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- cross-posted to:
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- US home prices have soared 47% so far this decade.
- The price surge has outpaced the gains seen in the 1990s and 2010s, and is nearly ahead of the 2000s.
- The rising value of homes has coincided with a millennial-fueled demand surge and years of low mortgage rates.
US home prices have soared 47.1% so far this decade, according to a ResiClub analysis of the Case-Shiller National Home Price Index.
The massive price gains seen in the first four years of the 2020s have eclipsed all of the growth seen in the 1990s and 2010s, according to the analysis. Housing prices in those two decades grew 30.1% and 44.7%, respectively.
On top of that, housing price growth in the 2020s is on the verge of eclipsing all of the growth seen in the 2000s, which was 47.3% after peaking at just over 80% before the 2007 housing market crash.
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…an ongoing surge in demand from millennial home buyers has steadily pushed home prices higher
The thing is, housing is a universal human need, so as the population goes up, the demand for housing will go up as well.
Yeah it’s an inelastic demand.
Our zoning codes, car centric infrastructure, and investment firms having control over supply have priced an entire generation out of a human right.
REITs have been buying excessively, mostly in the affordable residential market, since 2018.
https://www.reit.com/news/blog/market-commentary/reits-own-575000-properties-us
Only possible if people are able to borrow money. High interest rates are the death of this market.
This might sound good for people who own their home already but all it does is lock them in. You can’t move, trade up/down if no one else can afford to buy.
And when prices are inflated they tend to reach a price cap. This means the variance between a small and large house shrinks. This means selling a big house to buy a smaller one nets you very little profit which encourages people not to sell. Which decreases the market of affordable homes.
But corporations with the goal of owning all property to rent seek don’t care. They’ll overpay to hold houses a while until they can corner the rent market and charge through the nose.
It’s these deep pocket corporations that I think will keep a major housing bubble burst from happening or when it happens it will be fast.
They can buy x number of houses now at these inflated prices, they can but 10x X number of houses with a major downturn in home values. Then with all this buying of homes the prices shoot back up… At least that is how my high school level economics knowledge brain sees it.
As long as housing is considered an investment, it will never be affordable. Concrete and wood degrade overtime, so the only way the price of a house can go up is if the supply of houses gets progressively smaller while demand continues to increase. Rising housing prices are a direct result of municipal authorities failure to zone appropriately.
Increasing population outstripping supply of houses.
amen. exactly why local zoning ordinances are anti-housing.
asset prices must go up. always.
Also, keep out the riff-raff.
They are purposefully anti-housing. That is the point. And no, it is not to drive prices up but instead to ensure someone doesn’t buy the place next door and turn it into a toxic waste processing plant.
Zoning laws serve a good purpose in many locations. They also serve to maintain NIMBYism, but that is a second order effect.
zoning laws don’t do that. that’s the BS excuse they use and always have.
zoning laws originanted in racism and redlining, to keep the blacks from living near the whites.
learn some history.
Ok, so then what is the difference in an area zoned I-4 vs R-1.
And yes, I understand the historical context, but that’s not the topic of conversation. We are talking about their current use.
their current use is to prevent housing from being developed and this keep housing supply low so that current owners can benefit from increasing prices. hence why you have inner suburbs and cities full of single family homes where they should be apartment complexes, and and towns with 3 acre lot sizes and 100ft setbacks.
What does I-4 zoning stand for?
Concrete and wood degrade, but land can provide an income stream forever
Tbh, it’s probably more about the land than the concrete and wood.
My area in particular gets a lot of housing market “investment”.
The going rate for a one bedroom is $1400 a month or $460,000 for a single family home in the suburbs with no access to public transport.
It’s rough out here.
Interesting. In my neighborhood, the houses are selling for $300-400k, but renting for $2-3k per month.
It does get that high $1400 are basements in tare down neighborhoods
My neighborhood is all 3-4 bedroom homes, some older (30+) and some newer (about 5).
Those numbers mean nothing without knowing the local wages. In my neighborhood the lowest priced 800 sqft homes are 950k and one bedroom rent is $2400. So your area sounds like a killer deal.
I wasn’t trying to build a statistically significant argument, just giving my anecdotal woes of the local economy.
However median income for my area is $62,000. Rent range is $1400 - $3000 I gave the low end. Average is about $2,300. Hopefully that gives context.
Yeah, I wasn’t trying to give you a hard time, just sharing how drastically different housing markets can be. I could sell my house in California and buy a 400k house outright from the equity that has accumulated. Alot of middle class Californian are doing just that, selling their houses and buying in the south or midwest with cash. It’s part of what is inflating your housing costs because your market is more affordable than mine. For comparison, the median houshold income in my city is 89k but the median house list price is 1 million, making your market more affordable and attractive for those that need some relief from inflation.
A $1 million median is insane, even going by median cost of ownership in my area for a fairly standard single family home is $550,000, you could get away for $450,000 on the low end though.
I guess it can always get worse. The part that strikes me is that I live in an area that is fairly low density and was previously known for its home affordability. So I would say you’re right, that plus investment firms buying up a lot of the available housing. Not to mention the additional cost that car centric infrastructure lays on the individual.
I really hope things improve but I won’t hold my breath.
So is this adjusted for inflation? The word is not mentioned once in the article.
Using inflation calculators I get the following (used https://www.calculator.net/inflation-calculator.html and https://www.officialdata.org/us/inflation/; getting similar results)
- 1990s - $124,800 ($298,200 today)
- 2000s - $165,300 ($299,800 today)
- 2010s - $219,000 ($313,600 today)
- 2020s - $327,100 ($394,700 today)
- Now - $420,800
Looking at FRED economic data (https://fred.stlouisfed.org/series/MSPUS), it looks like thats where they got their figures. As far as I can tell is it not inflation adjusted. They have picked the Q4 results for each year as base for the 1 Jan.
When adjusted for inflation, the increase in value since the 1990s is much less AND the increase was biggest between 2010-2020.
Also on their own figures in the article; between 2020 and now the median price is up 28% without inflation adjustment, and 7% with. Compared to 1990 the median price corrected for inflation is up 40%, but the biggest jump is 2010-2020; it began 2020 32% above the 1990 price.
The point? House prices are up, but inflation has been uneven over that period, with a big spike recently - the dramatic figures in the article may not reflect the real story. According to the calculators from 2020 to 2024 the total inflation rate is 21.54%; equivalent to 4.7% a year. Inflation accounts for much more of the perceived price rise than the actual real value rise.
The problem with inflation is people only think about today’s inflation rate. Current US inflation is 3.5% but that is on top of last years inflation, and the year before that etc. So dramatic articles like this are really of dubious value.
EDIT: The article links to “analysis” by another website ResiClib. They do not seem to have looked at inflation at all either.
Entirely correct. This article and the associated data is useless without factoring in inflation.
Almost four years.
Anyone that thinks this isn’t a bubble is a moron.
It’s not a bubble, it’s much much worse. You only hear of it in whispers among the financial world. It’s stagflation. Japan seen this story before, they call it their lost decade that has been going on for nearly half a century. It’s when you deficit spend like crazy to prop up the economy and that leads to high inflation and stubbornly high costs (IE: Housing). It’s coupled with basically no wage growth and high underemployment. Does any of this sound familiar? It buried Japan, it might bury USA.
This spike in Inflation isn’t that high in the grand scheme of things and we have both historically low unemployment and higher than average labor force participation.
The current situation doesn’t resemble stagflation.
Actually it exactly resembles stagflation. It’s one of the reasons I said underemployment and not unemployment. During the 90s, Japan’s inflation rate was around 3% and they couldn’t get it under 2%. Sound familiar?
The other part was low unemployment, but mostly government jobs that didn’t do anything. But it did create historically low unemployment and higher than average labor force participation.
What you are seeing is USA doing exactly what Japan did in the 90s, which is have a target inflation rate of 2% that they can’t reach and hiding the high unemployment numbers with underemployment in crappy jobs.
Edit: just look at this rocketing government employment.
More than doubled in a decade.
I appreciate you providing sources but even your sources don’t align with your claims. Per your source, Japan averaged less than 1% per year inflation during the 90s.
Your source on government employment also doesn’t show it doubling in the last ten years. Through my own searching I’m seeing government employment dropping per capita over the last twenty years.
Ultimately, it doesn’t matter. I don’t personally see the signs of stagflation and I would encourage readers of these comments to analyze the data themselves and not blindly accept your claims.
No one in real-estate is doubting it being a bubble. The issue is how it will resolve. Not all bubbles burst. The question is if this one is going to simply “cool down” until the market rate catches up (lol, pipedream) or if the propping up will simply plateau it and it will level off for some years for the market rate the then catch up (almost the same thing, still a fucking joke when they try to justify this). Or there is the option of the bubble popping, it then it is the question of how deep the market cut will go, how fast it will rebound, how far up it will rebound, and if it is still worth it to buy now (what some are saying is that it is still worth doing the current fuckery and still profitable even with a bubble burst).
Even if it burts, what’s stopping investment companies from just gobbling up whatevers left and then repeat the same cycle?
Exactly this. The 2008 bubble bursting helped investors buy cheap. I was trying to buy in 2012 and kept getting under-bid and losing to cash offers from people who just let the house sit empty for a year or two before selling at a profit. The only way I was able to buy back then was finding a house owned by Fannie, which legally could only be sold to someone who lived in it as their primary residence.
The amount of money being stockpiled in the US (and around the world) is insane, so any major drop in housing prices means more investors will just buy it all up. And related: that’s also why I don’t see the bubble bursting. There are still people buying at insane prices with relatively high interest rates right now. There might be a slow down or a slight drop when those people finally get homes, but the bubble in 2008 was from subprime mortgages (not nearly as much of a thing now) and banks not lending (not a thing now). Even if banks got scared and stopped lending, the cash offers are still coming.
it isn’t a bubble because there literally isn’t enough housing.
the housing we are building isn’t keeping up with demand, so prices will continue to go up.
Can we just band together as like 30 individuals and do the development ourselves? Like I want to find enough people that together we can afford to construct a set of condos without relying on some giant fucking company to do it.
I’m not kidding, I want to own a home someday
Yes you can. Banks do loans for this kind of thing all the time. They prefer experience though, and so if you don’t have that you will need to prove you have enough on the line that you will lose if you don’t complete the deal.
Many condos are built by small companies. They build a few every month and it is enough to pay their employees and make a nice living. It is hard to break into this as the banks want to see experience, but it can be done.
I wish it was possible, a citizen’s co-op sounds amazing.
I will say I’ve seen it tried with varying degrees of success so It’d have to done carefully.
Outlaw Airbnb and similar practices and see how affordable housing suddenly becomes available
Completely sustainable!
47%? Houses in the Charlotte metro and surrounding areas went up ~1700%
I’ll take “What is an average” for $400, Alex.
Capitalism never stops. It’s only continually grasping at the money of the average person in an attempt to accrue it all.
I bet Wallstreet’s thirst for real estate has zero to do with this
Stop complaining and start torching.
I’m sure it’s not what you mean, but it sounds like you’re suggesting burning houses down, which would make the problem worse
Haha right. Don’t burn the houses.
Bought in '21, so far my home value is unchanged. But I have $40,000 in equity going for me so that’s nice.
As someone who has seen property values shoot up in my area even more than the average, it is such a relief to get out of the rental trap and start building equity. I know it’s more complicated than this, but knowing each mortgage payment gives me a little more claim over my property and more buying power if I ever need to sell it is such a good feeling.
I hope that we can get conditions to change so that more people can access home ownership if they want it.
