Helicopter Ben said:
Over_ed said:
Most people miss the single biggest reason for price increases over the last 40 years-- two income families.
With 2 incomes, housing which predominately a family decision, became the poster boy for costs rising WAY over the inflation rate.
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First tip, never ever trust the govt's inflation numbers. They've been WAY too low for decades. I bet if you used shadow stats inflation figures, you'd see that home prices track very closely to inflation. And if you compare to the price of gold or silver I will bet you that housing prices have fallen.
In fact, just a quick dive into this, I'm seeing it takes roughly 120 oz of gold to purchase a home at the median price today. In 1985 it looks like it would have taken about 200 oz. And that was during a big run up for gold price.
Families are going to dual income as a necessity. Inflation has caused cost of living to rise faster than wages so two incomes are now needed to support a family. I don't think most families just want to work for work's sake. I think the vast majority of families would much rather have a stay at home but feel they can't afford it.
The bottom line is that the govt is stealing an enormous amount of wealth from us through inflation. They've been doing this for decades and now people are starting to notice because it's happening faster. Nobody in power is doing or saying ANYTHING that will correct course, or even slow it down.
I'm more than a bit skeptical, but go ahead and convince me. BTW, I don't disagree that inflation has been understated.
You compare the price of gold to that of houses. And then imply houses in 1985 were really almost twice as expensive as now. OK, let's continue with your example...
Look at any comparable good or service, going from 1985 to present. Almost all will show that they were even MORE EXPENSIVE in 1985 compared with today. That is, if houses were twice as expensive (1.8 with your example) a bundle of goods, food, energy would likely be greater than 4X as expensive in 1985 as today.
You want to use gold as your standard. Fine. And, yeah, no doubt we should not have gotten off the gold standard, but that ship sailed.
Home buyers (and their lenders) generally look at one thing - percentage of income they put toward a house. And I strongly suggest that your "gold-based" numbers do not reflect that in any way, shape or form. You are confounding inflation and gold appreciation, and are not looking at the change in costs of other things and services consumers could buy instead of a house.
I only had 4 economics classes, and one of that was a 6000 level class in which I was barely able to tread water. (I was Hazelwood, didn't cost me anything , and took it so the class could make.) In any case, I don't claim to be an economist, but feel you are missing the point here.
ETA - the whole more/less expensive is a bit confusing without throwing around some numbers, but I suspect you get the gist of my argument.
