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Home prices keep reaching new heights in some areas due to: 1) Migration. Immigration from outside the country, but also internal immigration within the countr

Home prices keep reaching new heights in some areas due to: 1) Migration. Immigration from outside the country, but also internal immigration within the country from less economically vibrant parts to more economically vibrant regions. 2) Falling interest rates keeping the monthly mortgage payment the same or lower despite higher principals 3) Expectations that the price trend for homes will continue to look like the past. This expectation can lead to people buying more housing than they would normally consume. 4) Shrinking household sizes. You have gone from an average household size of 3.33 in the 1960s to an average household size of 2.53 today. That may not seem like much but you would need ~25% more housing today to accommodate the same population. 5) Larger house sizes. From a median of about 1000 sq ft in 1950 to 2300 sq ft today. The above can combine to keep pushing up house prices in some areas (as we see in the US) even as the population growth of a country stagnates.

wishysgb 6y ago
In my opinion the thing that is leading most to inflation in addition to your points above, is that there are way too many land lords anyone who makes a little money goes and buys a house, increasing demand.
bobthepanda 6y ago
Also add; limited housing development. Most new housing development after the war was gotten by turning farmlands and nature into single family houses. A lot of places have reached the limits of how far one can expand and run into some combination of geographical barriers, legal barriers (e.g. protected park or farmlands), or the barrier posed by time (most people have an upper limit of how long they are willing to commute.) The next logical step in density, subdivision of existing lots and/or intensifying into homes that accommodate two, three, four families in a place where a single family house stood, is pretty much illegal on most residential parcels in the US. Pre-zoning, neighborhoods were free to densify as they desired, so even in older single family neighborhoods there are sprinklings of slightly more intense development. But in 2021 zoning reform is hotly contested because people feel like they should have control over what their neighbors do with their land, and the overall result is that there isn’t too much developable land left.
- frongpik 6y ago
  Ban building new office space in overcrowded areas. Big corps will be forced to build their offices elsewhere, in remote areas with plenty of land, workers will follow and so do small businesses.
  - bobthepanda 6y ago
    1. Who would pass and enforce such a ban? Local governments are self interested and want more jobs, because it makes politicians look good and jobs require minimal additional services while providing lots of tax money. (See: Bay Area) State has same issues. Feds don't have the rights to do so, and good luck passing that kind of legislation anyways. 2. With the decline of the inner city during the midcentury we already saw what this looked like. It mostly resulted in jobs moving to the suburbs of established big cities, not decentralization of jobs into totally different regions.
  - imtringued 6y ago
    Considering how many people insist on their neighborhood staying the same, why haven't they thought long and hard about what it means to let more and more corporations settle in their city without building enough housing to match the new jobs?
    - supertrope 6y ago
      They don't care. Ideally their community can reap the jobs, retail services, and tax base that businesses represent while pushing off housing demand and public services demand to somewhere else. California has an extreme version of this through Proposition 13 which eliminates increasing property tax revenue base as an incentive to approve housing construction. Thus housing is made a "cost center." The end result is essential workers have to commute an hour or more one way to work in the communities they can't afford to reside in.
  - supertrope 6y ago
    What is the definition of overcrowded? Banning office space caps the size of the economy! A very bad result for a nebulous gain. That's like hoping for a recession or praising Gary, Indiana and Youngstown, Ohio for low housing prices. They choose to set up shop in big cities and in CBDs because there's more opportunity well worth the higher rent. High rent makes buildings more productive because no one is going to waste prime real estate on low productivity or land intensive enterprises. Some cities are pushing to ease car dependency by mandating businesses support remote working, not further invest in parking, and encourage walking, biking, and mass transit use. Those are ways of improving the land efficiency of businesses.
jjav 6y ago
> Larger house sizes. From a median of about 1000 sq ft in 1950 to 2300 sq ft today. Maybe it's a California thing, but not so sure about that. House I grew up in was over 3000sqft and can't think of any friends that had houses smaller than (estimating here) about 2500sqft (in the 70s to 80s). Myself and friends were all lower middle class families. Land and housing was just so cheap then that it was normal. And yet today, not a single house in this (much more recently built) neighborhood is over 2000sqft. Most of the models are 1300-1500sqft. And of course these houses cost ~40x what my parents paid for the house.

wishysgb 6y ago

In my opinion the thing that is leading most to inflation in addition to your points above, is that there are way too many land lords anyone who makes a little money goes and buys a house, increasing demand.

bobthepanda 6y ago

Also add; limited housing development. Most new housing development after the war was gotten by turning farmlands and nature into single family houses. A lot of places have reached the limits of how far one can expand and run into some combination of geographical barriers, legal barriers (e.g. protected park or farmlands), or the barrier posed by time (most people have an upper limit of how long they are willing to commute.) The next logical step in density, subdivision of existing lots and/or intensifying into homes that accommodate two, three, four families in a place where a single family house stood, is pretty much illegal on most residential parcels in the US. Pre-zoning, neighborhoods were free to densify as they desired, so even in older single family neighborhoods there are sprinklings of slightly more intense development. But in 2021 zoning reform is hotly contested because people feel like they should have control over what their neighbors do with their land, and the overall result is that there isn’t too much developable land left.

frongpik 6y ago
Ban building new office space in overcrowded areas. Big corps will be forced to build their offices elsewhere, in remote areas with plenty of land, workers will follow and so do small businesses.
- bobthepanda 6y ago
  1. Who would pass and enforce such a ban? Local governments are self interested and want more jobs, because it makes politicians look good and jobs require minimal additional services while providing lots of tax money. (See: Bay Area) State has same issues. Feds don't have the rights to do so, and good luck passing that kind of legislation anyways. 2. With the decline of the inner city during the midcentury we already saw what this looked like. It mostly resulted in jobs moving to the suburbs of established big cities, not decentralization of jobs into totally different regions.
- imtringued 6y ago
  Considering how many people insist on their neighborhood staying the same, why haven't they thought long and hard about what it means to let more and more corporations settle in their city without building enough housing to match the new jobs?
  - supertrope 6y ago
    They don't care. Ideally their community can reap the jobs, retail services, and tax base that businesses represent while pushing off housing demand and public services demand to somewhere else. California has an extreme version of this through Proposition 13 which eliminates increasing property tax revenue base as an incentive to approve housing construction. Thus housing is made a "cost center." The end result is essential workers have to commute an hour or more one way to work in the communities they can't afford to reside in.
- supertrope 6y ago
  What is the definition of overcrowded? Banning office space caps the size of the economy! A very bad result for a nebulous gain. That's like hoping for a recession or praising Gary, Indiana and Youngstown, Ohio for low housing prices. They choose to set up shop in big cities and in CBDs because there's more opportunity well worth the higher rent. High rent makes buildings more productive because no one is going to waste prime real estate on low productivity or land intensive enterprises. Some cities are pushing to ease car dependency by mandating businesses support remote working, not further invest in parking, and encourage walking, biking, and mass transit use. Those are ways of improving the land efficiency of businesses.

jjav 6y ago

> Larger house sizes. From a median of about 1000 sq ft in 1950 to 2300 sq ft today. Maybe it's a California thing, but not so sure about that. House I grew up in was over 3000sqft and can't think of any friends that had houses smaller than (estimating here) about 2500sqft (in the 70s to 80s). Myself and friends were all lower middle class families. Land and housing was just so cheap then that it was normal. And yet today, not a single house in this (much more recently built) neighborhood is over 2000sqft. Most of the models are 1300-1500sqft. And of course these houses cost ~40x what my parents paid for the house.