>Housing doesn't have to be expensive. It is, mostly, due to political reasons.
And it's made even more expensive because of interest on mortgages--which isn't real money to begin with. That's right, the banks charge you interest on money they created out of thin air.
"Real estate cannot simultaneously be affordable and a good investment."
As soon as someone becomes a homeowner, it becomes in his/her best interests to make sure others cannot become homeowners at anything but a higher price. It's one of the most extreme perverse incentives in modern economies.
"Oh, looking at this it is worth remembering that NIMBYism and real estate prices are one of the biggest drivers of inequality in the world."
I am not sure that is the case.
Certainly the growing inequality between the falling middle class and the increasingly rare upwardly mobile class could very well be due to the factors you cite.
But the biggest inequality (both globally and locally) is between people who have literally nothing - as in, zero dollars - and people who have (anything more than zero). Even if you live at the poverty level and have no assets you are still infinitely better off than someone with nothing.
That inequality gap is not due to zoning laws or illegal sublets or OMI evictions or whatever.
In many west coast locations, house prices are far beyond the prior housing bubble peaks, I often come across places that are 75% to 100% more than they were during the mid-2000s bubble.
Pick any popular western location, city, or neighborhood, and you'll find prices 300% and 500% higher than they were in 2000 and often double or more what they were in the first housing boom. And no, incomes have not increased that much. Many of these areas have price-to-income ratios into the absurd of 10x-15x. Outside of San Francisco, does anyone really think that is sustainable?
In the former case, the inflation was due to sketchy MBS's. In the latter case, price inflation in major city center's suburbs are causing the cost of building materials to go sky (lumber I believe is up 16% in the past 6 months), thus making a house that was once 100$ a square foot to build now 135$ a square foot.
This seems to reflect the "graying" of rural America: https://www.theatlantic.com/business/archive/2016/06/the-gra.... Younger generations are moving to denser areas, driving property values up. This isn't a bad thing per se (denser populations are more environmentally friendly), but is probably driving some of the division in the USA today.
The differences between the middle of the country and the east & west coast, since 2000, is startling.
I'd love to see this sort of graphic normalized against wage inflation as well. Is what we're seeing just fairly flat wage stagnation in the midwest, but wage inflation on the coasts (leading to a rise in housing prices)? If we start to see salary multiples of 3x, 4x, or 5x, if you just live on a coastline, what will that end up doing to interstate trade and commerce? Will the middle of the country begin to lose some of their buying power, purely because their inflation rates are lower?
I bet it's a combination of things. West coast cities are more desirable for younger people, there's better weather, a more socially liberal climate, more employers and other young people to interact with, and the networking opportunities. Plus overseas investors looking to put their cash in safe haven, but I would ascribe most of it to it just being a more desirable place to live.
A more relevant metric is net new household formation. The rust belt and southern metro areas you see the decline since 2000 are fighting a losing demographic battle.
Everyone here is talking about bubble, overpricing, inflations etc. But the long term demographic shift is coastal growth at the expense of the rest of the country. The West coast especially has a booming economy and is growing at a very rapid pace.
I think most of the price increase is just a supply/demand issue. Lots of people moving to coastal areas and American cities are terrible are high density housing and planning.
Pittsburgh has a thriving tech and financial sector, driven by CMU and PNC respectively. Buffalo has never quite been part of the "rust belt", they're more east coast. They have lot of stable government employment because of New York state.
There are a few that surprise me here -- declines for Indianapolis, Columbus -- these first two are really odd, but also Columbia, Augusta, and almost all of Alabama.
I know none of these places have the draw of the coasts, but are solid metros that have seen some growth since the recession.
Is it just that they're being outcompeted by larger regional neighbors, like Atlanta, Charlotte, and Charleston?
Why is all of Indiana and Ohio so blue when the two state capitals and their suburbs have been recovering much better than that region's other cities?
> Why is all of Indiana and Ohio so blue when the two state capitals and their suburbs have been recovering much better than that region's other cities?
I'd love to have an answer to this question, too. I grew up in rural central Ohio. There is still some industry hanging on, but just barely. All that I can hazard to speculate now is that it will be very interesting to see what happens to those areas when the coming trucking-industry revolution hits.
This is going to sound paranoid, obviously, but I was thinking if China ever wanted to start a war with North America, it has quite a sizable population in the US and Canada that could potentially contribute to that aim.
Much of middle-America (and Canada) was settled by huge numbers of German immigrants. At the start of WW1, there were similar concerns about German sympathies.
It just doesn't work that way. These people have made their homes here and count themselves as Canadians and Americans. They might have sympathies for the old country (much as many of us in North America do), but the stronger these sympathies are, the less likely we'll go to war in the first place.
There are lots of people of Chinese ancestry in the US, sure, but there is no reason to believe any substantial number of them have any devotion to the present government of the People's Republic of China.
Quite a lot of them are from families that have been American much longer than the PRC has existed.
[+] [-] ucaetano|8 years ago|reply
Housing doesn't have to be expensive. It is, mostly, due to political reasons.
https://www.economist.com/news/finance-and-economics/2164734...
[+] [-] bluthru|8 years ago|reply
And it's made even more expensive because of interest on mortgages--which isn't real money to begin with. That's right, the banks charge you interest on money they created out of thin air.
[+] [-] api|8 years ago|reply
As soon as someone becomes a homeowner, it becomes in his/her best interests to make sure others cannot become homeowners at anything but a higher price. It's one of the most extreme perverse incentives in modern economies.
[+] [-] coolspot|8 years ago|reply
[+] [-] rsync|8 years ago|reply
I am not sure that is the case.
Certainly the growing inequality between the falling middle class and the increasingly rare upwardly mobile class could very well be due to the factors you cite.
But the biggest inequality (both globally and locally) is between people who have literally nothing - as in, zero dollars - and people who have (anything more than zero). Even if you live at the poverty level and have no assets you are still infinitely better off than someone with nothing.
That inequality gap is not due to zoning laws or illegal sublets or OMI evictions or whatever.
[+] [-] notadoc|8 years ago|reply
Pick any popular western location, city, or neighborhood, and you'll find prices 300% and 500% higher than they were in 2000 and often double or more what they were in the first housing boom. And no, incomes have not increased that much. Many of these areas have price-to-income ratios into the absurd of 10x-15x. Outside of San Francisco, does anyone really think that is sustainable?
[+] [-] mistermann|8 years ago|reply
[+] [-] Kenji|8 years ago|reply
It's like drinking alcohol to ease the suffering caused by a mental health problem. You just make everything worse.
[+] [-] treehau5|8 years ago|reply
[+] [-] rm999|8 years ago|reply
This seems to reflect the "graying" of rural America: https://www.theatlantic.com/business/archive/2016/06/the-gra.... Younger generations are moving to denser areas, driving property values up. This isn't a bad thing per se (denser populations are more environmentally friendly), but is probably driving some of the division in the USA today.
[+] [-] yessql|8 years ago|reply
[+] [-] wjossey|8 years ago|reply
I'd love to see this sort of graphic normalized against wage inflation as well. Is what we're seeing just fairly flat wage stagnation in the midwest, but wage inflation on the coasts (leading to a rise in housing prices)? If we start to see salary multiples of 3x, 4x, or 5x, if you just live on a coastline, what will that end up doing to interstate trade and commerce? Will the middle of the country begin to lose some of their buying power, purely because their inflation rates are lower?
[+] [-] lotsofpulp|8 years ago|reply
[+] [-] JackFr|8 years ago|reply
[+] [-] jorblumesea|8 years ago|reply
I think most of the price increase is just a supply/demand issue. Lots of people moving to coastal areas and American cities are terrible are high density housing and planning.
[+] [-] geogra4|8 years ago|reply
[+] [-] aphextron|8 years ago|reply
[+] [-] Zigurd|8 years ago|reply
[+] [-] temp-dude-87844|8 years ago|reply
I know none of these places have the draw of the coasts, but are solid metros that have seen some growth since the recession.
Is it just that they're being outcompeted by larger regional neighbors, like Atlanta, Charlotte, and Charleston?
Why is all of Indiana and Ohio so blue when the two state capitals and their suburbs have been recovering much better than that region's other cities?
[+] [-] scruple|8 years ago|reply
I'd love to have an answer to this question, too. I grew up in rural central Ohio. There is still some industry hanging on, but just barely. All that I can hazard to speculate now is that it will be very interesting to see what happens to those areas when the coming trucking-industry revolution hits.
[+] [-] patmcguire|8 years ago|reply
[+] [-] jordache|8 years ago|reply
[+] [-] bumblebeard|8 years ago|reply
[+] [-] babesh|8 years ago|reply
[+] [-] JBReefer|8 years ago|reply
https://img.washingtonpost.com/wp-apps/imrs.php?src=https://...
[+] [-] Jemaclus|8 years ago|reply
It's interesting how many things generally correlate with urban/rural population distribution, too...
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] charred_toast|8 years ago|reply
[+] [-] sctb|8 years ago|reply
[+] [-] CountSessine|8 years ago|reply
It just doesn't work that way. These people have made their homes here and count themselves as Canadians and Americans. They might have sympathies for the old country (much as many of us in North America do), but the stronger these sympathies are, the less likely we'll go to war in the first place.
[+] [-] dragonwriter|8 years ago|reply
Quite a lot of them are from families that have been American much longer than the PRC has existed.
[+] [-] analyst74|8 years ago|reply
[+] [-] hkmurakami|8 years ago|reply
[+] [-] TACIXAT|8 years ago|reply
[+] [-] mistermann|8 years ago|reply
[+] [-] abootstrapper|8 years ago|reply
[+] [-] babesh|8 years ago|reply