It could be years until we see a normal housing market

This tells me that home seekers should be making offers to landlords rather than wasting their time making cold offers for people's primary residence. I bet a lot of those small time landlords are nervous about cash flow, and you could find one that's ready to get out.

Housing is already affordable in the United States compared to other countries when you compare median house price to median income.

If you want to see where the United States is headed go look at London, Vancouver, Paris, etc.

As urbanization in the United States accelerates for many reasons, including climate change, I see house prices in desirable areas increasing even further.

I don't think the Fed etc have the guts to allow a 80% drop, so that the 2 million dollar house would drop back to $400k, and become reachable for the majority of people

https://www.vox.com/22534714/rail-roads-infrastructure-costs...

It's funny that we talk about manufacturing "dying" while productivity is still very high. Meanwhile, the construction industry is actually foundering and we shrug. "Guess China is buying all the cement." Which cannot explain international disparities at all.

We can build small projects out of wood just fine. But those smaller projects need to be supported by larger projects: airports, hospitals, roads. Our existing concrete (literally) infrastructure is overburdened, which drives voter demand for restrictions on move-ins. Stop moving to Atlanta, stop moving to Austin, stop moving to Sussex County, Delaware.

We shouldn't be overwhelmed every time a city grows. Wonks blame the voters, voters blame the wonks, a bridge in Pittsburgh falls into a river.

The history of many cities shows periods of rapid growth far exceeding Austin over the last decade. San Francisco's population grew by >20% every decade from 1850 to 1930. There is no general rule that says growing cities must be so expensive. It's a phenomenon in the US, right now, not everywhere, all the time.

If there are as many over-levered real-estate investors as the article suggests, a market downturn will yield foreclosures, and PE firms will feast once again.

There is no "normal." Only past, present, and future.

Until people get over the idea that a depreciating, decaying pile of material is anything other than the lowest cost way to store your stuff and stay out of the elements, the market will remain irrational.

Only someone insane, or looking for a bigger fool, would count a house as an investment.

Source: I'm a home owner.

Want to convince me? Pull in a Case-Schiller index comparison and some more technical, market level characteristic analysis.

What would be interesting is figuring out price/interest rate sensitivities for buyers of homes in this market. Does investment leave the market if rates make other asset classes more viable? Probably. At what point?

Edit-or tell me that the Fed can’t possibly raises rates for $goodReasons.

Basically they removed a lot of houses from the market from locals, making them reach prohibitive prices completely off the reality of what locals can afford... where will they go?

What's the value added from the new-comers to those markets? They are not developing new houses, they aren't creating new jobs, and they shop mostly in big supermarkets.

Higher interest rates, which may be on the horizon, may put a damper on housing prices. However, I suspect that they'll have less of an immediate impact in the states, where fifteen and thirty year fixed rate mortgages are the norm. If inflation continues in Europe, it will be interesting to see what happens in countries where people generally borrow for ten to fifteen years at a time, and refinance once the mortgage term is over.

He says the simplest explantion is the best to explain high prices. His simple explanation claims that inventory is at records low and home prices should be 20% higher because of this. But if you compare the inventory to the previous time last year, it’s not a significant difference. If there’s not a significant difference (at least not significant enough to explain a 20% increase in my opinion), then why have they increased?

The “creditworthiness of home buyers chart” shows that the higher creditworthy buyers are paying more for their homes, it doesn’t say they are any more creditworthy than they were in the past. This would make sense because home prices are at a high, as he so astutely pointed out. A more revealing chart would show how many high credit people there are.

The author also ignores the USA's land use policy (other than a tangential nod to 'we aren't building enough' which could have many reasons).

Of course, there are many factors that the author mentions that are also adding stress to the housing market. It'd be interesting to read some research that attributes weight to each of them.

What if the everyday person, as a result of now having access to far more information than they did before (post Internet boom), acts in a different way?

Supply is increasing, but slowly, and there's a limit on how dense people want to have the city.

Demand side looks like the better area to focus. Reducing population would help significantly, combined with taxes/disincentives on second home ownership and vacant properties.

Unfortunately these policies are unpopular with governing parties because:

a) the politicians own property (and often more than one) b) older people vote, and they tend to be doing well out of the situation

I see a lot of right wing VC folk on twitter calling for massive derugulation of the housing market to grow supply. However, I think there's a strong case to be made that housing and land are different from other parts of the market. People want green space, they don't want high rise everywhere. You cannot (for the most part) make new land.

So, I agree that this problem won't be solved for 20+ years. Declining population is probably our best bet to improve the situation. And of course, young people will move to cheaper areas, particularly when they start families.

Capital accumulates in the hands of so few, it's just so fucked up and hurts to even think about. I'd settle in a hut in the forest, but I'm sure someone will try to evict me there too!

Prices are a function of demand and supply. Oddly, the article seems to just drive right past this as the author discusses the problems related to people having nowhere to go, specifically when mentioning that if they sell their home for a tidy profit, they don't actually profit because they now have to go compete for a house. For all the arguments in the article, the following proposition seems like a reasonable evaluation: if Silicon Valley residents woke up tomorrow morning and discovered 5,000,000 new homes on the market, would that be predicted to influence the price? Of course it would, and that impact would be that prices would immediately plummet.

This is true because the housing we are talking about may also be called shelter, and the demand for shelter is highly inelastic. People will do a lot to maintain shelter, including going without many other consumer items, buying used vehicles and using them until they turn to dust, sharing housing, taking second jobs, etc. In effect, all of the things we seen the younger generations doing are all the things we can easily predict one to do in order to have shelter, though most are not aware of or otherwise unable to articulate these kinds of economic considerations.

Supply was only marginally restricted until somewhere around the early 90s, when states, counties, and municipalities began placing wholesale moratoriums on housing construction*. I can remember in the 80s as child driving through San Jose and seeing large orchards that are all now suburban housing. Looking around the valley, there has been no other housing development anywhere near that size, yet the net job growth in absolute numbers is many times higher.

Many of the valley central planners plan construction as if it's still 1980, where each residential unit has something like 3 bedrooms to be occupied by two adults and two children, but reality is more like 3-5 adults. The result is substantially higher traffic and inadequate services, notably in the grocery stores which I observed to never have enough parking spaces, long lines, and popular items frequently out of stock on the shelf. Long commutes to far away communities are another result, essentially the planners deciding that among the most efficient workforce on the planet must be the task of sitting in a car 3 hours every day, which commonly cuts into what would likely be a good night's sleep, making the workers yet less efficient.

The lack of shelter problem cannot be solved through anything other than increased production of housing. It is not a price problem. Prices are just the method we use to inform us on the situation of supply and demand for a product.

Older generations will fight this, tooth and nail, because much of their savings are wrapped inside of a product they are consuming. Younger generations, if they ever figure out what is going on, may become hostile to the other needs of older generations, which, in my opinion, is a far greater risk to the older generations than the loss of equity in their homes. This goes without having a discussion as to the immorality of forcing younger generations into conditions of economically-enforced cohabitation and homelessness purely so that older generations can enjoy the profit that comes with restricted supply on the assets they own.

I suppose this was a long-winded way of stating that the article's title claim is wrong, because there will likely never be a "normal housing market" short of some sort of large scale coordinated effort to substantially loosen or eliminate restrictions on construction.

* Especially in California, housing construction is largely limited in absolute number of "new residential units" (NRUs), which is different than the popular understanding of increased difficulty in approval of design (the latter exists, and has for a long time, but it is not as significant as absolute restriction).

I think it is clear we are moving to a technocracy - we will not own anything, we will receive a UBI, we will be provided for (as a low level) but this will come at the cost of freedom. Technocrats (aka billionaire elites) will take closer control of the world's resources and micro-manage us.

There are several issues before we actually enter that system. Firstly, it is required that we all have a biometrical-security-id to do anything. This part is already underway - we are starting to be convinced of the need to provide id (green pass, citizen scores or whatever) to go shopping, or even leave the house.

Another of the issues that those who would achieve technocracy face, is that as much as the billionaire class owns, there is still independent wealth. In raising house prices, they create a new conflict - the older generation that own their houses know what it means - independence, that they worked for it, etc. Mostly they cannot conceive of owning nothing. The younger generation are the opposite, they cannot conceive of owning anything, or even moving out of their bedroom - they face an interminable childhood. I can see how being provided with a 110 foot flat would be a step up. They are/will be fine with the older generation losing their wealth and having the government re-allocate those resources towards a small flat.

On the ground floor then, we will see a conflict between generations. The planned result is that we are all worse off, living in a smaller footprint, under close control. What little wealth is on the ground floor, will shift up and become owned by corporations. On the higher floors, corporations will own everything - all the property. Corporations are in fact owned by individuals - we do not see them, but these self-styled 'gods' will own everything.

This is not freedom - the direction of travel is more overt bondage for the general population. And mostly, in their ignorance, people will be happy at the outcome.

If we were really tackling inequity, we would be tackling those that own everything - but this is impossible given the secrecy of trusts, media blackouts, etc. Ownership should be entirely transparent - everything should be traceable. Corporations are merely a further cloak - corporations are owned too. Which individuals own Vanguard and Blackrock? But this will not be the solution we seek to resolve the problem.

Instead, we will fight amongst ourselves. We will cheer as new annual taxes (at 1%) are introduced on the value of a 'expensive' (read, inflated) property, or when reverse equity options are offered as the government buys up the housing stock. (Reverse equity will come with a legal agreement to prevent the purchase of another property.)

I hope this doesn't happen, but it seems that we have far to go individually - when we still believe the media, when we still believe that the government is there to help, we really haven't learnt much.