The mean housing price in 1971 was $25,200. The mean housing price today is $392,000
You can say that that’s inflation, but let’s look at the CPI:
A gallon of milk in 1971 was $1.19, and it’s $4 now.
How come home prices have gone up 16x, while milk has increased in price by less than 4x?
Home values increase from 300k on average in 2020 to 392k on average in 2022. Tell me, do you really get 25% more utility from your home now? Is your home 25% more useful now than it used to be?
Every year home prices go up by at least 10%, and this has been the case for a long time. Is this sustainable? What’s the justification for this price increase?
If real estate continues to outpace inflation, pretty soon the average cost of a home will far exceed the average lifetime earnings of the average person. This is ridiculous, and obviously unsustainable economically.
If the utility of the product doesn’t increase, then it must be a demand/supply issue, and the only reason demand is going up is because banks are giving out mortgages at very low rates because of the fed.
There are two ways the market crashes. 1. Some smart billionaires build their own cities and sell the new housing and become ultra billionaires by destroying the current real-estate market. 2. The fed ends the party
If the fed increases rates, in a few months to a few years people will no longer be able to afford these egregiously overpriced houses that they already can’t really even afford.
Eventually the party will stop.
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