Other reasons why housing prices rise

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Submitted by Escoguy on September 5, 2016 - 10:27pm

Much of our discussion is based on comparing todays market with that of 10 years ago. Interest rates are a factor as well as a growing population and lack of new construction.

I think there are other reasons why housing prices can go up and be more sustainable than in the past and it has to do with general consumption patterns:

1. products like cars/computers last longer and have more features (replacing a car that lasts 10-15 years is a real discretionary purchase)
2. longer lifespans (older persons buy fewer things) but still need housing
3. some cultures embrace multi generational housing arrangements
4. glut of consumer products at ever cheaper prices
5. systems to reuse consumable items: Goodwill stores
6. renewable energy/solar/electric vehicles eliminates energy bills
7. wide range of tax credits/government benefits/food stamps
8. discounts for food at many fast food places
9. cheaper transportation/Uber/Lyft

In effect, some of these trends mean that housing has the potential to absorb excess funds which in the past would have been spent on other items which are either no longer needed or have a longer lifespan. Or which can be bought cheaply.

Or conversely, there are opportunity to save everywhere else by economizing except for housing where policy limits urban redevelopment and new supply so the money flows to the item which has the tightest supply constraint.

Submitted by FlyerInHi on September 8, 2016 - 10:57am.

njtosd wrote:
Or University towns generally - speaking of the MM house in another thread at 850,000 - this house in AA looks like a steal, especially when you figure in the quality of the schools and the classmates that inhabit them: http://www.zillow.com/homes/for_sale/Ann...

Your "oh, I have a cousin" comment reminds me of a line from Holidays in Hell by PJ O'Rourke. Cab occupant in Lebanon says "why are they leveling an anti-tank gun at us?" to which the cab driver responds "Oh yes, I have a cousin in Detroit!". Same level of responsiveness. So I will say it again - have you actually spent any time in any of the places that you so quickly dismiss?

I looked at the link. I have only been to Ann Arbor once. I hear it's nice. But unless you work at the university or have a professional job there are not many opportunities to earn a living and buy that house. In Mira Mesa, an immigrant small business owner and his wife could afford the home thanks to the more diverse economy.

My cousin loves Bloomington, His wife who stays at home thinks it's the best place but they are boring family people with toddler. He works at the university, bikes to work. They live in the best neighborhood. I visit them sometimes and it's nice to walk the neighborhood, go to the small downtown and enjoy family life. Good Midwestern values, nothing pretentious. They have a relax lifestyle and travel abroad several times per year. There even is a Red Mango store (Korean) because of the Asian students

Of course, there's something for everyone. But trend wise, big glamour cities is where growth is and where the bulk of GDP is generated. People are attracted by that.

Submitted by FlyerInHi on September 8, 2016 - 11:04am.

njtosd wrote:

Chicago isn't that desirable? Let's see, the best architecture in the country, the best orchestra in the country, one of the top five art museums in the country, some of the best restaurants in the country (according to Food and Wine, Chicago, Los Angeles and NY each have only one restaurant in the top 10 http://time.com/4360535/best-restaurants...), Second City (the source of pretty much everyone Saturday Night Live ever made money from), the University of Chicago (fourth in the world for Nobel prizes and 10 spots above CalTech), CBOT, Mercantile Exchange and actual MANUFACTURING rather than all of the funny money that exists on the coasts. Who'd want to live there?

Show me one, just one, study that backs up what you say. Your pronouncements are never very data driven - mostly Brian driven. And we know what you think - how about some facts?

Donald Trump keeps on mentioning the murder rate in Chicago. Sounds scary!

Submitted by flyer on September 8, 2016 - 3:56pm.

FlyerInHi wrote:
flyer wrote:
FlyerInHi wrote:
People are putting their retirement into their houses.
When they need to access the money, they will need to sell. Not a bad deal if buyers continue to come.
That's also why there're not too many San Diego natives except for families who lived within their means. Over the years, I have seen many families move away. Kids grow up and move first.

Don't know any financial pro who would suggest that, unless you plan to leave CA, and no one we know (including us) is depending on the equity in our home(s) to fund our retirement.

True, if kids relocate, some may wish to join them elsewhere, but, other than that, imo, it's not a good plan if you have to give up your dream home or sell to survive. If so, that may indicate you spent your life living beyond your means.

You know, in Vegas, there are countless california "refugees". They have nicer homes in Vegas but they would rather live in lesser homes in Cali if they could. The demographic changes speak for themselves as far as people selling and moving away.

Am well aware of the demographic changes, but my point is that, it's unfortunate if people are having to sell and move out of CA to survive financially, for whatever reason, and not by choice.

Submitted by FlyerInHi on February 16, 2017 - 12:40pm.

njtosd wrote:
FlyerInHi wrote:
njtosd wrote:
So I will say it again - have you actually spent any time in any of the places that you so quickly dismiss?

I know Bloomington, Indianapolis and Columbus, OH pretty well. Columbus, IN has some nice architecture.

In other words, "no".

The reason you have to add so many qualifications to the ridiculous things you say is that the sweeping generalizations that you would like to believe don't exist.

Chicago isn't that desirable? Let's see, the best architecture in the country, the best orchestra in the country, one of the top five art museums in the country, some of the best restaurants in the country (according to Food and Wine, Chicago, Los Angeles and NY each have only one restaurant in the top 10 http://time.com/4360535/best-restaurants...), Second City (the source of pretty much everyone Saturday Night Live ever made money from), the University of Chicago (fourth in the world for Nobel prizes and 10 spots above CalTech), CBOT, Mercantile Exchange and actual MANUFACTURING rather than all of the funny money that exists on the coasts. Who'd want to live there?

Show me one, just one, study that backs up what you say. Your pronouncements are never very data driven - mostly Brian driven. And we know what you think - how about some facts?

Donald Trump said Chicago is worse than the Middle East. www.chicagotribune.com/news/local/breaki...

Honestly, I like Chicago for the vey reasons you mentioned. And lots of big corporations and job opportunities. But it's too cold and lacks the international outlook of the big coastal cities. Toronto is more international.

Americans who don't know Chicago think it's really bad. Just like they think the Middle East is bad. Tel Aviv is kinda cool. I love the bauhaus architecture and the happening vibes.

Submitted by spdrun on February 16, 2017 - 12:41pm.

Chicago is a big city -- the crime is concentrated in certain areas.

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