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What can be done about the cost of living?

phattonez

phattonez

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Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.

-1x-1.jpg


Given that people are now regularly spending 30-50%+ of their incomes on housing, what are we going to do about it? Clearly this isn't good for quality of life. How do we expect people who are spending this much just to live to pay down debts and save for retirement? What are your ideas on how to solve this problem?

Personally I'd like to see mortgage rates rise to temper demand for mortgage debt. While not perfect, there does seem to be a correlation between the ratio of mortgage debt/GDP and home prices/income.

fredgraph.png


I'd also like to see unearned income at least taxed at the same amount as wages, as this would decrease speculation in housing and drive down rents. Some may counter that this will decrease investment in new housing units. That may be, but this would also decrease the cost of land itself which would counteract that and also incite more people to buy land and build their own homes on it.

What are your thoughts? Criticisms of my ideas and ideas of your own are welcome!
 
Frankly... nothing can be done, because it is intentional.
 
phattonez said:
Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.

-1x-1.jpg


Given that people are now regularly spending 30-50%+ of their incomes on housing, what are we going to do about it? Clearly this isn't good for quality of life. How do we expect people who are spending this much just to live to pay down debts and save for retirement? What are your ideas on how to solve this problem?

Personally I'd like to see mortgage rates rise to temper demand for mortgage debt. While not perfect, there does seem to be a correlation between the ratio of mortgage debt/GDP and home prices/income.

fredgraph.png


I'd also like to see unearned income at least taxed at the same amount as wages, as this would decrease speculation in housing and drive down rents. Some may counter that this will decrease investment in new housing units. That may be, but this would also decrease the cost of land itself which would counteract that and also incite more people to buy land and build their own homes on it.

What are your thoughts? Criticisms of my ideas and ideas of your own are welcome!
Click to expand...

I think:

1) that is one excellent post

2) one needs to look not very far at all for proof that the economy is not working, that America is not working, that the American Dream is dying.
 
capitalism is based on greed; greed is killing capitalism .......... everyone will not be able to participate ........... ironic, isn't it? ........
 
OrphanSlug said:
Frankly... nothing can be done, because it is intentional.
Click to expand...

Using escalating home prices to drive wealth creation....yet another bubble created to juice growth because without growth the both the entire economic and political systems collapse in upon themselves because they have been poorly constructed.
 
cuban smokes said:
capitalism is based on greed; greed is killing capitalism .......... everyone will not be able to participate ........... ironic, isn't it? ........
Click to expand...

The great error of the Enlightenment....promoting greed....thinking that it could be tamed.

Oh Well, this phase of human civilization will soon be over...
 
phattonez said:
Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.

-1x-1.jpg


Given that people are now regularly spending 30-50%+ of their incomes on housing, what are we going to do about it? Clearly this isn't good for quality of life. How do we expect people who are spending this much just to live to pay down debts and save for retirement? What are your ideas on how to solve this problem?

Personally I'd like to see mortgage rates rise to temper demand for mortgage debt. While not perfect, there does seem to be a correlation between the ratio of mortgage debt/GDP and home prices/income.

fredgraph.png


I'd also like to see unearned income at least taxed at the same amount as wages, as this would decrease speculation in housing and drive down rents. Some may counter that this will decrease investment in new housing units. That may be, but this would also decrease the cost of land itself which would counteract that and also incite more people to buy land and build their own homes on it.

What are your thoughts? Criticisms of my ideas and ideas of your own are welcome!
Click to expand...

Suggestion
Move

The US is a large country, with plenty of cities with much lower housing costs. Your list shows Houston, Dallas both being right around the "affordable mark".
 
Do what humans have done for all time. Move. Migrate.

Make the sacrifice for your future and that of your family (future or otherwise)
 
cuban smokes said:
capitalism is based on greed; greed is killing capitalism .......... everyone will not be able to participate ........... ironic, isn't it? ........
Click to expand...

But we've arguably had capitalism in this country for decades, right? So what changed more recently that caused this? I could argue that it's the increasing importance of finance versus manufacturing, that we're no longer an economy that makes things. What do you think?
 
Lord Tammerlain said:
Suggestion
Move

The US is a large country, with plenty of cities with much lower housing costs. Your list shows Houston, Dallas both being right around the "affordable mark".
Click to expand...

Yet even they've become relatively more expensive, and I'd assume that correlates with them becoming major job centers. Why are our cities more expensive now than they were in the past? Don't you think that this is something we should fix?
 
Lursa said:
Do what humans have done for all time. Move. Migrate.

Make the sacrifice for your future and that of your family (future or otherwise)
Click to expand...

Does that solve anything? Or is that just leaving the problem behind?
 
phattonez said:
Does that solve anything? Or is that just leaving the problem behind?
Click to expand...

Also "Just move" is disingenuous, because there are the matters of career and connection to place, to include family.

Moving is a lot of disruption.
 
phattonez said:
Yet even they've become relatively more expensive, and I'd assume that correlates with them becoming major job centers. Why are our cities more expensive now than they were in the past? Don't you think that this is something we should fix?
Click to expand...

The reason there is no affordable housing in those places is that of local housing regulations restricting the supply of apartments and properties both for sale and rent. The other reason is federally backed mortgages which encourage stupid buying decisions. Most of the problems are directly correlated to government policy and intervention.
 
Hawkeye10 said:
Also "Just move" is disingenuous, because there are the matters of career and connection to place, to include family.

Moving is a lot of disruption.
Click to expand...

And? Being poor is also quite disruptive. Americans have always moved to the opportunity when they needed to. Its one of the reasons that made us better than the rest.
 
PirateMk1 said:
And? Being poor is also quite disruptive. Americans have always moved to the opportunity when they needed to. Its one of the reasons that made us better than the rest.
Click to expand...

We seem to have a failure to communicate.
 
PirateMk1 said:
The reason there is no affordable housing in those places is that of local housing regulations restricting the supply of apartments and properties both for sale and rent.
Click to expand...

That contributes, sure, but then you would think you could find affordable housing for metro areas if you're willing to commute from pretty far. Given my anecdotal experience this is not true. Further, I don't think that this would cause a nationwide affordability crisis. We would expect this to be localized in just the areas with the stronger restrictions.

The other reason is federally backed mortgages which encourage stupid buying decisions. Most of the problems are directly correlated to government policy and intervention.
Click to expand...

This does seem to create a large moral hazard in the market.
 
PirateMk1 said:
And? Being poor is also quite disruptive. Americans have always moved to the opportunity when they needed to. Its one of the reasons that made us better than the rest.
Click to expand...

You think that moving frequently is one of our GOOD qualities?
 
For the Thread:

It’s relatively tough out there for American 30-year-olds.

Deutsche Bank’s Torsten Slok sent around a chart showing the overall decline in earning power for 30-year-old Americans over the last few decades. Slok noted that the “percentage of children earning more than their parents has been falling steadily since 1945.”

And although the original data are from December 2016, more recent reports indicate that the general trend continues.
Click to expand...
https://www.yahoo.com/finance/news/...ly-rough-30-year-old-americans-155554771.html
 
One thing I would like to see more of is telecommuting. There are millions of jobs out there being done in traditional work places that could be done via telecommuting. This would reduce traffic and lower housing prices in cities as people wouldn’t need to live so close to them
 
phattonez said:
That contributes, sure, but then you would think you could find affordable housing for metro areas if you're willing to commute from pretty far. Given my anecdotal experience this is not true. Further, I don't think that this would cause a nationwide affordability crisis. We would expect this to be localized in just the areas with the stronger restrictions.



This does seem to create a large moral hazard in the market.
Click to expand...


I live in the Central Valley of California, well I did live there now it's part-time. Anyhow, people commute every day from Lancaster, Inland Valley, Bakersfield etcetera. There's a lot of people commuting 2 plus hours one way for their jobs in LA. That has driven the prices of homes up in those areas quite a bit. The affordability crisis as you put it I dont think is nationwide but more local to some of the major metroplolitan areas.
 
phattonez said:
You think that moving frequently is one of our GOOD qualities?
Click to expand...



When using the term frequently then it's not necessarily a good or great thing. However, if people are willing to pick up and move to take advantage of a good job market or to pursue an opportunity that is a very good thing. It means people are mobile and flexible, and that is very important in achieving financial independence.
 
phattonez said:
Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.

-1x-1.jpg


Given that people are now regularly spending 30-50%+ of their incomes on housing, what are we going to do about it? Clearly this isn't good for quality of life. How do we expect people who are spending this much just to live to pay down debts and save for retirement? What are your ideas on how to solve this problem?

Personally I'd like to see mortgage rates rise to temper demand for mortgage debt. While not perfect, there does seem to be a correlation between the ratio of mortgage debt/GDP and home prices/income.

fredgraph.png


I'd also like to see unearned income at least taxed at the same amount as wages, as this would decrease speculation in housing and drive down rents. Some may counter that this will decrease investment in new housing units. That may be, but this would also decrease the cost of land itself which would counteract that and also incite more people to buy land and build their own homes on it.

What are your thoughts? Criticisms of my ideas and ideas of your own are welcome!
Click to expand...
My thought is hat higher mortgage rates would increase the number of renters and drive up rents. I'm not in favor of taxing something like unearned incomes just to effect social goals. Isn't rental income taxed at the owner's effective rate or am I wrong?
 
PirateMk1 said:
I live in the Central Valley of California, well I did live there now it's part-time. Anyhow, people commute every day from Lancaster, Inland Valley, Bakersfield etcetera. There's a lot of people commuting 2 plus hours one way for their jobs in LA. That has driven the prices of homes up in those areas quite a bit. The affordability crisis as you put it I dont think is nationwide but more local to some of the major metroplolitan areas.
Click to expand...

It might more accurately be called most, especially our biggest cities.
 
PirateMk1 said:
When using the term frequently then it's not necessarily a good or great thing. However, if people are willing to pick up and move to take advantage of a good job market or to pursue an opportunity that is a very good thing. It means people are mobile and flexible, and that is very important in achieving financial independence.
Click to expand...

But is that really what we want? It seems better to me for people to be able to put down roots and keep a home for generations. In this country, we can't even seem to keep a home for more than a few years.
 
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