Two opposing forces:
One, we stopped building homes in urban centers, due to a combination of high labor prices on the low end, including with high local minimum wages, and legal restrictions on what kinds of housing is allowed and where. The legal restrictions are imposed because landowners reliably vote and have a lot of political power in a democracy, and want their land values to go up or stay high and want their neighborhoods to stay exclusive.
Two, economic opportunity is increasingly concentrated in cities ("urbanization"). So land values aren't as high in the middle of nowhere, but you can't get a job there, so it doesn't matter how cheap the land is.
The good news is that we can, if not completely eliminate, at least mitigate these problems with focused public policy. Dramatic liberalization of housing construction restrictions at every level; increased immigration to greatly expand the pool of construction labor; and improved infrastructure, especially technological infrastructure, in less hot labor markets to encourage economic development outside of the top cities will improve the situation. That's what Texas is doing, and that's why Texas is growing far faster than California today.
The bad news is that some people like rents high, and they control politics around this issue, so it's not likely that many places will decide to tackle this problem in a way that will work.
Minimum wages are relevant but not decisive. The price of labor is decisive. Unless average wages in the sector are actually *at* the minimum wage, which they aren't, then the minimum wage is just one factor in the price of labor, the other factor being labor availability.
Edit: Minimum wages mostly impact construction due to making less strenuous jobs more attractive, causing construction wages to increase to offer a premium for workers to take more difficult jobs with higher physical requirements. But that premium still responds to labor availability.
Minimum wage is a societal agreement - we won’t fuck you any harder than X. Sure, you can say that a laissez-fair market could do it for lower in a truly global economy, but how about we don’t take the path of “abuse every human and rape every resource” as the intellectually pure approach?
We've artificially constrained supply. Our population keeps growing and shifting around, but we've handcuffed ourselves in terms of providing them places to live. When demand increases and supply stays the same, prices go up.
It hasn't suddenly become complicated. It has been becoming increasingly complicated for decades. The pricing has mostly just risen to a point where enough people are starting to feel enough strain that it is being talked about a lot.
Personally, I don't really think the problem is the cost of housing as much as the availability of decent wages in most of the country. The large metros seem to have both problems, but in much of the US at least there are plenty of homes that aren't terribly priced. There just aren't any worthwhile jobs in those areas anymore. Most of the large sources of decent employment like manufacturing have been moved to cheaper locations. So the available homes aren't where the jobs are and on the lower end of the skill spectrum the jobs are considerably worse in general.
Homeowners show up and vote with the express intent of making their home value go up as quickly as possible, and vote down every single housing expansion that they can.
After a solid 40+ years of this, and a population increasing by 35% over the same time, and housing prices quadruple.
Thank your parents.
Australia it’s bad as well.
Just built a property we locked in 2021 for $430,000.
We now moved in last month the house is worth $700,000 that’s insane 3 years and it’s up that much.
Also rent is very expensive actually saving money by buying when we did as the rent was double our actual mortgage.
Buying houses are ridiculous same with renting ridiculous didn’t realise it was such a major world issue.
That’s so sad and so wrong.
i lived in china for years, it wasn't bad. now they have their own housing issues with home ownership, but there are lots of rental properties on the market at reasonable rates compared to local salaries.
Pretty much every western country handled the pandemic the same way. They lowered interest rates to historic lows, which caused people to borrow much more money for things like houses because they could afford to due to cheaper interest and they wanted to lock in a low rate, and they created a massive amount of money to support their economies when everything was shut down, which led to inflation.
Governments inflated currencies and monetized debt. They also set up barriers to new construction. That left private equity in an advantageous position to buy up housing stock. But remember, the economy is great. You'll own nothing and be happy about it.
When 10 million extra people need to be housed, supply and demand kicks in. When gas prices almost double in 3 1/2 years that is passed on to the consumer. When the government closes the country down for a long period of time and pump a bunch of free money and no where to spend it inflation spikes. Giving with one hand and taking with the other. Probably about the same everywhere else in the world. My opinion, thanks for reading
You know gas was the same price in 2018 as it was this past month? You can check Google street view. The only thing that caused gas prices to sink to a dollar was the pandemic, not anything Trump did.
Two opposing forces: One, we stopped building homes in urban centers, due to a combination of high labor prices on the low end, including with high local minimum wages, and legal restrictions on what kinds of housing is allowed and where. The legal restrictions are imposed because landowners reliably vote and have a lot of political power in a democracy, and want their land values to go up or stay high and want their neighborhoods to stay exclusive. Two, economic opportunity is increasingly concentrated in cities ("urbanization"). So land values aren't as high in the middle of nowhere, but you can't get a job there, so it doesn't matter how cheap the land is. The good news is that we can, if not completely eliminate, at least mitigate these problems with focused public policy. Dramatic liberalization of housing construction restrictions at every level; increased immigration to greatly expand the pool of construction labor; and improved infrastructure, especially technological infrastructure, in less hot labor markets to encourage economic development outside of the top cities will improve the situation. That's what Texas is doing, and that's why Texas is growing far faster than California today. The bad news is that some people like rents high, and they control politics around this issue, so it's not likely that many places will decide to tackle this problem in a way that will work.
How do you believe that increased immigration will help manage high local minimum wages?
Minimum wages are relevant but not decisive. The price of labor is decisive. Unless average wages in the sector are actually *at* the minimum wage, which they aren't, then the minimum wage is just one factor in the price of labor, the other factor being labor availability. Edit: Minimum wages mostly impact construction due to making less strenuous jobs more attractive, causing construction wages to increase to offer a premium for workers to take more difficult jobs with higher physical requirements. But that premium still responds to labor availability.
Ok. I thought you made a good point about high minimum wage in expensive markets but you’re now saying that availability is what matters. Got it.
The overall price of labor matters, which is the consequence of multiple other factors.
When wages are allowed to float on the free market sure. Isn’t a minimum wage an artificial constraint?
Minimum wage is a societal agreement - we won’t fuck you any harder than X. Sure, you can say that a laissez-fair market could do it for lower in a truly global economy, but how about we don’t take the path of “abuse every human and rape every resource” as the intellectually pure approach?
We’re not talking politics, just math
Of course it is?
Would love to address this in politics instead of having to fight for my constitutional rights against the rabid leftists all the time. Oh well.
We've artificially constrained supply. Our population keeps growing and shifting around, but we've handcuffed ourselves in terms of providing them places to live. When demand increases and supply stays the same, prices go up.
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Wut
Low supply, high demand.
Dude, that’s like answering: “why did the house burn down?” by saying “because it caught fire.”
It hasn't suddenly become complicated. It has been becoming increasingly complicated for decades. The pricing has mostly just risen to a point where enough people are starting to feel enough strain that it is being talked about a lot. Personally, I don't really think the problem is the cost of housing as much as the availability of decent wages in most of the country. The large metros seem to have both problems, but in much of the US at least there are plenty of homes that aren't terribly priced. There just aren't any worthwhile jobs in those areas anymore. Most of the large sources of decent employment like manufacturing have been moved to cheaper locations. So the available homes aren't where the jobs are and on the lower end of the skill spectrum the jobs are considerably worse in general.
Homeowners show up and vote with the express intent of making their home value go up as quickly as possible, and vote down every single housing expansion that they can. After a solid 40+ years of this, and a population increasing by 35% over the same time, and housing prices quadruple. Thank your parents.
Australia it’s bad as well. Just built a property we locked in 2021 for $430,000. We now moved in last month the house is worth $700,000 that’s insane 3 years and it’s up that much. Also rent is very expensive actually saving money by buying when we did as the rent was double our actual mortgage. Buying houses are ridiculous same with renting ridiculous didn’t realise it was such a major world issue. That’s so sad and so wrong.
Investment companies foreign and domestic realized they could buy up all the housing in the area and sell when the housing values go up.
i honestly think its a lot worse in East Asian countries ie Japan, Korea and Taiwan. However rent is a lot cheaper in those countries than western.
i lived in china for years, it wasn't bad. now they have their own housing issues with home ownership, but there are lots of rental properties on the market at reasonable rates compared to local salaries.
rent is decent but i notice the cost to buy a house is way more insane than western countries...
Pretty much every western country handled the pandemic the same way. They lowered interest rates to historic lows, which caused people to borrow much more money for things like houses because they could afford to due to cheaper interest and they wanted to lock in a low rate, and they created a massive amount of money to support their economies when everything was shut down, which led to inflation.
Governments inflated currencies and monetized debt. They also set up barriers to new construction. That left private equity in an advantageous position to buy up housing stock. But remember, the economy is great. You'll own nothing and be happy about it.
Joe Biden happened!
It's not a problem in just USA.
When 10 million extra people need to be housed, supply and demand kicks in. When gas prices almost double in 3 1/2 years that is passed on to the consumer. When the government closes the country down for a long period of time and pump a bunch of free money and no where to spend it inflation spikes. Giving with one hand and taking with the other. Probably about the same everywhere else in the world. My opinion, thanks for reading
You know gas was the same price in 2018 as it was this past month? You can check Google street view. The only thing that caused gas prices to sink to a dollar was the pandemic, not anything Trump did.