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Comment by atlasunshrugged | Hacker News Reader

Great! Maybe home prices will become affordable for folks looking to enter the market. Although the U.S. needs to get its act together and enable the development of much more housing and automation in the market to make homes actually affordable to folks. I don't want to get too philosophical but I think a big part of the American dream was being able to own a home for you and your family and that is out of reach for so many people right now, in no small part due to NIMBY regulations but also overregulation of processes that prevent automation and more in the industry (among many other factors).

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> Great! Maybe home prices will become affordable for folks looking to enter the market

Well the problem with that is that housing busts are usually associated with rescission (can't buy a house without a job) and rising interest rates (can't borrow the money anymore).

Yes, indeed--although weirdly the jobs report out today was quite good (372,000 over the expected 250,000) so this might be a somewhat different type of recession if there is one. But yes, interest rates will rise and make long-term mortgages much more expensive for new borrowers.

https://www.cnbc.com/2022/07/08/jobs-report-june-2022-.html

I think we might need to rethink what a recession is.

AFAIK, we have been in a recession since 2008. IMO we never really got out of it.

We will either bust hard and go into an actual depression, or we will forever stave off a true depression by…

Working for the same wage for years and years while costs go up and raises only happen to slightly offset cost of living.

We’ve been doing that for about 8 years now

>"AFAIK, we have been in a recession since 2008. IMO we never really got out of it."

That's complete nonsense. The National Bureau of Economic Research, the body which officially declares recessions in the US, defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."[1]

Aside from the 2020 pandemic dive, there has been positive GDP growth every year since 2008.[2]

[1] https://www.nber.org/news/business-cycle-dating-committee-an...

[2] https://www.macrotrends.net/countries/USA/united-states/gdp-...

That's crazy talk.

It would've been arguably true in 2015 or so. But then we had years of high job growth, high median wage growth, and generally great economic conditions, right up until COVID, and then we actually recovered very quickly from COVID.

Like, is inflation high? You bet. Could we go into recession? We absolutely could. Did we have the last 8 years of costs going up and raises only happen to slightly offset cost of living? Absolutely not.

> high median wage growth

Wages are noticeably down since 2020.

WSJ and others prefer to report nominal wages (unless the article is about business costs), but you don't have to fall for the scam.

https://jabberwocking.com/wages-continue-to-plummet/

Yes the pandemic has caused falling wages. You surely noticed that 2020 is kind of a weird year? And inflation is currently causing wages to fall further.

But 2014-2020 was very different.

Can you explain how "[real] wages ... down since 2020" demonstrates "we have been in a recession since 2008"?

For all job markets? Or just tech?

https://fred.stlouisfed.org/series/MEPAINUSA672N

Here's both real average hourly (red) and median weekly (blue) wages:

https://econbrowser.com/archives/2021/08/yet-more-alternativ...

Helps to show that it's not an effect dominated by the very rich, and thus throwing off the average, and also that it's not that hourly wages have stagnated but people work more hours -- since they're broadly similar, we should feel strongly that it is a real increase in "normal people's" actual wages.

There are more data available if people want to look for it. This is a surprisingly complex subject for something that initially sounds simple, so it helps to get a few different views into it, but the upshot is: since the teens, people have been paid more.

EDIT to add: People are just slow to update on this. If you look at the world in 2014, then it seems a lot more reasonable to be skeptical that normal people will ever get a raise. Then, you'd had basically 15 year of stagnation, before that a little rise, and then more years of stagnation at a lower level.

The overall median for non-supervisory workers in the United States, not just tech. I'm sure that there is some industry that has had hard times in the last eight years, but overall we've seen growth.

Not a recession, but something is definitely wrong with the economy when it is completely dependent upon continued stimulus.

Times like this make me glad to be in the US though. As bad as it gets here, it will be far worse in the developing world and Europe.

> continued stimulus.

What do you mean by "continued stimulus"? There is no natural rate of interest.

The natural rate of interest is the one where supply meets demand. The Fed, with its enormous balance sheet, distorts the supply/demand equation.

Go look up the 'taper tantrum' and see what happened when the fed tried to normalize its policy a few years ago.

"normalize" does not mean anything because there is no base rate of interest. the Fed underpins the whole thing as it provides the reserve balances for our currency.

Why not use another word instead of redefining an existing word with an agreed upon and well understood meaning?

Jobs are the last domino to fall. The strong jobs report was actually bad for some segments of the economy(i.e. the stock market) because it enables the fed to continue tightening. The fed has two mandates: strong employment and stable prices. Right now, prices are not stable. The strong jobs allow them to focus on bringing stability back to prices. That means tightening. Unemployment will likely need to top 5% before the fed backs off. We are just getting started in the tightening cycle.

There are people working on the automation part—e.g. https://www.buildcover.com/

Yeah absolutely! But even people like cover have to work around ridiculous regulations for the type of homes they can create and where they're allowed to put them. If you look at one of the main callouts for benefits, one is "We take care of zoning research, design, permitting, manufacturing, project management, and installation." So 2/6 of these are regulatory related benefits (zoning research, permitting) even for a relatively simple structure that will go in a backyard. Govs need to do much more to enable automation at scale for all parts of the construction process and for all types of dwellings

Yes, but get ready to go in if that's the case. People waste the opportunity to get in at a lower price since they think it will go down even more when it's going back up. Just remember that you'll be unlikely to buy at the bottom. Just buy when you need to buy and hope for the best.

I don't think housing prices in popular cities will crash but they might at least flatline

What does automation have to do with building more affordable housing?

For a typical suburban American home, 80% of the cost is labor and 20% is materials. This rule of thumb even applies in small cases - replacing the floor will likely cost you 5x more to have it done for you vs what the materials cost at Home Depot

Labor inputs make up a portion of a homes cost, so working to automate pieces of the homebuilding process that would lower that cost would lead to decreased prices

But couldn't it just as easily lead to increased profits instead of decreased prices?

Not in a competitive market. Small and medium scale development is usually pretty competitive.

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