Housing price changes from base 100 in 1990

[JoeWras]

Quote:

Originally Posted by brucethebroker Yeah, that is the problem. I think the "localness" of real estate drives the academics crazy. Their computers just don't take into consideration differences (proximity to a school, vs. factory) in neighborhoods (even within a single zip code), condition of a particular home and amenities (pool, remodeled kitchen, etc.). Local Realtors and appraisers with 15-20+ years experience, are the still the pricing experts.

I think it is getting even more intense. Well, at least in my neck of the woods. Someone with clout around here has given our area a new nickname, and suddenly some phone app somewhere says this is a great place to live, just make sure you are in the nickname zone. Prices explode overnight. I'm not complaining... at least until the tax man cometh.

[OldShooter]

Quote:

Originally Posted by haha But that is really not a reason. For example, Seattle once had Boeing and satellite aerospace, Safeco, UW and of course hospitals and government offices Then in the 70s it got Microsoft. Now it has all these plus Amazon, Starbucks, and large offices of other tech companies with additional highly paid workers. So the money available to pay for housing is increasing much faster than general inflation, because the workers are not in that same old system. Nevertheless, prices will not and cannot increase forever, unless there is another disruptive cycle of innovation and another large cohort of workers who are more productive and better paid than those who are already here. This can start another cycle. Ha

I'm puzzled. Your tone sounds like you think you are disagreeing with me but your content is in violent agreement.

Again: Housing prices are driven by personal income. As you point out, local increases in personal income result in locally higher housing prices. Visit Detroit and you will see that the absence of personal income results in lower housing prices, too. The sword cuts both ways. So I stand by my statement that at the macro level, housing prices are limited by the growth in personal incomes. ( At the margins, housing costs can rise as a % of personal incomes, but only in a small way. Housing cannot crowd out the need to buy food and clothing.)

Re inflation: Personal income is actually a pretty good surrogate for the CPI. See graphs here: https://www.advisorperspectives.com/...american-dream But in theory, at least, personal income should grow more in line with inflation-adjusted productivity increases than with the CPI. But that is a political debate that is IMO out of scope for this thread.

Your original post speculated that housing's tie to inflation might have been repealed. My response was that, with the slight adjustment to talk in terms of personal income, it has not and cannot be repealed.

[haha]

Quote:

Originally Posted by OldShooter I'm puzzled. Your tone sounds like you think you are disagreeing with me but your content is in violent agreement. Again: Housing prices are driven by personal income. As you point out, local increases in personal income result in locally higher housing prices. Visit Detroit and you will see that the absence of personal income results in lower housing prices, too. The sword cuts both ways. So I stand by my statement that at the macro level, housing prices are limited by the growth in personal incomes. ( At the margins, housing costs can rise as a % of personal incomes, but only in a small way. Housing cannot crowd out the need to buy food and clothing.) Re inflation: Personal income is actually a pretty good surrogate for the CPI. See graphs here: https://www.advisorperspectives.com/...american-dream But in theory, at least, personal income should grow more in line with inflation-adjusted productivity increases than with the CPI. But that is a political debate that is IMO out of scope for this thread. Your original post speculated that housing's tie to inflation might have been repealed. My response was that, with the slight adjustment to talk in terms of personal income, it has not and cannot be repealed.

Not sure what point you have in mind. But for sure, I am thankful for learning the never before appreciated state of "violent agreement". Of course income in a certain area affects housing prices. That plus new builds are the main factors.


But this is not inflation. Inflation is a macro factor, and agree that CPI is usually similar to personal income. But this has nothing to do with why San Jose housing costs way more than Terre Haute. Main factors are are demographics and changes in local payrolls.

Anyway, I am off this discussion. Adios.

Ha

[daylatedollarshort]

Foreign investors play a big role in housing prices in some U.S. cities. I have wondered if the Bay Area is in a bubble, but then I look at the per square foot of housing in London and most areas here have a long way to go to to catch up to London prices.

[97guns]

I find it hard to fathom that housing prices are driven by personal income, it is far more conceivable that it is driven by jobs and availability of jobs. Work creates demand within the the city and that creates demand on housing. I have always lived in a booming economy in the San Francisco Bay Area. I do not know life in any other economy but I've seen and visited areas of less than thriving economies and housing always follows or lags.

[RobbieB]

Same thing really. Lots of good high paying jobs lead to more personal income that gets spent of more expensive houses.

[97guns]

One city I frequent, Reno, NV., has no real industry but jobs are around, average wage from what I can see is 12-$15/hr but housing is doing pretty good.

[CaptTom]

Without any analysis, just glancing at the graphs, am I seeing another bubble developing?

[97guns]

Glancing at my property values, they are still around 15% shy of their previous highs. On paper the stock market is in more of a bubble than RE

[FlaGator]

Quote:

Originally Posted by CaptTom Without any analysis, just glancing at the graphs, am I seeing another bubble developing?

I would say we're on a path for a cyclical peak. My read is the cycle is ~15 years.

Think it will take looser credit to get to a bubble. Could happen - 15 years is about long enough for the last lessons to be forgotten.....