GameboyRMH said:What do you think has caused home prices to increase so much, particularly in the late '90s to mid-'00s?
We've been explaining that to you, literally for pages and pages.
I'm sorry that the answer isn't "because greedy developers and evil corporations" or whatever it is you're looking for.
Would it save time and effort if I just said it was?
GameboyRMH said:If computing somehow got so expensive that computers were being effectively uninvented for younger generations and boomers were trading the 486es they bought way back when for far more than when they were new, I'm sure that a major part of my career would be figuring out why and at least thinking about a solution.
Computing power gets exponentially cheaper because electronic technology gets exponentially better over a very short period of time: 1-2 years, if not months.
The technology of framing a house with 2x4s gets exponentially better over a very long period of time: 1-2 centuries. AND it has an upper limit of how much better it's ever going to get. A piece of wood cut out of a tree and nailed to another similar piece of wood until you have a house just doesn't have that much untapped technological potential.
GameboyRMH said:Industry experts, let me try to ask this a different way than trying to pick at different causes that could be responsible or highlighting random potential causes I run across. What do you think has caused home prices to increase so much, particularly in the late '90s to mid-'00s?
I am not an expert, but here is my opinion :)
Home Ownership used to be a goal of most people. They would save for a downpayment, live below thier means, and buy a house within a budget. It took effort and sacrifice. At some point, people decided that was "not fair" and "everyone deserves a house" so they forced the banks to not require 20% down, and to approve a certain amount of applicants or get sued. This put more people in the market, therefore creating demand, and surprise! prices went up. There were also no major penaltys when you defaulted (people lived in houses for years without paying) so why not get as much house as "they" said you can afford?
The same thing happened with Higher Education, as soon as everyone could get a loan "to be fair to everyone" there were more people that could afford going, so more applications, so suprise! prices went up. If loans were harder to get and actually based on something besides 'fairness" prices would be much lower on housing and schools.
frenchyd said:Opti said:frenchyd said:In reply to yupididit :
Clear argument about the needs of the many versus the rights of the individual.
White settlers took land from Native Americans. Often killing them or sometimes infecting them with diseases they weren't prepared to resist. Any way you slice it that's wrong.
On the other hand let's say Native Americans remained on the land until 1940. Would Native Americans be in a place to resist the Nazi's or Japanese from taking their land? I doubt bows and arrows would defeat machine guns and tanks.
Society does have validity and sometimes over individual rights.I have some issue with that last sentence. people say it when "society" agrees with them, and fight it when it doesn't. Individual rights should be pretty much at the top of everyone's list, or it degrades and eventually the power you gave up for society gets yielded against you.
You should be able to do whatever you want with your property, including developing it and adding covenants/hoas/restrictions for potential buyers, or just have an empty lot untouched by civilization for 150 years.
Society/State/Government all seem the same hot button to some. However the reality is we cannot go back to 1776 with America's tiny population and endless empty land.
In science class I watched a movie about crowding. It used mice but past a certain level of crowding all "civilization" broke down.
Abraham Lincoln's Father said he moved anytime he could see the smoke from his neighbors chimney.
That's no longer possible.
So how does society deal with modern crowding? Yet allow basic freedoms to continue?
Yes, we are talking about land rights.
Imagine owning 150 empty acres in downtown Washington DC /New York/ San Francisco? Passed down through generations. Should property taxes remove those rights? Eminent Domaine?
Or just wait until a descendent gets greedy enough to sell?
Is it greedy to decide to sell something for a profit?
In reply to yupididit :
There seems to some undefined (but small) amount of profit you can stay under to avoid being called "greedy".
It's like the definition of obscenity, though: "I know it when I see it."
A profit of a million dollars is obscene, even if that represents a margin of only 5% of revenue.
I should probably let this thread lie for a while. My cynicism is starting to show through.
In reply to GameboyRMH :
Inflation? Plus population growth while available land remained stagnant.
In reply to yupididit :
I think if I was obstructing progress for an entire city for centuries and eventually sold out for a massive amount. ( what would a 150 acres of land in the heart of a major city be worth? ) a hundred Billion? A trillion dollars?
Yes the word Greedy would be probably used.
Although I suspect if it were sold for fair market value and benefited the city somehow. A University or recreation center, etc. much more flattering words would be common.
Crazy low interest rates made borrowed money "cheap". The housing supply was finite, so demand forced prices higher.
Meantime, building codes in recent years got more strict with respect to air infiltration, insulation, etc. making windows, doors and enclosures more expensive. Other building material prices ebbed and flowed.
Little did we realize MOST houses built with plastic "air and water barrier" (house wrap) and OSB sheathing are silently rotting BECAUSE they're wrapped but still leaky due to old habits and practices - and subsequently air conditioned below the dew point.. and people have no idea black mold is poisoning them.
Credit availability has a huge effect on house prices.
There was no such thing as a 30 year mortgage before the '60's. Most did not exceed 7 years.
Credit availability gave buyers the option of buying something much more expensive than they would have prior to that. It enabled them to go deep into the game of keeping up with the Jones's.
Add things like HGTV, and people's wants and desires FAR outpace their needs.
Rinse, repeat.
Duke said:We've been explaining that to you, literally for pages and pages.
I'm sorry that the answer isn't "because greedy developers and evil corporations" or whatever it is you're looking for.
Would it save time and effort if I just said it was?
So if I understand correctly, your answer can be summed up as:
Duke said:And used house prices have spiked due to a terrible supply shortage of new houses.
New house prices have spiked due to increases in direct construction costs, increases in indirect infrastructure costs that are charged to the development, increases in land acquisition costs, increases in market demand for larger houses, increases in regulatory requirements, increases in mandated energy performance, population-driven increases in general demand across the country, and extreme increases in demand for housing in specific areas.
Not to mention decreases in or stable low interest rates.
And that's entirely leaving out pandemic-driven radical increases in lead times for most construction materials.
I'll admit I was hoping for a more concise answer than a wide range of issues that apparently all happened in different countries around the same time and kicked off a seemingly never-ending appreciation trend, but thanks anyway. It's kind of like hearing that your engine started running like crap because someone changed a whole laundry list of settings at once...when changing even one setting to try to fix it would take years.
In reply to yupididit :
I must be the devil.
I sold my first house for 6 times what I paid for it. I'll sell my current house for 2.5 times unless I decide to keep it and become an evil landlord.
My family owns 460 acres we have been hoarding since the 1700s.
My brother, father, and I spent the weekend looking at acreage in the mountains to add to our hoard.
You could take all the property from the rich, give it to the poor, and the rich would own it again it 20 years. The difference between rich and poor is a mindset, not a bank account balance.
Long-running cheap mortgages (for everyone!) were definitely a factor, but certainly can't explain all of it either.
Duke said:Opti said:In reply to Duke :
My 150 year old wood windows I can pop off and repair in a day or two, and with copper seals on the side and the addition of some weatherstripping they meet the most recent (last I looked) energy efficiency specs.I guarantee you they do not, if you live anywhere north of Florida.
Typical single-glazed wood windows have U-factor (thermal resistance value) of anywhere from 0.80 (at best) to 1.10. U-factor is the inverse of R value, so lower is better. So that's the equivalent of R-0.9 to R-1.25 at your window. If you have really good storm windows that are in very good repair, that might go as high as R-1.75 to R-2... but I doubt it.
2018 energy code requires 0.32 maximum for anywhere from Mississippi to Pennsylvania. I didn't even look at the 2021 code, which is probably worse, because that hasn't been adopted everywhre. North of PA it goes down to 0.30. That's equivalent to R-3 to R-3.3 for minimum required performance - many modern windows are better than that, whether all wood, clad wood, or extruded fiberglass composite.
But the other factor is air leakage. Older windows in good shape tend to leak anywhere from 0.5-0.7 CFM of air (at a standard of 25 mph wind pressure). Modern windows can be anywhere from 0.1-0.3 CFM (normalized for size of window). That's just through the window unit itself. Old windows are also far less likely to be installed properly, with all gaps sealed and the perimeter of the window properly taped into a continuous air infiltration barrier (because that is almost certainly completely absent on an older house).
Admittedly, reducing that air leakage means you probably need to provide additional fresh air into the house. But doing so in a controlled way is much more energy efficient rather than just letting the outside air in all over the place.
I never saw the testing of the Ufactor, and couldnt ever find any info on it. I added storm windows to help improve mine. The focus was on air infiltration. The testing was to the 2012 spec. Here is their findings
1 through 4 are restored.
1 through 3 used storm windows weatherstripping
4 is restored with rubber weatherstripping and no storm window.
5 is unrestored with interior covering (like a storm window)
Housing prices were caused by people being willing to pay higher prices for houses. That it. If no one was willing to pay $300k for a house there wouldn't be any $300k houses.
Many people don't look at the price, they look at the payment. They don't care about the price beyond making sure the monthly payment fits their paycheck.
In reply to GameboyRMH :
None of those things is specific to the US at all.
Since you apparently know the answer and I keep guessing wrong, how about YOU enlighten ME?
In reply to Opti :
That's a poorly labeled graph.
It says it's about "window energy efficiency ", but it's not. It's about air infiltration.
Air infiltration is only 1 factor that contributes to window energy efficiency.
You could paint your windows shut and have zero air infiltration. You'd still have hugely inefficient glass, wood frames (which transfer thermal), and uninsulated sash cord pockets.
I think that graph is mostly BS, probably published by a manufacturer of storm windows.
frenchyd said:Opti said:frenchyd said:In reply to yupididit :
Clear argument about the needs of the many versus the rights of the individual.
White settlers took land from Native Americans. Often killing them or sometimes infecting them with diseases they weren't prepared to resist. Any way you slice it that's wrong.
On the other hand let's say Native Americans remained on the land until 1940. Would Native Americans be in a place to resist the Nazi's or Japanese from taking their land? I doubt bows and arrows would defeat machine guns and tanks.
Society does have validity and sometimes over individual rights.I have some issue with that last sentence. people say it when "society" agrees with them, and fight it when it doesn't. Individual rights should be pretty much at the top of everyone's list, or it degrades and eventually the power you gave up for society gets yielded against you.
You should be able to do whatever you want with your property, including developing it and adding covenants/hoas/restrictions for potential buyers, or just have an empty lot untouched by civilization for 150 years.
Society/State/Government all seem the same hot button to some. However the reality is we cannot go back to 1776 with America's tiny population and endless empty land.
In science class I watched a movie about crowding. It used mice but past a certain level of crowding all "civilization" broke down.
Abraham Lincoln's Father said he moved anytime he could see the smoke from his neighbors chimney.
That's no longer possible.
So how does society deal with modern crowding? Yet allow basic freedoms to continue?
Yes, we are talking about land rights.
Imagine owning 150 empty acres in downtown Washington DC /New York/ San Francisco? Passed down through generations. Should property taxes remove those rights? Eminent Domaine?
Or just wait until a descendent gets greedy enough to sell?
Ive seen the mice thing you mentioned and once they got overcrowded all hell broke loose. The reason you cant imagine someone owning acreage in the large metropolitan areas because property right havent been protected and stuff like crazy property taxes and imminent domain has made it impossible to own a decent piece of property there. If overcrowding is so terrible, is it possible that some of the large cities wouldnt be such terrible places if maybe people could still own a chunk of land right in the middle of them.
Someone mentioned land value tax earlier. The basis of it, is that taxes (property) stifle development, maybe if we didnt have property taxes we wouldnt be forcing the poor out of ownership, and we would reduce speculation on undeveloped land
In reply to SV reX :
its not published by a storm window manufacturers. IIRC testing was performed by a third party and it was published by WSPC, Window Preservation Standards Collaborative.
I mentioned in the post I had no info on the U-factor, and that it was specifically talking about air infiltration
Conservation of historic windows has become a big deal, and people are finding ways to make them compete with modern windows. In this study they achieved a U factor of .17 with a storm window and some tricks. Example for the weight cavities they are putting the weight in pcv and putting foam around the pcv.
https://planning.dc.gov/sites/default/files/dc/sites/op/publication/attachments/Effects%2520of%2520Energy%2520on%2520Historic%2520Windows.pdf
Duke said:In reply to GameboyRMH :
None of those things is specific to the US at all.
Since you apparently know the answer and I keep guessing wrong, how about YOU enlighten ME?
I don't know the answer. I'm sure it's more than one thing and it may not even be the same things in different places, the zoning restriction theory seemed like a good one but the fact that it affected a number of different countries in a similar way almost simultaneously makes it more questionable to me. I ran across one theory that it was the beginning of Chinese investment into foreign real estate markets, coming from a single source could account for the synchronization, but it seems highly doubtful that Chinese investment alone could've had such a significant effect. I think it's unlikely that a perfect storm of many different factors all worked together to contribute to a problem that affected so many countries similarly at the same time, more likely there are just a few key factors they have in common driving all of it.
GameboyRMH said:Long-running cheap mortgages (for everyone!) were definitely a factor, but certainly can't explain all of it either.
It can explain more than you'd think, it's just math.
Assume 30% of income goes to house payment.
7% rate, $300k house, you need to make $100k to qualify.
2% rate, $300k house, you need to make $46k to qualify.
That rate change puts a lot of people into the market, so the $300k house has greater demand and the guy making $55k bids $325k and gets the house.
That guy wouldn't be in the game at 5% + because he wouldn't qualify for the loan, but since he is, the $65k guy gets outbid, so he's bidding up the $400k house. Rinse and repeat. $400k for 30 years at 3% is $1686, at 7% it's $2661. There is much more demand for that house at $1600 vs $2600. Rate matters a lot.
In reply to Opti :
So a study published by an organization dedicated to preserving old wood windows (it's right there in the name) finds that old windows can perform as well as modern windows after being treated to a lot of expensive work by a specialist contractor.
Seems legit.
I have no doubt it's true. I also have no doubt that it is well outside the parameters of what is ever likely to happen in the vast majority of cases.
That level of work is going to happen only when the owner is committed to an extremely accurate restoration, or is required to be by the local historic district.
In reply to pheller :
FYI you'll see "rents" here used frequently, which is Georgist lingo for Land Value Tax.
"What does this mean for our education system? That it simply cannot do the heavy lifting on its own. It cannot, alone, lift students out of poverty, at least not on a societal scale, if the rest of the economy is engineered against them. A broader application of George’s ideas is needed, one that undercuts the foundations of inequality. Fortunately, the formula George (and others) has provided offers a roadmap. Capture land rent, which currently enriches a wealthy and overwhelmingly white section of society, and use it for the public good. This can make particular progress in reversing racial inequality, since land value and other kinds of rents make up such a great portion of the racial wealth gap and, as discussed above, are particularly used to gatekeep quality education. Taking these rents and investing them into communities is the surest way to relieve people from want. If we believe, as educational proponents proclaim, that change begins with children, we need to relieve children and parents from want. We can do this by making housing, healthcare, and food easily accessible for every child in the country – paid for by these publicly captured rents." - Matthew Downhour
"Sociologists John Logan and Harvey Molotch coined the term “growth machine” in a 1970s essay, “The City as a Growth Machine,” which famously argued, “Growth likely increases inequality within places through its effects on the distribution of rents.” Sure enough, California has the highest poverty rate (when adjusting for housing costs), the most billionaires per capita, the highest share of homelessness in the U.S., and the largest population of any state.Indeed, Logan and Molotch assume causation: “Increases in urban scale mean larger numbers of bidders for the same critically located land,” they proclaimed, “inflating land prices relative to wages and other wealth sources.”
We have seen that growth of regional economies and populations does not produce inequality on their own. Rather, preconditions of homeownership as a lucrative investment lead growth to distribute unevenly across racial and class lines. With a disproportionately rich and white homeowner class plowing their life savings into personal real estate assets, their wealth grows as houses get more expensive relative to wages."
How Unfair Property Taxes Keep Black Families From Gaining Wealth
HOW LAND VALUE TAX COULD NARROW THE RACIAL WEALTH AND OPPORTUNITY GAP
I'm behind a bit. It looks like the housing cost increase factors have been well addressed, but I think the above is the underlying reason for this discussion.
We do not have a caste system. We don't have Poor People and Wealthy People. By and large, they are the same people at different points in their life. It is not the job of the education system, or any societal construct to "lift people out of poverty." That is up to the individual. It is society's responsibility to ensure opportunity, not results. Opportunity doesn't mean skip steps, or opportunity to get a better result than one has worked for. It's the opportunity to progress through the steps. Whenever you see the poor pitted against the wealthy, you should see it for what it is- the poor current self if being pitted against their potential wealthy future self. Ironically, long term they are fighting against their own potential prosperity for a promised short term gain. This is a losing battle, see your California example above. Those who buy into this are at a distinct disadvantage to those who do for themselves.
I got married in 1995. My wife and I were each making $6 an hour, $11.72 in today's money. Which is well below the current minimum wage in CA. By all definitions, we were poor. But that doesn't mean we weren't happy. We lived in a crappy apartment, shared a car, bargain shopped for everything. It never occurred to us that someone else should be lifting us out of poverty. We were young and happy with what we had. We made some stupid financial decisions over the next few years-debt- I've said it before, nothing is more expensive than being poor. But we learned from those mistakes, and got our E36 M3 together when we wanted to buy a house and start a family. It took effort and sacrifice- extra jobs and saying no to things we wanted but didn't need. At times it seemed like an impossible dream, but we did it. As our careers progressed, we made a lot more money- but we retained a lot of the lessons learned through the steps. Instead of blowing our increased wealth, we put it to work for us. Our standard of living is well below our income. If I could go back and visit my 20 year old self, the last thing I would do would be to give him a shortcut or money. I'd try to convince him to get started 5 years earlier, avoid debt, and invest as much as possible.
Steve_Jones said:GameboyRMH said:Industry experts, let me try to ask this a different way than trying to pick at different causes that could be responsible or highlighting random potential causes I run across. What do you think has caused home prices to increase so much, particularly in the late '90s to mid-'00s?
I am not an expert, but here is my opinion :)
Home Ownership used to be a goal of most people. They would save for a downpayment, live below thier means, and buy a house within a budget. It took effort and sacrifice. At some point, people decided that was "not fair" and "everyone deserves a house" so they forced the banks to not require 20% down, and to approve a certain amount of applicants or get sued. This put more people in the market, therefore creating demand, and surprise! prices went up. There were also no major penaltys when you defaulted (people lived in houses for years without paying) so why not get as much house as "they" said you can afford?
The same thing happened with Higher Education, as soon as everyone could get a loan "to be fair to everyone" there were more people that could afford going, so more applications, so suprise! prices went up. If loans were harder to get and actually based on something besides 'fairness" prices would be much lower on housing and schools.
This is the answer.
GameboyRMH said:Long-running cheap mortgages (for everyone!) were definitely a factor, but certainly can't explain all of it either.
I'm not suggesting all of it, but the effect is not small. It's enormous.
A 7 year mortgage for $50,000 at 4% costs $683 per month. If you stretch the term to 30 years, the same $683 will pay for a $146,000 loan. Changing the term triples the credit available.
Habitat for Humanity has helped over 35 million low income people into homes of their own simply by making credit accessible to people who would not otherwise qualify for mortgages.
When credit is available, prices go up.
Boost_Crazy said:We do not have a caste system. We don't have Poor People and Wealthy People. By and large, they are the same people at different points in their life.
The stats disagree:
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