One of the biggest things holding back businesses is skyrocketing housing costs

I don't know if it's a good idea to incentivize people to have more children like that.


Or at least, you might see this thread: How to encourage Middle Class to have more children without over encouraging the poor

 

I am a Christian who has been researching Judaism for over four decades and there is some sort of prediction about a population explosion as the Era of Moshiach dawns?!

Zechariah 8:4

¶
Thus saith the LORD of hosts; There shall yet old men and old women dwell in the streets of Jerusalem, and every man with his staff in his hand for very age.
And the streets of the city shall be full of boys and girls playing in the streets thereof.

 

Looking at it now.......
all I know is that i want to be able to look back at my life and know that I didn't collaboarate on anything like:


Can we learn about the Washington Swamp from the Ottawa Swamp?

 

Where is the statistical data to support the above arguments ... ?

 

You don't seem to understand how housing markets work. Let's ignore land, as it is a speculative medium. If new housing is constructed at a faster rate than old housing depreciates (typically 3%-5%/yr), then the average price of a house will indeed rise. But the prices of existing houses will fall, as the new supply absorbs some of the market demand. Then when the building boom is over, depreciation will take over and the average price will decline again. It's just a cycle.

 

You don't seem to understand what I was saying.

Yes, obviously, but construction of housing is generally a continuous process, in response to housing demand. So in reality, construction of new housing likely won't be accompanied by any very substantial decrease in price.

All I was saying is that the new supply can never absorb enough market demand to make the price fall below what they were before, before there was a reason to start building new homes.

What you keep talking about is besides the main issue I am trying to point out.
And that is that construction of more houses (even not factoring in the issue of land) can never totally compensate for the increase in prices caused by an increase in demand.

The demand is for the older already existing cheaper houses. This is something that can't just be directly replaced by the construction of newer houses.

Yes, eventually in the long-term. That can be pretty far out though.
You're still going to have a rise in home prices for a few decades.

Let's say old homes sell for 200k, then a surge in demand pushes the price up to 300k. At that point new homes start being built and sold for 300k. It's going to be a long long time until those new homes start being sold for 200k (assuming no inflation).

I'm was trying to focus on supply and demand affecting prices, not depreciation.​

 

Let me just repeat what I was trying to say before and try to condense the message down in the simplest terms possible:
If prices in a local housing market go up due to a large influx of homebuyers from other areas, constructing more houses is not going to make the home prices go back down to what they were before.

This is true even if there is plenty of land and building space available, even if there was someone giving all this land away for free for homes to be built on.

 

New houses don't get built until the ratio of demand to supply increases to a certain critical level.
Once all those new homes are built and sold, the ratio of demand is still higher than what it originally was. So the new homes do not fully compensate for the increase in price due to higher housing demand.

 

Yes, because in that case, price is constrained by construction cost and depreciation. But in ACTUAL housing markets, there are two quite independent factors going on: the land market, which is determined by the expected future subsidy to landowners and the expected discount rate (tax rates are generally assumed to be constant) and the improvements market, which is determined by construction cost and depreciation rate.

 

Depreciation isn't a simple given.
First there has to be the people with the money to buy those new houses. The eventual additional supply of used houses will be constrained by them, so we're unlikely to see the cost of used homes go down to what it was before.

I wasn't disagreeing with this.
I wasn't even disagreeing with you when you said land was the more important factor.
I was simply saying you shouldn't discount construction costs.

When you add more people, the supply is not going to expand to accomodate all those people, and that's why depreciation is never going to bring the price down to what they were before.

(by "never", I mean within the normal depreciation timespan of a home, and by "add more people", I mean a surge of people; it's theoretically possible in for prices not to go up - in this situation - if it's a slow trickle of people that do not come at a rate faster than new homes are being built by wealthier people)

 

So I was simply explaining that new construction costs are also an additional factor why adding more people increases housing prices - and this remains that way even after these new houses have become "old" and depreciated in value.

I mean if you have 100 houses that are all 20 years old, and you add another 100 families, maybe only 60% of those families can afford new homes, so now you'll have a population of 200 families wanting 160 homes - prices are going to go up - and they'll still remain up (higher than what they were before) even after another 20 years when those new houses are now as old as the original houses were.
You see, cost of construction is one factor why housing won't simply automatically expand to accomodate the demand.

 

It's pretty simple.

Non sequitur.

But if you take land out of the equation, you are left with production of a consumer durable like cars. Do you really think the average prices of cars won't decline as they get older?

 

Were you able to understand what I stated or not?

Cars are not such a good example because most consumers very commonly buy new cars, so there's usually an ample supply of used cars relative to the overall consumer demand.
But yes, there's no reason why the same principle would not theoretically also apply to cars, it would just be to a much lesser degree.

 

All I meant is that new houses are likely not going to become as cheap as current houses when they [the new houses] eventually become as old as the current houses. Does that make sense?

Once you have housing shortages, new housing construction does not entirely compensate for those shortages, and so housing will continue to be more expensive after that, even after the depreciation of those new houses.

New housing does not entirely compensate for shortages because new houses are much more expensive than already existing houses, and so the amount that get constructed is limited. The ratio of demand to supply has been altered. Even after those new houses have been constructed, and even after those new houses have become a little bit old and had time to depreciate. Depreciation doesn't bring the price of those homes back down to what used homes cost before.

That's why construction costs are a factor.

Even if land were not a limiting factor, suddenly increasing the population in a certain area would still cause general housing prices to rise.

And waiting for 10 or 15 years until many of those new houses become used houses isn't going to make the price go back down to what they were originally before either.

The new houses aren't simply more expensive just because they're new, that's why I said "depreciation was not so simple".

 

No, it's not a non sequitur. It's my whole point.

If you can't see that then maybe it's impossible for you to grasp the concept I'm trying to explain.

 

Once more people move into the area, the price of all housing increases, not just the new houses.
Yes, constructing new houses helps relieve some of the pressure and keeps prices below what they would otherwise be without those new houses, but construction of those new houses will not make the price of the old houses go back down to what they were before those additional people moved into the area.

Construction of new houses can relieve some of the pressure, but not all of it.
(unless somebody is building new houses and losing money on it, obviously)

 

It seems to depend where you look. The green line is the US average and it doesn't look so bad:

https://www.economist.com/graphic-detail/2016/08/24/american-house-prices-realty-check

The average shown for today is barely above the slope of 1984 to 1987.

The problem, I think, is that the economy is not nearly as good as "they" would have us think it is. Oh, sure, there are lots of low-pay jobs and the stock market is going up due to buy backs, but the economy for people isn't so great and that means many businesses aren't doing great either.

 

That's certain true, but most of the economic activity takes place in a small percentage of high-price area.

The seeming paradox is true: most of the people do not live in most parts of the country.

 

If you're right, maybe it's a phenomenon much like that of the stock market: when people see prices going way up, they start to panic that they might miss out on the spoils, so they buy in and then the market turns. In the stock market the lows corresponds predominantly with fear, and at market tops the predominant feeling/emotion about it is greed. Although was ready to buy a new house, I successfully resisted that impulse at the top of the housing market in 2009 even though I certainly felt it. And those who yield to the emotion typically lose.

 

There is only one economic fatality that cuts drastically housing prices, and it is a major economic downturn.

Which is not in the cards at present ...

 

This is a very narrow-minded view.

 

Wrong . New housing brings down the cost of existing housing. Existing houses for sale cannot compete with new housing that costs the same and has more amenities lower down payments. Every one wants a new house.
ThAt is why anyone with a brain would purchase a home in a good neighborhood at these extremely low interest rates. If you purchase a new home you will be paying too price and if you need to sell will be competing with the high prices your neighbor paid.

Always try to purchase the lowest price home in a neighborhood because we prices rise, your home will be easy to sell. Then take your profit and sink it into a higher price neighborhood.

 

Skyrocketing housing costs is a geographical phenomenon. California and New York are the highest priced real estate. I would never move to either. Even Chicago is more affordable. That is why we, in Texas have an influx from both States.

I don't want them. Even though they are fleeing progressive States, these people will likely vote Democrat. I don't want them here.

 

Written like a true Replicant blind to the world around them.

Your sentiments are stone-age, Madam ...

 

I wonder if the impact of climate change will impact all sort of property ventures. the effects of more storm damage, more fire damage and higher insurance for less protection of investment capital should drive people away for property and brick and mortar store ownership and toward something it is a lot easier to walk away from. It should disincentivise economic behavior that does not maximize mobility. We may not be able to predict increased tornadoes, fires, and flooding but we can make sure our investiments are as mobile as we will need to be.