We really need economic indicators that reflect conditions for most people, not just the top few. Indicators that are often used in the news like rising GDP, house prices and manufacturing output are pretty useless if only a few get benefits from them.
> We really need economic indicators that reflect conditions for most people, not just the top few.
We have economic indicators that do that, such as median income and various distributional measures. They don't tend to get covered as much in the news because most of the people with power and influence don't like people paying attention to the stories they tell.
But the same government agencies that publish the headline figures publish my more useful ones for assessing how most people are experiencing the economy.
The people who make money by moving plants offshore, are also behind the design of the economic indicators, knowing that if you can control what is measured then you are in charge of the conversation, and therefore in charge of the politics. That is what American oligarchs have been doing for the past 5 decades, distorting the entire system from top to bottom so that nobody can figure out what is going on. It's the same behavior of a pickpocket or a con artist.
Can you take a look and help me pick which of those 421,000 pieces of time-series data are the conspiracy ones so that I know not to look at them any more?
The physical house will typically depreciate with regular use. It is the value of the "___location" that can fluctuate wildly in recent years. The policy failure is allowing ___location values to to become so disparate and sometimes hard to predict.
I disagree. Previous generations valued housing for its utility: it's a place to live. The land would be seen as an investment if it was used for farming. Gen-X came of age at a time where housing was viewed as an investment to make money on.
The idea of buying a house with the promise of selling it later to make a profit is very modern. My great-grandparents and grandparents all owned one house and lived it in for the majority/entirety of their lives, so the value of he house was inconsequential to them.
My parents and their siblings have mostly owned multiple houses. They never moved for pragmatic reasons, like relocating for a job. Instead, they took to the modern notion of "starter homes", where a family continues to move up to a better house by "using the profits" from the sale of their previous home.
Ugh, "starter homes". Someone saying that about their most recent purchase usually tells me all I need to know about them. American over-idealism at its finest.
Lots of people buy vehicles that depreciate like mad because they believe the total value of the purchase exceeds the total cost.
I'm not necessarily saying that prices should have significant downward trajectory. Of course desirable locations will command a premium over time and so on. But as a society we probably shouldn't be excited that housing sometimes goes up substantially, even as the stock deteriorates.
> I'd be better off renting from someone else losing money.
No, you wouldn't, because if the rental market wouldn't support recovering the full costs to the owner, no one would bother owning land and renting it. Whatever costs fall on land owners will, inevitably, be fully (and then some, usually) distributed to renters of the land.
Only if the landlords are rational. If the landlord primarily bought the property hoping to sell it to a greater fool later on, then they won't care about the negative cash flow.
This is what's happening in Toronto right now. You can rent a condo for less than the mortgage interest + property tax + condo fees + maintenance.
Land already does depreciate to a degree, because most places levy property taxes on land. People don't realize capital losses when they sell because the paper value of the land likely increased. But it's completely possible to experience a net-loss holding land over a long-term, even if it is sold for a profit.
Maybe if housing/land didn't appreciate over time then investment dollars would stop chasing it, and the overall price of renting would stay flat or decline due to the lack of capital inflow to the underlying asset. Who can say?
The problem with these thought experiments is you have to assume some reason why housing prices have stopped increasing, but also that nothing else about the economy has changed. Otherwise the thing that stopped housing prices increasing has probably also had some other pretty serious effects on the economy.
It's like asking "what if World War 2 never happened"? Well, why didn't it happen? The same forces would have pushed us in the same directions. If it didn't happen, well, that world doesn't look very much like the one we live in, so who can really say what would have happened?
In general, making as tiny a change as possible, housing still would be priced the same as it is now - i.e. based on what the market will bear, rather than some weird idea that landlords would get vindictive and crank rents just because their asset is no longer appreciating. To the extent possible that's what they already do, and they would price themselves out of the market with further increases.
But if landlording is still a revenue-positive activity, then people will do it, and housing prices would continue to increase in anticipation of future gains. People would still want to move to desirable locations like big cities, and that increases housing prices too.
So I don't see how exactly this happens without a major, major shift in the housing market - something like "landlording is a revenue-negative activity" or "there is a significant chance of losing your asset value in a fashion that it will definitely never recover within the span of several generations". i.e. nothing like the world we live in.
It's a complex system. One can identify the immediate consequences of a change, but they certainly work more like some "pressure", where other factors will also change and apply their "pressure" on dissimilar ways.
Reducing the lucrativity of owning a house will put pressure into less housing stock and higher rent prices. If it is a fast change the rent price will almost certainly not keep up with it, because the housing stock is kind of fixed at the short term. And yes, some unrelated action may overwhelm that factor. Some unforeseen consequence may also do that, but this one is much less likely.
You seem to have read a "No, we shouldn't, because..." into my post that wasn't there.
My point was directly that it is, in fact, not a policy failure in the usual sense since it is working both as policy makers and voters intend, and, on a deeper level, that --given that people who, in fact, benefit from housing price appreciation are overrepresented among those who actually vote -- changing this is likely to require either changing who actually votes or getting people to vote against their own financial interests.
I simply didn't state that it is a policy failure.
I said We should also start treating rising housing prices as a policy failure.
It's a prescription for what society should do, not an assessment of whether current policy aligns with voter wishes.
In the comment I replied to initially, rising prices are treated as a measure of economic success. Treating them as a policy failure would contrast with that current attitude...
