I also shop mostly at ethnic grocery stores (Superking, Ranch 99, H mart, etc) and IMO the problem isn’t inflation but general consolidation across many industries. I’m always shocked when I travel to less populated regions (even in California) and see their grocery availability, usually dominated by a single major chain like Albertsons or a local one like Publix. SoCal has competitive prices for groceries despite the high cost of living because there are so many people (and immigrants) to support many competitors, none of whom have real pricing power. My grocery budget hasn’t gone up significantly in the last five years despite switching to Costco for my meat rather than the cheaper halaal butcher.
Eggs are always more expensive at the ethnic stores here but cheap at TJs because they use it as a competitive loss leader. A lot of the country can’t support such competition so there’s zero incentive for suppliers to drive down costs.
So they were famously cheap for things that poor and blue collar families weren’t looking for anyway. UMC goods on a LMC budget, really.
You mean 10%? 10x is just not believable.
As houses get older, their value should decrease. Even large-scale renovations often should not push the value up quite as much as one would hope. Certainly the value of land can go up, based on housing/zoning policy, coupled with supply and demand in a particular area.
At any rate, most things are temporary. Interest rates are headed downward again, and the Fed expects to make more cuts. Presumably we won't get back down to zero, but that's probably a good thing.
Also let's consider history: interest rates are still objectively not all that high right now. They're on par with or lower than what rates were in much of the 90s, and even some of the 00s. It's only the 10s that saw zero rates. And hell, go back to the 80s and prior, and the current rate situation looks delightfully low.
> High interest rates have also helped crash the real estate market, so even if you just own a home, you've taken a bath since the high interest policy has been implemented.
A note on this: so what? What matters is the cost of comparable housing. If my house has lost 25% of its value, it stands to reason that similar houses in similarly-desirable locations will have lost a similar amount, and still be affordable for me if I wanted to sell my house and move.
But again we run into the problems caused by the 30-year fixed-rate mortgage! Anyone who has bought a house with a mortgage recently enough, at a price high enough, might be in a situation where they can't move because they won't be able to sell their current house at a high enough price in order to pay off their mortgage (and still have enough of a down payment for their next house). This is a problem we've created for ourselves, and it's super annoying.
It also sounds like you're basing your statement on your tax assessment, which implies that your tax assessor has correctly allocated the value increase to the appropriate category. That has not been the case very frequently in my personal experience.
I have to raise an eyebrow when someone says "truth" and/or "should", as if there's a hidden One True Way. I do think that David Ricardo's theory of rent holds.
> As houses get older, their value should decrease.
"Value should decrease" is doing a lot of lifting in oversimplifying, if not positioning itself counter to, reality. eg My area is growing by ~10k a year across 3 adjacent municipalities. Population growth (migration+births) contributes to a growing area in a way that's self-reinforcing (availability). So depreciation is often outpaced on that basis which has nothing to do with specific characteristics of structure.
Houses also have a multidimensional value. Proximity to specific locations (subjectively vary in value), safety, amenities, maintenance costs, etc all contribute. Home from 1950? https://www.zillow.com/homedetails/1826-3rd-St-N-Fargo-ND-58...
What about the multimillion dollar homes on cliffs? https://www.theguardian.com/us-news/2024/feb/14/dana-point-l... - with less than 2 mil, you can rehabilitate these places with some demo and rebuild.
How does this affect the calculations? Well, it doesn't seem to hurt as much as some might imagine. People are resilient and optimistic, long term, and happy to own the roof over their head in the short term to give themselves agency. These value motivate people to buy what's available and prices do not fall as if they exist in a vacuum.
I'm not the OP, but I notice that it's very strange that the other major expensive durable good the typical American household will own [0] is a steeply depreciating asset.
I also notice that "housing as both shelter and investment" is not universal policy. Japan does things totally differently and has historically done well by it.
[0] That is, the automobile.
There is a proclivity to wash over a lot of the difficulties, constraints, and "norms" of earlier generations and making the current economic times seem so much worse. Things like living with multiple roommates (2-4) in your 20's is MUCH rarer today, as is sharing a bedroom with a sibling. Vacationing frugally at a nearby lake, not some international expedition. Packing a box lunch. I agree that by many measures, times are tough, but also, the base expectation level has definitely increased dramatically.