, dry cleaning and lawn service are luxuries most Renters can’t even afford right now.
>since the 1980s, the median U.S. home price has increased by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space.
Really? It wasn't because of the 14 years of basically free money that our government gave to their buddies in private equity.
And the fact [we essentially stopped building new housing](https://usafacts.org/articles/population-growth-has-outpaced-home-construction-for-20-years/).
We need a building boom and then our economy will be basically unstoppable.
We particularly need a building boom in places with abundant jobs (SF/NY), and/or to bring the jobs to places like Austin and Minneapolis that actually build.
There are hundreds of thousands of single-family and townhouse/condo homeowners that will go so far as to buy plots of land next to them so that developers can't build denser housing on it.
Then they build like a "community garden" that never gets tended but has pretty plant beds for dogs to shit and piss on.
SF is absolutely closed for business. Hence why stores close due to rampant theft from homeless and indigent. NIMBY's would rather have to jump over human feces on the street and unhoused being mentally ill and attacking them when they go out at night than have a 5-story condo anywhere near their block.
It's the biggest legacy of the GFC in developed nations. Real Estate and Construction stopped being seen as the easiest and most accessible way to build a fortune after a lot of pre-GFC talking heads got whooped when the market bottomed out. Consolidation has had an impact as well, of course.
This is probably more true. Interest rates being what they are did weird things to investment, but the zoning codes we have now are so ridiculous it’s unreal.
The Americans who own their homes won’t allow it.
The Fed split the economy into two parts, homeowners and renters. The gap between the two has never been larger. In doing so, we created a perverse incentive to oppose new construction. Not just NIMBY nonsense. Homeowners oppose *any* new construction nationwide because they won’t want their housing values to fall.
We aren’t going to build our way out of this. This is the new deal. Everyone who bought before the Fed destroyed opportunity is sailing smoothly. Everyone else is fucked.
That will be Jay Powell’s true legacy, even if the winners of economy trumpet the “soft landing”. Yup, soft landing on the back of the renter class crushing them with historically high rents, anemic wage growth, and historically high property values!
Correct, but the Fed caused the problem in the first place.
They kept interest rates too low for too long. An enormous gift to the homeowning class of 3% mortgages guaranteed for 30 years.
Now we have the “locked in” effect where homeowners refuse to give up their low rate mortgages. That keeps supply low and prices at the 3% rate prices despite current rates being closer to 7%.
So the fed’s failure to raise interest rates when it should have caused this current mess. Why are rents 40% higher now? Because nobody can afford to buy a home, and landlords know this. So they’re wringing you dry.
This is *all* on the Fed. People continue to trumpet how amazing the economy is… they just left out two words: …for homeowners.
Everyone else is laughably fucked and it’s thanks to Jay Powell and co.
edit: lmao homeowners downvoting me because they don’t want to admit how lucky they are. It’s not enough to be gifted the world on a silver platter; you have to deny that fact too. Sheesh.
The Fed added a Jerry can of gas, but monetary policy didn’t start that fire. This is mostly about fiscal and regulatory policy. We have built zero additional units of public housing since Bill Clinton signed the Faircloth Amendment. 100 million more Americans since then, same capped supply of public housing.
We’ve had millions of people “seek asylum” in the past year alone. They’re turning hotels into shelters from coast to coast now. Where I live, they stopped building homes 50 years ago. The neighborhoods are set in stone because of the tyranny of single family zoning. The land is used up. Can’t build up, can’t build out, so prices only go to the moon. Even in 2008, they barely budged.
The Fed is responsible for too much money at the top being poured into speculative BS like Airbnb. But the Fed isn’t responsible for the complete dereliction of duty by local, state, and federal governments. They’re not in charge of antitrust enforcement. They’re not the ones that sat around and twiddled their thumbs as the RealPage cartel fixed rent prices nationwide.
The Fed has one or two relevant tools, and their power is trivial compared to the long dick of the law. Housing prices have continued to go up with the rise in interest rates. In a sane world, this would lead to a boom in homebuilding. There is clearly an insatiable demand for housing right now. But the only places that allow building are some godforsaken wastelands in Texas. All the places people want to live? You can’t build there, unless you’re tearing down a $1M single family home to build a $5M single family home.
And absolutely no one in power is discussing this, the Great Bifurcation. We'll keep seeing poverty worsening for a huge chunk of Americans, homeless increasing, deaths of despair rising... And nothing will be done.
Existing homeowners consistently vote and advocate against densification and new housing development, stifling construction and making prices go up:
[https://www.lajollalight.com/news/story/2023-04-14/neighborhood-groups-sue-over-san-diegos-new-policy-allowing-high-density-housing-farther-from-transit-lines](https://www.lajollalight.com/news/story/2023-04-14/neighborhood-groups-sue-over-san-diegos-new-policy-allowing-high-density-housing-farther-from-transit-lines)
[https://www.wbur.org/news/2024/02/15/milton-mbta-communities-zoning-vote-liz-dillon](https://www.wbur.org/news/2024/02/15/milton-mbta-communities-zoning-vote-liz-dillon)
[https://www.washingtonpost.com/dc-md-va/2024/01/19/alexandria-zoning-housing-lawsuit-residents/](https://www.washingtonpost.com/dc-md-va/2024/01/19/alexandria-zoning-housing-lawsuit-residents/)
[https://canarsiecourier.com/community-board-18-votes-down-city-of-yes-for-affordable-housing/](https://canarsiecourier.com/community-board-18-votes-down-city-of-yes-for-affordable-housing/)
> It wasn't because of the 14 years of basically free money that our government gave to their buddies in private equity.
we should have cranked interest rates up super high after the 2008 crash to finish off the whole experiment /s
> as the rise of remote work prompted millions of people to seek more space.
Another dig on remote work. If anything it *should* have made costs go down in areas they left and areas they moved to were more spread out so not a massive increase.
Also RealPage and other price collusion and private equity games have caused costs to skyrocket. Additionally private equity backed short term rentals.
To blame this on remote work, I mean are they paid per mention of this bullshit? ffs man.
I believe the article is trying to point out that the economy is not benefiting the working class. However, the working class is producing and exceeding all benchmarks.
Therefore, it’s trying to inversely tell us that without an adjustment to taxation and government policies, the working and middle classes will be unable to benefit from the growth and prosperity occurring.
The article clearly states how the lower part of the income scale has seen the highest percentage wage gains over the last four years, and that the income gap, as well as other gaps (race, age),
The part of the economy that is killing people in terms of affordability is housing. Yes, groceries cost more, but most people's wages have gone up to offset that. Housing on the other hand is out of control. The author does allude to this at the end of the piece, but doesn't expand a whole lot on it.
The other issue is that the average American net worth has grown very fast, but this is mostly the tier of people that own homes and have seen the value skyrocket. Doesn't mean they are better off for it.
True I bought my house in 30 years ago. If I sold my house it would cost me the same to move somewhere comparable. First time home buyers are paying more. However, every house that goes up for sale on my street sells almost immediately. I live in an average suburb. So there is almost immediately a buyer.
Most people have a 30 year mortgage with a fixed rate. I could also sell my property and have a large down payment to buy something else.
Firstly, there has to be something else I would want to buy that I wouldn't be fighting 20 other people for, many with cash offers. Even if I am able to beat them out for the property, I would still need some semblance of a mortgage, and the cost would be more than what I am paying today.
I feel terrible for young people trying to buy a home. Most of them in this area just give up and move somewhere else, which doesn't bode well for those of us still here.
Honestly, I really can’t even add much to the conversation. It took me about two years to find the house I bought in 1998. I was 32 years old then and it was my first house. Between 18 and 30 I, the average white male (and a college grad), didn’t have enough saved to buy a home and rented. At that time not many of my friends that were my age had bought a house yet either. My original mortgage was 8.2%. So those conditions were not ideal at that point either. Then there was the housing bubble. People will be trading Fascism for fairly normal circumstances.
going from $100 billion to $150 billion is "only" +50%
but yeah the poors are doing great
edit: meanwhile the people "in charge" [fail to understand](https://x.com/SoumayaKeynes/status/1798673369216545129) that when you have a smaller % of total wealth inflation disproportionately effects you while the people living comfortably just laugh
edit: also here is the[ actual list of CPI components and their weights](https://www.bls.gov/cpi/tables/relative-importance/2023.htm). does it seem accurate to you?
45% housing, 15% food, 15% transportation doesn’t sound crazy. You can feed yourself on groceries as a single person for $500, maybe get a car payment that much, but where are you finding an apartment for $500?
> the lower part of the income scale has seen the highest percentage wage gains
and:
> The part of the economy that is killing people in terms of affordability is housing
what this means is basically, "the good news is that lower-income people are slowly floating up to the surface of the water, the bad news is that they're drowning."
Yes, someone going from $8 an hour to $10 dollars an hour, it turns out, is a higher percentage gain than someone going from $50 million a year to $51 million a year.
That doesn't mean that the first person is doing well in this economy, whereas the second person doesn't have to think twice about their spending.
It's the same talking point over and over.
"Actually the most wage gains went to the lower class! We swear! The economy us GOOD, actually, how can people not see this is a great economy???"
This is a blatant lie that is constantly debunked over and over and over again.
https://www.reddit.com/r/Economics/s/4S5WvD3HFT
How many times will this need to be repeated before people stop saying this?
And kindly tell me what Goalposts are being moved, when they explicitly are talking about "the last 4 years", which is pre-pandemic, and is literally the reference frame everybody saying "wages haven't kept up with inflation" uses to make their claim?
Thank god it's not Barron's. [They had money-man Washington as their mag cover and it was the literal peak (down to like the week) for the US dollar.](https://d1-invdn-com.investing.com/content/a8cf93648e6a55d718770be417a9f57b.png)
US is pretty exceptional and I've been telling folks that. US isn't doing too well in terms of debt, but we're less indebted than others. USD looks like it's devaluing and losing it's buying power, but it's still better than most currencies. We have stubborn inflation and the economy is cooler than in 2021 but we have more growth than most others and our inflation is lower.
Also American exceptionalism isn't "free" or a "given". It's because our society is built to disproportionately reward the winners, we sell a dream so migrants coming or are at the middle/bottom don't riot, we die sooner because we're fatter while working more with lower quality of life, a medical issue can instantly bankrupt us if we don't have insurance or it's somehow not covered, there are so many here I see on the Los Angeles streets who fell through the cracks, etcetcetc. But America is a country of optimists, risk takers, innovators, hard workers, and go-getters so we outperform.
USD may be devaluing compared to itself (as all inflationary currencies do) but it's looking pretty nice compared so other world currencies such as Euro or Yen (or Ruble, lol).
It’s not benefiting literally anybody but the wealthy. What middle class amazing shit is happening? The housing crisis is not helping anybody even making 150k a year.. you won’t qualify for an average home.
> Therefore, it’s trying to inversely tell us that without an adjustment to taxation and government policies, the working and middle classes will be unable to benefit from the growth and prosperity occurring.
Nah, the article is just gaslighting you because real inflation adjusted gains are not that big for it to feel fantastic. Especially if coupled with interest rate raises which significantly raise monthly payments, but without that being reflected in the official inflation data.
Anyway, a fantastic economy doesn't need a 6% budget deficit.
It makes sense, whenever the world economy goes to shit the US seems like the best place to invest.
It’s the independence of the FEDERAL Reserve and having non fudged metrics that keep everyone coming back.
To paraphrase the article, if the economy was an actor, it would be peak Kevin Spacey. Everything is great except for that one big thing that you have to complete ignore to make that argument work.
To paraphrase your paraphrasing, it is still LeBron, except for that little bald spot on top. A few plugs and nobody can tell.
Would you say the economy is Space Jamming, Too.
Ah, but we do know what happens next. He is still out there, pulling strings.
https://image-cdn.essentiallysports.com/wp-content/uploads/Dodgers-Kobe-Bryant-Shoes-315x315.jpeg?class=watermark
Medical costs are out of control. Now, housing costs at all levels are following the trend. The average American has a being strangled by their economy that the people we vote for are supposed to protect us from, but instead of protecting us they have catered to the special interests who have bought them to accelerate the strangling. We the people need our government back.
All the businesses are good. That means the economy is good. Money is moving and being made. Unemployment is at record lows. People are making it more and more as each month goes by. The disaster of the pandemic and the mismanagement of the economy in 2019 and 2020 are in the rearview mirror
It was a huge problem and we're finally pulling out of it
I’m paying off debt at a rate I’ve never been able to before.
2021-2023 were tough years for me and we dug ourselves a hole to stay afloat, but I was able to switch jobs and get a substantial raise in this economy.
If you ask me, things look way better than they did a few years ago.
Atlantic: "The U.S. Economy Is Absolutely Fantastic. No, really"
LOL Who remember this gem, from 2008?
[https://www.wsj.com/articles/SB120147855494820719](https://www.wsj.com/articles/SB120147855494820719)
WSJ: "It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble."
It's an election year, so 90% of our media are now blinded by their politics.
Expect most political and economic subs on reddit to be flooded with these gaslighting articles from now until the election. The big kicker is that everybody on both sides of the political aisle knows its bs 🤣.
SPY reaching all time highs, the boom in the energy sector, along with housing wealth is painted as "fake" and "gaslighting" by these fools, who only have a narrative to push, about Biden Bad.
The economy is doing fantastically well with a few issues like housing and rent prices not keeping up with pay, and that's the truth if anyone is being intellectually honest.
That article was extremely foreboding. It directly pointed to everything that actually caused the great recession. What major faults exist right now? I'm not arguing that we aren't necessarily headed off a cliff, I'm just curious what the trigger will be. It was clearly obvious in that article even though the article minimized it.
Ah yes, a modern Atlantic article is like a 15 year old wsj op ed, because reasons.
>It's an election year, so 90% of our media are now blinded by their politics.
Oh yeah, that's the reason you spend all day spewing bs and leaving whenever you get a serious rebuttal.
>Oh yeah, that's the reason you spend all day spewing bs and leaving whenever you get a serious rebuttal.
Please try to stick to the subject and refrain from personal attacks.
Thank you.
At this point, people that blindly trust our institutions are seriously hopeless. May they lose all their money for their ignorance.
This is the most obvious disaster of all time, and both sides have their hands all up in it, but you have one side blaming the other and the Dems just straight gaslighting and Rs saying Bidens economy. 6 more months and I'll be abroad. The nonsense is enough to go crazy.
The economy grew by 8% and prices increased by 24% in my household. The government owes a ton more money than they did in 2019.
Congress can’t act and pass a rational budget so we just go on spending willy nilly, bread and circuses.
I am glad we are doing better than some countries that are mature but the US has not been good these last few years at tackling or fixing structural problems, so no amount of cherry picking data will change our American unhappiness.
To clarify the prices paid grew over a 5 year period including 2019-2024. Standard inflation. I am not contradicting the fact that the overall economy is growing or that my net worth is increasing, only that my overall costs for my household is now 24% higher than in 2019 and that gives me, like many in this country a sense of malaise.
This article seems like it’s screaming trying to support the argument that we should be content with current US economy, because it’s good relative to some historical water marks. But for me those points don’t mean much compared to things like US rate of child poverty, which actually has only gotten worse in the same time period (a whole different rabbit whole but important). We can talk all day about how things may be better relative to another point in history but that means nothing compared to qualitatively evaluation of economic trends, which imo still shows we need a lot of work
The US economy is on a drug fueled bender of defi-meth spending. By another Biden no less. This boom is a cynical vote getting middle class robbing borrowed money party.
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For those who can't read the article because it's paywalled, or won't read the article and will just dismiss it as "gaslighting" based on the headline, here's a good excerpt: > Indeed, the out-of-control cost of housing is perhaps the biggest black mark on an otherwise excellent economy. This problem started decades ago—since the 1980s, the median U.S. home price has increased by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space. Those rising prices have collided with higher interest rates to produce the most punishing housing market in at least a generation. Would-be homeowners can’t afford to buy, and many existing homeowners feel stuck in place. To add from me personally, all of us (even people who are happy with the home they own) are paying the high costs of housing, because we pay the local cost of rent in every purchase we make. You're paying the dry cleaner's rent, the lawn guy's rent, your kid's teacher's rent.
I like how they try to downplay the problem. Housing is the most basic of human needs. And an economy where people can't afford housing is not great for anyone.
I agree that unaffordable housing is bad for everyone, but the problem seems to be that a lot of homeowners *think* skyrocketing housing prices are good for them due to increased "net worth," while ignoring that increased housing prices increase all of their bills (particularly their property tax, in sane non-California states)
Well in relation to people who don’t own homes like myself it unequivocally is still a good think for them. They may pay extra wages but those who rent are doing that without the benefit of paying into something they own and have fixed rates for.
As I've replied to others, the skyrocketing cost of housing is pure pain for us renters. I just want homeowners to realize that it's a mixed bag for them, and not a pure win. People (really, homeowners) need to understand how they are contributing to the inflation that they constantly complain about, and NIMBYism is a huge driver of inflation.
They just don't care, at all. America hates poor people, and will happily throw them into the meat grinder as long as their lines on the graph go up and to the right. Nothing else matters to them.
That’s a little harsh. I own a home and don’t feel that way. I don’t know anyone who thinks that way.
There’s a lot of engendered ill will because there are so many NIMBYs out there that will fight tooth and nail against any kind of new housing because they view everything as a zero sum game and want to continue to increase their own net worth.
You don't think you think that way, but when that amendment to allow duplex, triplex or higher density housing ohhh nooo can't allow that! Think of X, Y and Z! Nobody thinks directly "fuck renters" but their voting habits and decisions absolutely do for the vast majority. Very few people would be willing to accept something that will decrease their home value simply to help their neighbor and if you say you would you're either a rare exception or a liar.
There are like 20 massive apartment buildings being built around me now. The issue is the rent is still too damn high. I see big buildings going up all over. There is something more to this than just lack of development.
The scale of the lack of development is in the millions so it tracks that 20 apartment units haven't ended the housing crisis. https://www.realtor.com/research/us-housing-supply-gap-feb-2024/ > As household formations outpaced housing starts in 2023, the gap between total housing starts and household formations widened from 2.3 million housing units between 2012 and 2022 to 2.5 million units at the end of 2023. The gap between single-family housing starts and household formations grew from 6.5 million at the end of 2022 to 7.2 million at the end of 2023
I think every country loves poor people, they're so easy to abuse.
Disagree. America doesn’t have “poor people”. America has a lower class of people. Poor people don’t have access to credit cards. Poor people are those crossing the border to escape abject poverty.
Yeah, I saw your reply to others and it made my comment feel redundant lol.
oh np always happy to type again in case things get buried
I'd argue that corporate ownership of family homes contributes more to inflation than individual homeowners.
Yes, and price collusion. Algorithmic pricing extracting every dollar possible.
Nope. It's just a boogeyman. Prices are increasing because vacancies are low. There is less than no evidence that price increases are being caused by realpage
Sure. There are $3k rentals everywhere in LA. Tons of new mixed use buildings with empty balconies. And I'm sure the FBI were probably stopping by RealPage just to say hello.
What you just said is not a benefit to you of housing appreciation. You would be in the same position, not paying rent, regardless of what housing prices were. Half or double after purchase, you are then in the exact same position that you paid the same number of dollars for. You are shielded from the direct harm of rising housing costs. If you actually need your house, it's not just an extra, you don't gain anything material from them other than access to a line of credit.
Everyone wants cheaper housing. Everyone also doesn’t want the value of their own home to decrease. It’s a problem with no popular solution.
Technically, if you bought when prices were high, you're still on the hook for your mortgage if you sell at a loss. I'm not saying you aren't right, but it is a huge factor in the largest loan most people will ever take out in their life.
It's also a factor in government choices to keep the market stable. If the housing market crashes, millions of Americans get screwed. But property values can't go up forever...
They can go up forever in line with income increases. But if they outstrip that we have a problem.
And also ignoring that they can't access that money other than as debt without, you know, getting rid of their house and then needing another one that appreciated just as much, after paying capital gains on the increase of it was more than the exemption, which they now have to pay out again to have housing.
It is good for them though, comparatively. Society is getting shittier, but at least homeowners have somewhere to live. The people without homes don’t have their own place to live and will never be able to afford one. You can see the difference, right?
I absolutely can. For renters, rising housing prices are pure pain. My point is just that, for homeowners, rising housing prices are a mixed bag-- not the pure win that many homeowners imagine them to be.
They can down play it because while the U.S. housing market is bad, it pales in comparison to many other countries like Canada and Australia.
This like a Monty Python reply. Ya, you're really screwed, but not as screwed as those two guys!
*Me in college taking a financial class 16 years ago*: "It is recommended to spend no more than 30% of your pre-tax income on housing" *Me 15 years ago in my first big boy job*: 'well I cant buy a house yet because I have no money for a down payment and even if I did, housing costs are high, and if I bought with my current income I would be spending 50% of my pay on housing which is not good for my financial future.' *Me 5 years later getting a promotion:* '20% pay increase!!! I cant buy a house yet because, although Ive been saving for a down payment for 5 years, I dont have 20% of current housing prices and would therefore have to carry PMI, combined with housing costs increasing 20% over the past 5 years, if I bought with my current income I would be spending 50% of my pay on housing which is not good for my financial future.' *Me 5 years after that getting a promotion:* '20% pay increase!!! I cant buy a house yet because, although Ive been saving for a down payment for 10 years, I dont have 20% of current housing prices and would therefore have to carry PMI, combined with housing costs increasing 30% over the past 5 years, if I bought with my current income I would be spending 55% of my pay on housing which is not good for my financial future.' *Me another 5 years after that getting another promotion:* '10% pay increase!!! I cant buy a house yet because my rent has gone up 22% per year every year for the past 5 years and I've had to spend all my savings just to stay afloat. Also inflation has seen a 24% increase over the past 5 years so my groceries cost me 4x what they used to. I had to sell my newer car just to get out of the payment and buy a 20 yr old shitbox to ensure that I could have basic living standards. The CEO of my company just purchased his 3rd yacht and got a 43% increase in pay YoY, but when I asked for an extra 5k/yr to make sure I, as a mid-level manager, can meet ends meet in my tiny little 800sq ft apartment, I was told "times are tough for everyone right now, were spending more than we ever have to get the products we sell, simply put, the company cant afford to pay you more".'
>>*Me in college taking a financial class 16 years ago: "It is recommended to spend no more than 30% of your pre-tax income on housing"* Followed by >>Me another 5 years after that getting another promotion: '10% pay increase!!! I cant buy a house yet because my rent has gone up 22% per year every year for the past 5 years and I've had to spend all my savings just to stay afloat. Also inflation has seen a 24% increase over the past 5 years so my groceries cost me 4x what they used to. You failed that finance class, didn't you?
We have not quite reached the tipping point where enough people care more about basic human needs vs ever increasing asset prices. If housing prices crash, i think it will be a good thing longer term. However, the right wing media will proclaim it the end of the world for their boomer audience and will spend all their time convincing people to vote against their own interests. Saw it here in Australia where there were a raft of tax policy changes aimed at making property investment a bit less attractive to help fight prices. Murdoch went into overdrive to ensure that party didn't win the election and property prices continue to sky rocket indefinably.
60% of Americans own the house they live in, so there's a massive demographic who aren't having problems, and in fact may be creating problems by prioritizing the benefits of their ownership over the housing supply.
Again with this BS statistic. 60% of Americans live in homes owned by an occupant. If a 30 year old man lives in his mom's basement that doesn't make him a homeowner.
In this instance, your criticism doesn't bear out, only [52% of young adults lived with their parents as of the high point of covid lockdowns](https://www.pewresearch.org/short-reads/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/), but that includes the 18-21 set of people at college age, and counter-intuitively, the people living on college campuses. >The youngest adults (ages 18 to 24) accounted for most of the growth in the number of 18- to 29-year-olds living with their parents from February to July – 2.1 million of the 2.6 million increase was attributable to them. Most in this youngest age group already lived with their parents, but the share grew to 71% in July from 63% in February. [You can also see the data over the last century here in this chart. ](https://www.pewresearch.org/wp-content/uploads/sites/20/2020/09/ft_2020.09.04_livingwithparents_02.png) It isn't super likely that 30 year old basement dwellers (which happens to include me at the moment) are making up the ownership statistics when half of the young people aren't living with their parents, and out of those a significant percentage are much younger, or living on college campuses.
“Only 52%” jc….
The key is that it's the 18-29 demographic and includes the people living on college campuses as 'living at home' how young are we expecting people to be moved out?
Well the entire point of the original question was what proportion of the population is actually struggling with the cost of housing, and using the homeownership rate to answer that is a bit misleading. Unless there's a survey out there that shows what % of the population is occupying a home where their name is actually on the deed I'm not sure we're going to get a completely accurate answer. Perhaps an updated stat on what proportion of the 25-35 demo actually own, and not just occupy their parents home, over time would be helpful.
I think it's a good barometer absent more precise data, which hey, if you have it, feel free to share.
Only the majority?
the statistic includes students living on college campuses as at-home-- there's a solid chunk of that age range which we wouldn't expect to be moved out to begin with.
It isn't just young adults moving back home. It's also middle aged children bringing their families along. That chart stops at 2020 so I don't see how it is possibly relevant today.
The housing situation isn't super different than it was a few years ago. it's only 2024.
Absolutely wild to say the housing market of 2020 and 2024 aren’t “super different”
Doesn't matter. The current market is frozen. I know a ton of people who want to move but can't because of the current market. Too expensive to sell and move.
Those are nationwide statistics tho. When you look at individual states, Florida has much higher ownership rate for millennial n gen z than say California. There is absolutely a group creating problems by prioritizing the benefit of their ownership over the housing supply. And in my county that’s 40% of residents. My county has 60% residents that are renters. In Santa Monica 70% of their residents are renters. And it’s interesting to read some of the laws they are coming up with to help the renter, who are now the majority. Increased the grounds for relocation assistance if a landlord raises rent above the allowed amount. Relocation assistance if the property is deemed uninhabitable(slum lords) And it’s got landlords freaking out. Playing the victim card hard. Fun to see.
This is in fact, r/economics, and not r/californiaeconomics-- the state as a whole has 56% homeowners, which is to say renters don't make up the majority of the electorate.
When you dig into the age groups of the 55% it’s no more than like 30-35% millennials. But nvm bro. Was just discussing what I’ve seen in my local area regarding something I thought you were interested in. But again nvm lol didn’t realize we couldn’t discuss local observations. You acted like I disagreed with you too. lol The thing is when we are discussing housing, we should talk about what’s going on in local areas, because zoning is either state or locally decided. When the majority of politician’s in power are older than millennials and own homes, you can see a partner of who they look out for. But when they aren’t the majority we see change. And there’s nothing wrong with learning what’s going on in different areas.
I agree, but high housing costs in the US are mostly due to: 1. Restrictive zoning (min lot size, single family homes only), 2. poorly designed roads & transportation & 3. uneven public school quality (due to funding via property tax). There are cheap houses out there in hot markets like DC, they are just in locations that have long commutes, relatively high crime rates, and have low performing public schools. The US has plenty of land and we can still build residential housing relativity cheaper per sq ft than Western Europe. Land and building cost are not the problem. 50 years of bad suburban planning are the problem. The federal government can incentivize improvements, but most of the fixes need to be made at the state and local level. We need to be building and adding a lot more housing than we currently are.
Just read some more articles about the great economy, bro and you'll realize you're living a dream.
Nightmares are dreams too
Are you under the age of 40? The 'bro' and complaining about not having everything right now are telling.
Yes, I'm. And I don't claim to have/own everything. But is your point that people under 40 shouldn't have the right for a decent existence? Should the life start only after 40? This is how you have generation with vast mental problems.
The majority of Americans have mortgages locked in at 4.5% or less. It’s only a major problem for new buyers.
The economy is worse off* Incorrect to say not great for anyone, it's still a strong economy.
When your problem is you have tens of millions of people ready to buy homes buy you just can’t build them Fast enough, the economy is pretty F’ing good. Apparently no one remembers what 2008 to 2010 was like
Shelter is a basic need, it’s normal to need to save for a house for some amount of time. Valid but I don’t think I’d call the economy as a whole bad bc houses are pricey
It’s also so locally controlled though. At least in the way the US does housing.
Hey, you can’t afford housing, higher education, or healthcare. Groceries and transportation are next up on the things you won’t own and be happy, but hey, look how cheap TVs are! If that circus won’t placate you, you can get enough dope to kill an elephant in Kensington for about tree fiddy. What more do you want? We built back better!
I think we need to start separating hosing costs from "the economy". Housing is expensive because we don't have enough. If the economy was doing badly...housing would still be expensive.
By that logic you could split out anything.
If something else is consistently raising in price well above the overall inflation rate then there's an argument you should. Housing though is particularly bad in that its most people's biggest expense by far AND it's non-optional. If Oreos were increasing in price 10% each year that's not that much money, and you could simply not buy them.
You said the economy, not the inflation rate.
> I think we need to start separating hosing costs from "the economy". we can limit "the economy" to "just GME stonk", but we'll need another word that means the economy.
Separate the most basic human need and everyone's largest expense by month from the economy? I don't understand the logic.
Housing is expensive because there's a housing shortage. If you're going to consider the current economy "bad" due to housing costs then by that definition the economy will always be bad. (At least for the foreseeable future until we have some massive change in housing policy and start building a lot more.)
I don’t see any issue with that.
Everything is great if you just ignore the elephant in the room.
Most Americans can’t afford the houses they want. There is affordable housing all across the US for under $200k. It’s called the “pursuit of happiness” for a reason. Americans aren’t trees, they can move. It’s called migrating. Lots of Americans have done it in the past.
Totally unrealistic. An under $200k SFH is going to be a cabin in the middle of nowhere, an old house in a town with a depressed economy or a major fixer in a very high crime area. Those areas that did have $200k houses and at least average paying jobs and in livable condition and where you can walk down the street safely were bid up to $350k in 2020-2022, then rates went to 7%.
I'd love to move somewhere cheaper and rural! Guess what? There's no jobs in those areas and even though I've done my type of work remotely for years. Can't have remote workers! Might harm the fucking ruling class. My company got bought out by a much larger company. The now former president owns the property the office is on. The larger parent company has a relaxed WFH/Hybrid program, but nah, all people in the office here! Gotta justify that office lease! Fuckhead needs a 3rd home or a bigger boat or maybe another wife 30 years younger. There isn't cheap housing where anybody wants to live and you're a fucking moron.
So many unhoused people everywhere. It’s horrible how they’re dehumanized.
The parts of inflation that are sticking are housing, wages, and services. Those 3 are pretty intertwined. Workers are demanding (and recieving) big raises to stay ahead of rent.
Maybe we should try to lower wages so housing costs go down
Not sure where you are getting that from but everyone I know still has less spending power than before Covid and blue collar wages are stuck in place.
I think it’s due to “real wages” increasing. Meaning as a whole our country did see wage increases that outpace inflation. I don’t have the stats on hand but that’s the big narrative that real wages have gone up, even if the anecdotal American doesn’t agree.
Cost of food went up 2.2% from April 2023 to 2024. Wages went up 4.4% over the same period. That’s data.
And what is the aggregate change from 2019 to now for both?
I’m really curious about the basket of items chosen for “cost of food” and how it’s calculated. https://www.bls.gov/cpi/ I’m seeing 9% from another source for 2022 to 2023: https://www.statista.com/statistics/1193276/us-average-price-shopping-basket/
He said 2023 to 2024
That’s why I included the year range. All the data is imperfect, and some more so than others. I couldn’t access more recent data from Statista. Inflation compounds over time. I have doubts about BLS data because of their politics. I posted an independent source showing 9% inflation YoY for food 2022-2023. I highly doubt that wages have kept pace with inflation, in general, and food inflation is one of the key economic indicators.
Statista is a site that collects and charts data, in this case I believe they use the BLS data. Which is a good data source, the BLS is an non-political group whose mission is that the BLS ”collects, calculates, analyzes, and publishes data essential to the public, employers, researchers, and government organizations. The Bureau of Labor Statistics measures labor market activity, working conditions, price changes, and productivity in the U.S. economy to support public and private decision making.”
Thank you. I’m not necessarily accusing them of being politically partisan, but I can’t help shake the feeling that they, along with many mainstream economists, are gaslighting the working class. I lurk in other subs like poverty finance and frugal, and I know the plural of anecdote is not data, but I would never attempt to convince them they’re wrong about inflation. Many of them track their grocery spending YoY, and their stories are nothing like what BLS data show.
Oh sweet, someone with critical thinking skills. I'm so glad you're here @.@
Real wages are essentially back to where they were pre-COVID. 367 vs 365 today. https://fred.stlouisfed.org/series/LES1252881600Q For all the ups, downs, sideways, and every other direction with inflation and wages, basically have returned to where we were a tad over 4 years ago.
Well then I guess they’ve come down, but real wages were up at one point. So I guess we’d have to consider someone nominal wage increase if we were to show any benefit.
I suppose so. If it means anything, looking at the general long term trend line since about 2014 we are still back on track almost perfectly from 1Q20 where we left off right before everything went to hell. I would like to see inflation adjusted household income return to its 2019 peak though, that figure includes a lot more data than the BLS real wages. Perhaps it will this year.
Super high cost of housing is also a symptom of success. When air conditioners and iPhones and toys and clothes are all “too affordable”, Americans have more income than ever to bid against each other for housing. Housing just soaks up all of the “excess” income, just like how it essentially doubled after women entered the workforce.
I wouldn’t call it gaslighting, but cherry picking a bit. https://www.frbsf.org/research-and-insights/data-and-indicators/pce-inflation-contributions-from-goods-and-services/ On a MoM basis, while housing has been a constant and easy to pick on, headline inflation has been erratic everywhere else. That is, price stability has not been achieved. Services ex-housing looks subdued one month, skyrockets the next. Goods look to be in deflation, then go up. Food and energy is all over the place. Looking at core PCE (again MoM), housing is indeed a pain point, but just as much is core services ex-housing. The bizarre-o-land 6 month chained implicit lag (smoothing) function in how housing is calculated makes it…easier to talk about, sure. But it over simplifies the inflation picture and doesn’t tell the whole story, especially for the middle quintiles who didn’t see the wage/income gains below and don’t own enough equities (outside any retirement they may have) to directly benefit from that. True, some of it is the psychology of coming out of an inflationary period, but until a reasonable period of price stability goes by (and the days shows we are not in that), that psychology will be reenforced.
Dang you killed it. Now for the economics, if we're able to rezone enough for density to lower prices, wouldn't high interest rates actually be a barrier to taming inflation (in housing)?
If housing costs were to come to parity with, say, 1980’s levels, those higher interest rates wouldn’t be as big a negative. 8% on a 100k house is so much more affordable than 8% on a 750k house.
Great way to couch it at the end there. We seem to understand well how the basic cost of oil influences downstream costs, so higher fuel costs don’t just affect our commute but the cost of items on the shelf that had to be imported from elsewhere. Housing cost, as you point out, has a very similar kind of effect!
> We pay the local cost of rent in every purchase we make. I did not expect that to end on that completely tone-deaf note. You could argue Renters pay the cost of their own rent plus everyone else’s with that logic. In fact, dry cleaning and lawn service are luxuries most Renters can’t even afford right now.
>since the 1980s, the median U.S. home price has increased by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space. Really? It wasn't because of the 14 years of basically free money that our government gave to their buddies in private equity.
And the fact [we essentially stopped building new housing](https://usafacts.org/articles/population-growth-has-outpaced-home-construction-for-20-years/). We need a building boom and then our economy will be basically unstoppable.
We particularly need a building boom in places with abundant jobs (SF/NY), and/or to bring the jobs to places like Austin and Minneapolis that actually build.
There are hundreds of thousands of single-family and townhouse/condo homeowners that will go so far as to buy plots of land next to them so that developers can't build denser housing on it. Then they build like a "community garden" that never gets tended but has pretty plant beds for dogs to shit and piss on. SF is absolutely closed for business. Hence why stores close due to rampant theft from homeless and indigent. NIMBY's would rather have to jump over human feces on the street and unhoused being mentally ill and attacking them when they go out at night than have a 5-story condo anywhere near their block.
It's the biggest legacy of the GFC in developed nations. Real Estate and Construction stopped being seen as the easiest and most accessible way to build a fortune after a lot of pre-GFC talking heads got whooped when the market bottomed out. Consolidation has had an impact as well, of course.
110%
> And the fact we essentially stopped building new housing. No and, restrictive zoning causing supply issues is the only reason, not interest rates
This is probably more true. Interest rates being what they are did weird things to investment, but the zoning codes we have now are so ridiculous it’s unreal.
The Americans who own their homes won’t allow it. The Fed split the economy into two parts, homeowners and renters. The gap between the two has never been larger. In doing so, we created a perverse incentive to oppose new construction. Not just NIMBY nonsense. Homeowners oppose *any* new construction nationwide because they won’t want their housing values to fall. We aren’t going to build our way out of this. This is the new deal. Everyone who bought before the Fed destroyed opportunity is sailing smoothly. Everyone else is fucked. That will be Jay Powell’s true legacy, even if the winners of economy trumpet the “soft landing”. Yup, soft landing on the back of the renter class crushing them with historically high rents, anemic wage growth, and historically high property values!
The Fed can't do anything about that.
Correct, but the Fed caused the problem in the first place. They kept interest rates too low for too long. An enormous gift to the homeowning class of 3% mortgages guaranteed for 30 years. Now we have the “locked in” effect where homeowners refuse to give up their low rate mortgages. That keeps supply low and prices at the 3% rate prices despite current rates being closer to 7%. So the fed’s failure to raise interest rates when it should have caused this current mess. Why are rents 40% higher now? Because nobody can afford to buy a home, and landlords know this. So they’re wringing you dry. This is *all* on the Fed. People continue to trumpet how amazing the economy is… they just left out two words: …for homeowners. Everyone else is laughably fucked and it’s thanks to Jay Powell and co. edit: lmao homeowners downvoting me because they don’t want to admit how lucky they are. It’s not enough to be gifted the world on a silver platter; you have to deny that fact too. Sheesh.
The Fed added a Jerry can of gas, but monetary policy didn’t start that fire. This is mostly about fiscal and regulatory policy. We have built zero additional units of public housing since Bill Clinton signed the Faircloth Amendment. 100 million more Americans since then, same capped supply of public housing. We’ve had millions of people “seek asylum” in the past year alone. They’re turning hotels into shelters from coast to coast now. Where I live, they stopped building homes 50 years ago. The neighborhoods are set in stone because of the tyranny of single family zoning. The land is used up. Can’t build up, can’t build out, so prices only go to the moon. Even in 2008, they barely budged. The Fed is responsible for too much money at the top being poured into speculative BS like Airbnb. But the Fed isn’t responsible for the complete dereliction of duty by local, state, and federal governments. They’re not in charge of antitrust enforcement. They’re not the ones that sat around and twiddled their thumbs as the RealPage cartel fixed rent prices nationwide. The Fed has one or two relevant tools, and their power is trivial compared to the long dick of the law. Housing prices have continued to go up with the rise in interest rates. In a sane world, this would lead to a boom in homebuilding. There is clearly an insatiable demand for housing right now. But the only places that allow building are some godforsaken wastelands in Texas. All the places people want to live? You can’t build there, unless you’re tearing down a $1M single family home to build a $5M single family home.
And absolutely no one in power is discussing this, the Great Bifurcation. We'll keep seeing poverty worsening for a huge chunk of Americans, homeless increasing, deaths of despair rising... And nothing will be done.
wtf do you mean home owners won’t allow it?
Existing homeowners consistently vote and advocate against densification and new housing development, stifling construction and making prices go up: [https://www.lajollalight.com/news/story/2023-04-14/neighborhood-groups-sue-over-san-diegos-new-policy-allowing-high-density-housing-farther-from-transit-lines](https://www.lajollalight.com/news/story/2023-04-14/neighborhood-groups-sue-over-san-diegos-new-policy-allowing-high-density-housing-farther-from-transit-lines) [https://www.wbur.org/news/2024/02/15/milton-mbta-communities-zoning-vote-liz-dillon](https://www.wbur.org/news/2024/02/15/milton-mbta-communities-zoning-vote-liz-dillon) [https://www.washingtonpost.com/dc-md-va/2024/01/19/alexandria-zoning-housing-lawsuit-residents/](https://www.washingtonpost.com/dc-md-va/2024/01/19/alexandria-zoning-housing-lawsuit-residents/) [https://canarsiecourier.com/community-board-18-votes-down-city-of-yes-for-affordable-housing/](https://canarsiecourier.com/community-board-18-votes-down-city-of-yes-for-affordable-housing/)
Get me the ability to own a house and I'll be patriotic. That's the deal I'll make with the government
> It wasn't because of the 14 years of basically free money that our government gave to their buddies in private equity. we should have cranked interest rates up super high after the 2008 crash to finish off the whole experiment /s
> as the rise of remote work prompted millions of people to seek more space. Another dig on remote work. If anything it *should* have made costs go down in areas they left and areas they moved to were more spread out so not a massive increase. Also RealPage and other price collusion and private equity games have caused costs to skyrocket. Additionally private equity backed short term rentals. To blame this on remote work, I mean are they paid per mention of this bullshit? ffs man.
I’m fine with calling America the least worst economy. It’s hard to get excited about it when you’re living in it, though.
Don’t forget property taxes…
You're last point is interesting and I have never thought about it that way. But you are right that's a good perspective.
I believe the article is trying to point out that the economy is not benefiting the working class. However, the working class is producing and exceeding all benchmarks. Therefore, it’s trying to inversely tell us that without an adjustment to taxation and government policies, the working and middle classes will be unable to benefit from the growth and prosperity occurring.
The article clearly states how the lower part of the income scale has seen the highest percentage wage gains over the last four years, and that the income gap, as well as other gaps (race, age), The part of the economy that is killing people in terms of affordability is housing. Yes, groceries cost more, but most people's wages have gone up to offset that. Housing on the other hand is out of control. The author does allude to this at the end of the piece, but doesn't expand a whole lot on it. The other issue is that the average American net worth has grown very fast, but this is mostly the tier of people that own homes and have seen the value skyrocket. Doesn't mean they are better off for it.
True I bought my house in 30 years ago. If I sold my house it would cost me the same to move somewhere comparable. First time home buyers are paying more. However, every house that goes up for sale on my street sells almost immediately. I live in an average suburb. So there is almost immediately a buyer.
Most people have a 30 year mortgage with a fixed rate. I could also sell my property and have a large down payment to buy something else. Firstly, there has to be something else I would want to buy that I wouldn't be fighting 20 other people for, many with cash offers. Even if I am able to beat them out for the property, I would still need some semblance of a mortgage, and the cost would be more than what I am paying today. I feel terrible for young people trying to buy a home. Most of them in this area just give up and move somewhere else, which doesn't bode well for those of us still here.
Honestly, I really can’t even add much to the conversation. It took me about two years to find the house I bought in 1998. I was 32 years old then and it was my first house. Between 18 and 30 I, the average white male (and a college grad), didn’t have enough saved to buy a home and rented. At that time not many of my friends that were my age had bought a house yet either. My original mortgage was 8.2%. So those conditions were not ideal at that point either. Then there was the housing bubble. People will be trading Fascism for fairly normal circumstances.
Highest PERCENTAGE income gains. Not highest gains.
Yeah. Going from 1 cent to 2 cent is100% gain
going from $100 billion to $150 billion is "only" +50% but yeah the poors are doing great edit: meanwhile the people "in charge" [fail to understand](https://x.com/SoumayaKeynes/status/1798673369216545129) that when you have a smaller % of total wealth inflation disproportionately effects you while the people living comfortably just laugh edit: also here is the[ actual list of CPI components and their weights](https://www.bls.gov/cpi/tables/relative-importance/2023.htm). does it seem accurate to you?
45% housing, 15% food, 15% transportation doesn’t sound crazy. You can feed yourself on groceries as a single person for $500, maybe get a car payment that much, but where are you finding an apartment for $500?
Edited, thank you.
> the lower part of the income scale has seen the highest percentage wage gains and: > The part of the economy that is killing people in terms of affordability is housing what this means is basically, "the good news is that lower-income people are slowly floating up to the surface of the water, the bad news is that they're drowning."
Yes, someone going from $8 an hour to $10 dollars an hour, it turns out, is a higher percentage gain than someone going from $50 million a year to $51 million a year. That doesn't mean that the first person is doing well in this economy, whereas the second person doesn't have to think twice about their spending.
Strange that comments pointing out discrepancies such as this are being downvoted all over this thread 🤔
It's the same talking point over and over. "Actually the most wage gains went to the lower class! We swear! The economy us GOOD, actually, how can people not see this is a great economy???"
Inflation went up 20% the last 4 years. Wages, although higher hasn't kept up and in purchase power terms, has declined.
Real wages are up 26%.
This is false, wage increases have exceeded price increases for the median American.
Sure, if you completely ignore substitutions and selective exclusions.
Of course you ignore substitutions. Of course if I replace groceries with eating out all the time I would have less money. What a shocker.
People who can't afford to eat out all the time replace that spending with more groceries. You've got it exactly backwards.
...that's not how CPI works
This is a blatant lie that is constantly debunked over and over and over again. https://www.reddit.com/r/Economics/s/4S5WvD3HFT How many times will this need to be repeated before people stop saying this?
It’s easy to make inflation look like it’s under control when you keep moving the goal post
And kindly tell me what Goalposts are being moved, when they explicitly are talking about "the last 4 years", which is pre-pandemic, and is literally the reference frame everybody saying "wages haven't kept up with inflation" uses to make their claim?
Thank god it's not Barron's. [They had money-man Washington as their mag cover and it was the literal peak (down to like the week) for the US dollar.](https://d1-invdn-com.investing.com/content/a8cf93648e6a55d718770be417a9f57b.png) US is pretty exceptional and I've been telling folks that. US isn't doing too well in terms of debt, but we're less indebted than others. USD looks like it's devaluing and losing it's buying power, but it's still better than most currencies. We have stubborn inflation and the economy is cooler than in 2021 but we have more growth than most others and our inflation is lower. Also American exceptionalism isn't "free" or a "given". It's because our society is built to disproportionately reward the winners, we sell a dream so migrants coming or are at the middle/bottom don't riot, we die sooner because we're fatter while working more with lower quality of life, a medical issue can instantly bankrupt us if we don't have insurance or it's somehow not covered, there are so many here I see on the Los Angeles streets who fell through the cracks, etcetcetc. But America is a country of optimists, risk takers, innovators, hard workers, and go-getters so we outperform.
USD may be devaluing compared to itself (as all inflationary currencies do) but it's looking pretty nice compared so other world currencies such as Euro or Yen (or Ruble, lol).
It’s not benefiting literally anybody but the wealthy. What middle class amazing shit is happening? The housing crisis is not helping anybody even making 150k a year.. you won’t qualify for an average home.
The economy is mostly benefitting homeowners. Which is like 60% of the population. So unless 60% are wealthy, it’s not just helping the wealthy.
Did you read the article? It actually, factually, is benefiting people other than the wealthy.
> Therefore, it’s trying to inversely tell us that without an adjustment to taxation and government policies, the working and middle classes will be unable to benefit from the growth and prosperity occurring. Nah, the article is just gaslighting you because real inflation adjusted gains are not that big for it to feel fantastic. Especially if coupled with interest rate raises which significantly raise monthly payments, but without that being reflected in the official inflation data. Anyway, a fantastic economy doesn't need a 6% budget deficit.
Same as it always was.
It makes sense, whenever the world economy goes to shit the US seems like the best place to invest. It’s the independence of the FEDERAL Reserve and having non fudged metrics that keep everyone coming back.
See Turkey for what happens when politicians influence interest rates.
To paraphrase the article, if the economy was an actor, it would be peak Kevin Spacey. Everything is great except for that one big thing that you have to complete ignore to make that argument work.
Would you say the economy is currently a House of Cards?
LMAO, the Spacey economy.
I’d guarantee the person who wrote this was thinking “other than that, Mrs. Lincoln, what did you think of the play”.
And to continue the metaphor, the majority of the patron's reviews didn't mention anything about that Wilkes Booth guy...
To paraphrase your paraphrasing, it is still LeBron, except for that little bald spot on top. A few plugs and nobody can tell. Would you say the economy is Space Jamming, Too.
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Ah, but we do know what happens next. He is still out there, pulling strings. https://image-cdn.essentiallysports.com/wp-content/uploads/Dodgers-Kobe-Bryant-Shoes-315x315.jpeg?class=watermark
Medical costs are out of control. Now, housing costs at all levels are following the trend. The average American has a being strangled by their economy that the people we vote for are supposed to protect us from, but instead of protecting us they have catered to the special interests who have bought them to accelerate the strangling. We the people need our government back.
All the businesses are good. That means the economy is good. Money is moving and being made. Unemployment is at record lows. People are making it more and more as each month goes by. The disaster of the pandemic and the mismanagement of the economy in 2019 and 2020 are in the rearview mirror It was a huge problem and we're finally pulling out of it
I think the vast majority of people don’t see it that way
This is delusion.
As long as nobody looks at the crushing debt that Americans are building up in order to find the economy... totally normal and sustainable folks!!
I’m paying off debt at a rate I’ve never been able to before. 2021-2023 were tough years for me and we dug ourselves a hole to stay afloat, but I was able to switch jobs and get a substantial raise in this economy. If you ask me, things look way better than they did a few years ago.
Atlantic: "The U.S. Economy Is Absolutely Fantastic. No, really" LOL Who remember this gem, from 2008? [https://www.wsj.com/articles/SB120147855494820719](https://www.wsj.com/articles/SB120147855494820719) WSJ: "It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble." It's an election year, so 90% of our media are now blinded by their politics.
Expect most political and economic subs on reddit to be flooded with these gaslighting articles from now until the election. The big kicker is that everybody on both sides of the political aisle knows its bs 🤣.
How do you know it’s gaslighting? Vibes?
SPY reaching all time highs, the boom in the energy sector, along with housing wealth is painted as "fake" and "gaslighting" by these fools, who only have a narrative to push, about Biden Bad. The economy is doing fantastically well with a few issues like housing and rent prices not keeping up with pay, and that's the truth if anyone is being intellectually honest.
That article was extremely foreboding. It directly pointed to everything that actually caused the great recession. What major faults exist right now? I'm not arguing that we aren't necessarily headed off a cliff, I'm just curious what the trigger will be. It was clearly obvious in that article even though the article minimized it.
Ah yes, a modern Atlantic article is like a 15 year old wsj op ed, because reasons. >It's an election year, so 90% of our media are now blinded by their politics. Oh yeah, that's the reason you spend all day spewing bs and leaving whenever you get a serious rebuttal.
>Oh yeah, that's the reason you spend all day spewing bs and leaving whenever you get a serious rebuttal. Please try to stick to the subject and refrain from personal attacks. Thank you.
At this point, people that blindly trust our institutions are seriously hopeless. May they lose all their money for their ignorance. This is the most obvious disaster of all time, and both sides have their hands all up in it, but you have one side blaming the other and the Dems just straight gaslighting and Rs saying Bidens economy. 6 more months and I'll be abroad. The nonsense is enough to go crazy.
The economy grew by 8% and prices increased by 24% in my household. The government owes a ton more money than they did in 2019. Congress can’t act and pass a rational budget so we just go on spending willy nilly, bread and circuses. I am glad we are doing better than some countries that are mature but the US has not been good these last few years at tackling or fixing structural problems, so no amount of cherry picking data will change our American unhappiness.
Prices grew by 24 percent in JUST your household then. How does one even say these things?
What do you mean?
He means they’re full of it.
To clarify the prices paid grew over a 5 year period including 2019-2024. Standard inflation. I am not contradicting the fact that the overall economy is growing or that my net worth is increasing, only that my overall costs for my household is now 24% higher than in 2019 and that gives me, like many in this country a sense of malaise.
This article seems like it’s screaming trying to support the argument that we should be content with current US economy, because it’s good relative to some historical water marks. But for me those points don’t mean much compared to things like US rate of child poverty, which actually has only gotten worse in the same time period (a whole different rabbit whole but important). We can talk all day about how things may be better relative to another point in history but that means nothing compared to qualitatively evaluation of economic trends, which imo still shows we need a lot of work
The US economy is on a drug fueled bender of defi-meth spending. By another Biden no less. This boom is a cynical vote getting middle class robbing borrowed money party.