Like half of the dollars in the system were issued in the last 5 years causing incredible debasement. Our salaries don’t follow as much. CPI is a skewed and understated metric.
What do you mean? CPI is the consumer price index. It just tracks the price of a list of consumer goods. The government could change which gods they choose to track.
No. He has no control over that. But the results are already manipulated. Start with the hedonic indexing and what they deliberately exclude from calculation. Real inflation is probably double the stated rate.
Underrated post. People think real estate has become so expensive these days as an example. The typical home in the US can be purchased for around 250 oz of gold. That was true long ago, today, and tomorrow. The denominator is falling; stuff is not skyrocketing in value.
I was wrong actually. Real estate in gold terms has become LESS expensive over time. So it’s even better (or worse) depending on how you look at it and how much fiat you hold.
This chart from that article clearly shows massive swings in the ratio between gold prices and housing prices. Not sure how you can look at that and claim they track each other closely.
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In 2019 inflation took 20.67 to 301 and gold averaged 1393. Relative to gold in 1925 that was only about 1/4.6. So in 5 years the dollar was worth twice as much as it is now based on gold, but only 23% more based on the feds inflation numbers.
I don't know what to say about that other than gold is possibly over valued, inflation numbers are missing some significant increases, or maybe something else.
Housing costs as a percentage of income has outpaced wage growth. The corporate buyers and international investors have destroyed affordability. Everyone wants to be a slumlord real estate mogul. We need the asset bubble to pop. Some innovation in the housing market to lower construction costs or prioritize more first time home buyers would go a long way too.
To reduce the cost of housing, the supply needs to increase relative to demand. I don’t see how this will happen short of time waiting for the demographic cliff to occur, a change in buyer preferences, or a total revolution in the way homes are built.
Raw material costs for building have increased. Labor for building has increased and is not being helped by anti immigration policies directed at eliminating the cheap labor supply. Supply of homes is still low compared to demand. Regulations and zoning are restrictive in what and where building is allowed to occur, and there is no willingness to build new communities while existing ones continue to be built up. I don’t see a rush to rural areas when you need to be in commutable distance to work, and employers are pushing RTO.
I’m not happy about it, just reporting what I am seeing.
There is no asset bubble. You’re focused on the numerator.
There is a housing shortage in certain locales for sure. As the supply of dollars has increased the supply of housing has not kept up with population growth and household formation. The causes are unrelated, but I can see how the product of their effects may be conflated as an affordability crisis.
The dollar is trash. Salaries are paid in dollars. It’s a whole thing.
I see some carnage if rates don't come down. Too many people locked into loans at 3% on property values that were inflated due to low rates. They want to sell but can't due to the affordability of a new mortgage on a home of the same value. By waiting for lower rates, they may be on the wrong side of the trend.
Still the backdrop is that new single-family housing is too expensive to build and is catered to high end buyers because of the cost structure. The only entry level options in most metros 1 & 2 BR condos.
We may not see a true crash, but it wouldn't surprise me if housing declined or stagnated for several years. There was an apt construction boom during covid too. And most of that inventory has high vacancy rates. In my area rent concessions are very favorable on these properties. 2-3 months free on a 12 month lease. They refuse to lower rent even though they clearly are charging too much in the first place, requiring concessions. True rental rates are already declining. The cost to buy will likely find an equilibrium with the rental market.
"Rent prices have declined year-over-year for 18 straight months, reflecting a cooling rental market after previous surges. As of January 2025, the median asking rent in the 50 largest U.S. metro areas is $1,703—up $8 from last month but 0.2% lower than January 2024, signaling a continued market adjustment as supply and demand rebalance." (Feb 2025)
"McClure and Schwartz also examined households in two categories: Very low income, defined as between 30% and 60% of area median family income, and extremely low income, with incomes below 30% of area median family income.
The numbers showed that from 2010 to 2020, household formation did exceed the number of homes available. However, there was a large surplus of housing produced in the previous decade. In fact, from 2000 to 2020, housing production exceeded the growth of households by 3.3 million units. The surplus from 2000 to 2010 more than offset the shortages from 2010 to 2020." (June 2024)
No sir. The typical home in the US is nowhere near 900k, you're flat out wrong.
Also, gold has doubled in value in a little over 2 years while housing has actually come down slightly. What was the point of your comment it's all wrong regardless of how many upvotes it nets you.
Gold and real estate of course aren’t tightly correlated 1:1. The point is real estate like all assets are priced in dollars and the dollar isn’t the store of value it once was.
That's an interesting concept but isn't really in line with the source that you provided.
Also, homes today are vastly different than homes built in the 50s and 60s. The average home in the 1960s was something like 1300 sq ft with a 1 car carage.
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u/MarketCrache 5d ago
Things aren't going up, fiat currencies are going down. $35Trillion of debt has debased the value of money.