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How the Economy Changed: There's No Bargains Left Anywhere

Kushinator said:
Normally, that's going to happen in a competitive market. The U.S. housing market is kinda weird due to ample area to build new housing, yet it's just not going to occur in areas like San Francisco or Manhattan without coming at an ultra premium price. South Florida is another animal in and of itself. Demand for $1 million + homes has soared since the pandemic, although it should be noted the price of real estate has skyrocketed since the onset of the pandemic, e.g. a home that cost $1 million in Jan 2021 is now worth $1.31 million if we index to Case-Shiller. Similarly, a house that sold for $763k is now worth $1 million.

Affordable and low income housing? Not so much. There is an estimated 7 million home deficit.

IMO, housing demand revolves around the ability to qualify for financing. A person who qualifies for a $900k loan is going to pay prime interest, where at the lower end of the market, we are talking about FHA subsidized loans where the borrower can put down 3%, but will be required to purchase mortgage insurance in the case of default. Prior to the pandemic, historically low mortgage interest rates provided additional flexibility in price, but higher rates have eaten into loan allowances on the basis of monthly income.

There's also a stigma associated with low-cost housing, being that the developers are often depicted as slum lords or rent seekers. It's a tougher market for developers unless they are large enough to absorb such flack.

Housing is beginning to develop characteristics of a Giffen good.
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And what would create a lot more affordable housing? Allowing the building of denser housing in and near cities, especially near or designed public transit. You can reduce the cost of housing and transportation.
 
Carjosse said:
And what would create a lot more affordable housing? Allowing the building of denser housing in and near cities, especially near or designed public transit. You can reduce the cost of housing and transportation.
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No building slums is not consistent with the American dream, just ban non Americans from the market and wait for equalization
 
EMNofSeattle said:
You can’t supply the market fast enough for 2 million new arrivals a year. The admin is purposefully allowing more aliens then can be housed every year
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You're making things up.
 
Slartibartfast said:
My gut tells me (as reliable as that is) that the hustler and profit at any cost mentality is just seeking out previous deals. One example is that you can see prices for things typically go up before black friday so that companies can claim there is a sale.

Its a lot of little stuff like that where individuals or companies are seeking every trick they can find to increase profits, removing the variability in pricing that used to exist.
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The way I'd frame the idea is that Capitalism can become too efficient, and then it becomes harmful.

Slavery makes perfect sense to Capitalism, for example.
 
Carjosse said:
And what would create a lot more affordable housing?
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Large works projects in sparse areas.
Carjosse said:
Allowing the building of denser housing in and near cities, especially near or designed public transit. You can reduce the cost of housing and transportation.
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Additional urban development is going to always fluctuate towards the higher end. People originally created suburbs to escape high prices and the congestion of the city.
 
Kushinator said:
I believe the statement was more tongue in cheek.

The concept of a completely free and competitive market is a theoretical construct. From my experience, the most "free" markets were the dark web markets circa 2015, but even they were subject to competitive issues because there was always the risk the sites would be seized by authorities, or the owners just up and pulling everyone's crypto. Eventually, newer markets would develop a decentralized wallet system to ease the fear of getting robbed.

But they were illegal, and therefore were not completely free.

The logic above inversely relates to communism. Unless an economic system is going to completely abandon property rights, communism is a complete misapplication of the term. Same thing applies to a society that uses currency... even barter.

Unregulated markets eventually become dominated by organized crime. Fully regulated markets eventually develop a black market that is entirely dominated by organized crime.

At the end of the day, the U.S. is a mixed economy with a capitalist lean. It's highly regulated and has a competitive landscape. The no true Scotsman fallacy does not apply to this type of discussion.
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IMO the US economy needs more regulation in some areas, less in others (or at least updated for current times), and more application of anti-trust law.
 
Kushinator said:
Large works projects in sparse areas.

Additional urban development is going to always fluctuate towards the higher end. People originally created suburbs to escape high prices and the congestion of the city.
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People don’t want to live in sparse areas, they want to live where their is jobs, amenities, schools, etc. North American cities have so much un-utilized and underutilized land. As supply increases prices will decrease for everyone. There are several American cities experiencing this right now.

Banning purely single family zoning would go a long way. Also eliminate purely residential zoning and allow mixed use developments.
 
EMNofSeattle said:
The mass replacement of Americans by over 60 million foreign citizens since 1965

If you factor the children born because of immigration the US population is likely over 100,000,000 people more then it would be without Hart Sellers
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Wow! I thought "the problem" was white Democrats maneuvering black women to abort scores of millions of black babies intended to comprise a cheap labor resource.

What's it gonna be?

 
Carjosse said:
People don’t want to live in sparse areas, they want to live where their is jobs, amenities, schools, etc. North American cities have so much un-utilized and underutilized land. As supply increases prices will decrease for everyone. There are several American cities experiencing this right now.
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Of course! But it's not as simple as you make it out to be unless we have large scale eminent domain.

Here is a great piece that describes the challenges in detail as to why it's unbelievably difficult to get things built in American mega cities.
Carjosse said:
Banning purely single family zoning would go a long way. Also eliminate purely residential zoning and allow mixed use developments.
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Agreed.

But it's still not going to solve the affordability issue. I've alluded to this point at the very end of my original response... housing demand in urban areas is beginning to resemble that of a Giffen good.

Basically, given the lack of substitutes, the demand for real estate and housing in urban areas is very much inelastic. So much, that the slope is beginning to turn positive in some cases.
 
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