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Thread: U.S. home prices are down to 1895 levels

  1. #1

    Default U.S. home prices are down to 1895 levels

    Why U.S. House Prices Won't Recover
    Hough: Taking inflation into account, U.S. home prices are down to 1895 levels.
    By JACK HOUGH

    When will U.S. house prices recover? Likely never. But that's no reason not to buy.

    The latest S&P / Case-Shiller numbers, reported last week, show that prices in 20 major markets declined 3.5% over the year through February. They're now back to 2002 levels. If we subtract for inflation, they're back to 1998 levels.

    But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels (see chart).

    That's because the natural rate of price appreciation for houses is zero after inflation. Prices will eventually stop falling. They'll resume rising. But over the long term, they're unlikely to resume rising faster than inflation.

    That's why prospective buyers should stop focusing on the vague hope that house prices will jump from here and focus instead on the functional value houses provide for the money. In most markets, they provide enough of that to make buying a good deal.

    To see why house prices and inflation are linked, consider that inflation is a general rise in the price of consumable goods and services. We measure it as a nation just as you might think: pollsters collect prices on thousands of items and statisticians turn those prices into an index, called the Consumer Price Index.

    The inflation rate over the year through March was 2.6%. Behind that number is a lot of variation; dairy products got 6.3% more expensive, while utility gas service got 9.1% cheaper.


    That's because inflation isn't the only thing that drives individual prices. Short-term supply and demand factors drive them, too. For example, the U.S. has a severe glut of natural gas at the moment. But prices have a way of self-correcting over time. Power companies have already sharply increased their electricity production from natural gas while pulling back on coal.

    Few things escape the gravitational pull of the inflation rate forever. Even healthcare and college tuition are showing signs of slowing price growth. U.S. housing had spectacular booms and busts in the 1920s and mid-2000s, but smoothing out the swings and adjusting for inflation, prices have gone nowhere for more than a century.

    Houses are ordinary consumable goods: wood, stone and metal bound pieced together through labor. There's no reason to believe they should enjoy a special rate of return distinct from those for, say, apples and shoes. My best guess for the rate of price increase of all three is 2.2% a year over the next 10 years--equal to the rate of inflation.

    To get that number, I looked at yields on Treasury Inflation-Protected Securities. Those are a special kind of bond that adjusts in value each year for the rate of inflation. The difference between the yields on 10-year TIPS and those on regular 10-year Treasurys shows what investors expect inflation to look like over the next decade.

    Of course, house buyers can also base projections on factors like house inventories, shadow inventories, the foreclosure rate, the construction rate and so on. But market prices already adjust for factors the public knows about, so buyers who try to form special predictions on prices had better have special knowledge the public isn't privy to.

    The good news is that houses--like apples and shoes--have functional value, and right now buyers are getting plenty of it for what they spend. The easiest way to see this is by dividing yearly rents by purchase prices for similar properties, to come up with a "rent yield". Landlords literally collect rent yields; owner-occupants collect implied ones because they don't have to pay rent.

    In more than half of U.S. housing markets, the rent yield is over 10%. That's a gross yield; buyers should subtract for things like taxes and maintenance. But even so, buyers in most markets will end up with yields of over 5%. That's a pretty good deal at a time when 10-year corporate bonds of decent credit quality pay only 3%. And with the average 30-year mortgage rate sitting below 4%, financing terms are attractive relative to rent yields (for buyers who can get loans).

    Similar math led me to believe five years ago that buying a house had become a bad deal in most of the country (see "Renting Makes More Financial Sense Than Homeownership") and to decide last year that it had once again become a good deal in many markets (see "Time to Buy That House"). Prices declined 33% nationwide between those two columns, or by more than $80,000 for a typical house. I didn't time the top or the bottom of the market to the month, of course, but buyers who base their math on the functional value of houses don't have to worry about next month's price change. They just have to pay a price that allows them to extract good value from their house.

    To see whether houses are a good deal in your market, start by checking a list of price-to-rent ratios like the latest one published by Trulia.com. To turn a price-to-rent ratio into a rent yield, simply divide "1" by the ratio. So the New York City area's price-to-rent ratio of 14.5 is equal to a rent yield of 6.9%. (That's not such a high number, especially after subtracting for taxes and maintenance costs, making New York one of a handful of markets where renters shouldn't be in any hurry to buy.)

    Four last points to keep in mind: First, those price-to-rent ratios are based on average price data. Individual buyers can do better or worse than the averages, depending on how carefully they shop.

    Second, your market is probably not special. It can be tempting to think that, because prices in your area have risen faster than the national average over the past five years, they will continue to do so. That temptation is called recency bias--the belief that things will always be the way they've been lately. They probably won't.

    Third, renters who base their house buying decision on rent yields will come to a radically different conclusion than those who buy because they're optimistic about future price growth. For single-family houses, the way to maximize value is to buy only as much house as you need, rather than locking in as much house as you can afford.

    Fourth, there are some useful buying-versus-renting calculators on the web. Some show buyers exactly how many years it will take for them to be better off owning versus renting. But most allow users to put in independent values for the inflation rate and the rate at which house prices increase. If you set inflation to 2% and house price growth to 6%, just about anything looks like a good deal. The prudent thing is to use the same rate for both. Again, use the difference between the 10-year TIPS yield and the 10-year regular Treasury yield, which works out to 2.2% at the moment.

    http://www.smartmoney.com/spend/real...114/?mg=com-sm
    "A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government." George Washington



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  3. #2

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    Quote Originally Posted by AmericasLastHope View Post
    Why U.S. House Prices Won't Recover
    Hough: Taking inflation into account, U.S. home prices are down to 1895 levels.
    By JACK HOUGH

    When will U.S. house prices recover? Likely never. But that's no reason not to buy.

    The latest S&P / Case-Shiller numbers, reported last week, show that prices in 20 major markets declined 3.5% over the year through February. They're now back to 2002 levels. If we subtract for inflation, they're back to 1998 levels.

    But consider: After subtracting for inflation, prices are also back to 1986 levels. And 1955 levels. And 1895 levels (see chart).

    That's because the natural rate of price appreciation for houses is zero after inflation.
    No. The natural rate of price appreciation for houses is negative after inflation: buildings depreciate and are eventually worthless. It is land that appreciates after inflation, as land rents (and their capitalization, land values) tend to grow a bit faster than GDP. The Case-Shiller home price index does not account for the fact that since 1895, the amount of land under a typical resident-owned house has plummeted while its value per acre has skyrocketed. There were no people living in trailers on rented pads in 1895 that were counted as "homeowners." Now there are millions. There were no condo owners each with a tiny ownership interest in the land under their high-rise apartment buildings in 1895. Now there are many millions. There were, OTC, many millions of family farms in 1895 with dozens to hundreds of acres under the family home.

    The working man who owns a trailer on a rented pad or a condo in a high-rise building foolishly imagines that being a "homeowner" gives him a financial stake in maintaining the exorbitant welfare subsidy giveaway to landowners. It doesn't. It just makes him a dupe of the greedy, privileged, landowning rich and the corporations they own: the great majority of land in the USA, by value, is corporate-owned, and the majority of corporate stock, by value, is owned by the richest 1% of the population.
    Prices will eventually stop falling. They'll resume rising. But over the long term, they're unlikely to resume rising faster than inflation.

    http://www.smartmoney.com/spend/real...114/?mg=com-sm
    The chart indicates prices have reached historically sustainable levels, except for two things: interest rates are still at all-time lows, and there is still a massive overhang of vacant, foreclosed and delinquent properties. The fat lady hasn't sung yet.
    Last edited by Roy L; 05-05-2012 at 06:52 PM.

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    The government has been bulldozing vacant houses at a much faster rate then it leveled all those vacant factories.
    The flippers will continue to buy up the cheapest ones and try to increase the prices much the way JP Morgan buys up oil except people need gas, they don't need a rundown home.
    If the globalists continue to advance their agenda....housing will become as scarce as employment only because there will be much less.
    They will try to create another bubble as they pass Amnesty giving the illegals easier loans to buy from the flippers...lol
    Do you want to know who you are? Don't ask. Act! Action will delineate and define you.
    Thomas Jefferson

  5. #4

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    Quote Originally Posted by Roy L View Post
    The working man who owns a trailer on a rented pad or a condo in a high-rise building foolishly imagines that being a "homeowner" gives him a financial stake in maintaining the exorbitant welfare subsidy giveaway to landowners. It doesn't.
    That is hilarious when you think about it - imagined thoughts projected into someone else's mind and verbalized from a completely alien paradigm - as if we all secretly think the way Roy does.

    I can't wait to ask the next landowner with a trailer I know, "Hey, do you foolishly imagine that you have a financial stake in maintaining a welfare subsidy giveaway to landowners?"

    No doubt this will get me a furrowed brow and a bucolic "Huh, wha-, what the f-?" in response, but to that I can always respond with, "Don't lie or play stupid with your refusal to know indisputable facts of objective reality, trailer trash, just answer the question. Don't you know that your landownership just makes you a dupe of the greedy, privileged, landowning rich and the corporations they own?"

    Now I know what you're thinking, but not so fast. There's always a chance his shotgun won't be nearby, or loaded.

  6. #5

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    Quote Originally Posted by Steven Douglas View Post
    That is hilarious when you think about it - imagined thoughts projected into someone else's mind and verbalized from a completely alien paradigm
    But in fact a perfectly accurate depiction of the situation.
    - as if we all secretly think the way Roy does.
    No, that's just another stupid lie from you, Steven. I neither said nor implied that you are intelligent enough to think the way I do. You have devoted thousands of words to proving the contrary.
    I can't wait to ask the next landowner with a trailer I know, "Hey, do you foolishly imagine that you have a financial stake in maintaining a welfare subsidy giveaway to landowners?"
    People who live in trailers on rented pads almost never own land.
    No doubt this will get me a furrowed brow and a bucolic "Huh, wha-, what the f-?" in response, but to that I can always respond with, "Don't lie or play stupid with your refusal to know indisputable facts of objective reality, trailer trash, just answer the question. Don't you know that your landownership just makes you a dupe of the greedy, privileged, landowning rich and the corporations they own?"

    Now I know what you're thinking, but not so fast. There's always a chance his shotgun won't be nearby, or loaded.
    <yawn> Compared to the "arguments" you have offered, a loaded shotgun would be positively Aristotelian.

  7. #6

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    see this, is why I love RPF...
    I always knew of land vs home, but never actually looked at it.
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  8. #7

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    Quote Originally Posted by LibForestPaul View Post
    I always knew of land vs home, but never actually looked at it.
    The exponential appreciation of land and depreciation of improvements implies that one should never try to "invest" for appreciation by buying a new home: for the first 10-20 years (depending on a number of factors), improvement depreciation will often overshadow land appreciation. This is a major reason so many people who bought new houses were wiped out in the GFC: their new houses were going to lose value even WITHOUT the GFC, and having so little equity put them underwater immediately.

    The best housing investments tend to be older but still usable places, especially if you are handy and can do some fixing up: as capital gains on principal residences are normally tax-free, you can earn untaxed labor income.

  9. #8

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    Not sure why Roy is getting the hate from his post?

    He's right from a logical standpoint. It's the land that holds the value over the long haul, not the house. Houses are a lot like cars...once you drive 'em off the lot... (and a LOT of people get caught up in that stupid fallacy that new=better!)

    It's why, as a REALTOR, I moved out of the city to beyond the suburbs on 5 acres.
    Few men have virtue enough to withstand the highest bidder. ~GEORGE WASHINGTON, letter, Aug. 17, 1779

    Quit yer b*tching and whining and GET INVOLVED!!

  10. #9

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    I disagree. Land values are artificially inflated (in certain areas) mostly by investors. Otherwise they remain historically stable. They have not decreased as much as the home due to other reasons. The amount of dollars (used to buy land) cannot be reasonably compared since our fiat system has greatly weakened our currency. The value of our dollar was much greater 100 years ago so the amount of land that could be bought was much higher per dollar than it is now. This makes the whole argument that land values have skyrocketed false. Only in investor areas have they been artificially increased. Housing on the other hand is a necessity. The only reason that they are so low now is that there are so many vacant houses that have been trashed since people without jobs cannot afford to live in a home. As the number of homes for sale becomes higher, the price naturally goes lower.....lol...this is why the globalists are bulldozing them like they did to our factories.

    Economics 101...without jobs, we can't afford to buy those crappy Chinese goods they are selling, we can't drive our gas guzzling SUV's and we certainly cannot buy new homes...lol

    People who live in trailers do not believe they have a stake in anything...lol...it sounds as if you have never been to a trailer park. They are mostly elderly or very low income and now include many Illegals. Condo owners are an entirely different sort.
    Do you want to know who you are? Don't ask. Act! Action will delineate and define you.
    Thomas Jefferson

  11. #10

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    Quote Originally Posted by LibForestPaul View Post
    see this, is why I love RPF...
    I always knew of land vs home, but never actually looked at it.
    Not to fear-Roy L&co. can troll you for 20+ pages about it.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
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    That which doesn't kill me has made a grave tactical error
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  12. #11

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    Quote Originally Posted by mosquitobite View Post
    Not sure why Roy is getting the hate from his post?

    He's right from a logical standpoint. It's the land that holds the value over the long haul, not the house. Houses are a lot like cars...once you drive 'em off the lot... (and a LOT of people get caught up in that stupid fallacy that new=better!)

    It's why, as a REALTOR, I moved out of the city to beyond the suburbs on 5 acres
    .
    Roy L would consider you a rent-seeking parasite.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  13. #12

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    If I have an interest rate of 3.5%, can write it off the interest and property taxes and the real inflation rate is over 5% how is it a bad idea to buy a newer house that needs less repairs?

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  14. #13

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    Don't forget that if you buy with a low fixed rate loan and then high inflation occurs, your mortgage payments are made with increasingly worthless dollars.

  15. #14

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    Quote Originally Posted by ItsTime View Post
    If I have an interest rate of 3.5%, can write it off the interest and property taxes and the real inflation rate is over 5% how is it a bad idea to buy a newer house that needs less repairs?
    It's not a bad idea as long as you are able to secure your income and your ability to repay the note. Personally, I will never borrow another dime from the banks and become their "enabler" since I am getting ready to be evicted from this home that I have owned for 7 years. I stopped making payments when I lost my job and I'm taking what is left of my savings and buying one of those fixer uppers for cash. I'll be much better off since I won't have a mortgage and be doing the work myself thus increasing it's value exponentially.
    Do you want to know who you are? Don't ask. Act! Action will delineate and define you.
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  16. #15

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    Quote Originally Posted by showpan View Post
    It's not a bad idea as long as you are able to secure your income and your ability to repay the note. Personally, I will never borrow another dime from the banks and become their "enabler" since I am getting ready to be evicted from this home that I have owned for 7 years. I stopped making payments when I lost my job and I'm taking what is left of my savings and buying one of those fixer uppers for cash. I'll be much better off since I won't have a mortgage and be doing the work myself thus increasing it's value exponentially.
    Sorry to hear. I was going to buy one cash but in my area that is pretty hard. Nothing really foreclosed that is not the same price as a non-foreclosed home.

    I took out a loan that is way below the "max" they set for me.

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  17. #16

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    Quote Originally Posted by ItsTime View Post
    Sorry to hear. I was going to buy one cash but in my area that is pretty hard. Nothing really foreclosed that is not the same price as a non-foreclosed home.

    I took out a loan that is way below the "max" they set for me.
    Thanks for the sorry but I really look at it as a positive . There are a lot of homes here (near Vegas) that are really cheap with tremendous value but I am leaving this state and moving to Indiana where I can buy a home for less than 10k and taxes are still really low. The employment opportunities are also much greater and the education system is one of the best in the country compared to here, one of the worst. I have 2 school age children. It does suck to just give up and move, I am not the type to do that. My pride is the only thing that has suffered......lol


    BTW, I love NH, live free or die!!!!
    I grew up in Ct and often just took off for a weekend ride through NH and Vermont. The swapmeets at Keene were awesome, I could build a complete bike for less than 2k....lol
    Last edited by showpan; 05-05-2012 at 07:43 PM. Reason: more info
    Do you want to know who you are? Don't ask. Act! Action will delineate and define you.
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  18. #17

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    Quote Originally Posted by showpan View Post
    I disagree. Land values are artificially inflated (in certain areas) mostly by investors. Otherwise they remain historically stable. They have not decreased as much as the home due to other reasons. The amount of dollars (used to buy land) cannot be reasonably compared since our fiat system has greatly weakened our currency. The value of our dollar was much greater 100 years ago so the amount of land that could be bought was much higher per dollar than it is now.
    The price of land, measured by hours of typical wages needed for purchase, has increased greatly in the last 100 years.

  19. #18

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    Quote Originally Posted by ItsTime View Post
    If I have an interest rate of 3.5%, can write it off the interest and property taxes and the real inflation rate is over 5% how is it a bad idea to buy a newer house that needs less repairs?
    No, especially not with the incredible improvements in energy efficiency, I'd much prefer to have a newer home than an older one.

  20. #19

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    Quote Originally Posted by MattintheCrown View Post
    The price of land, measured by hours of typical wages needed for purchase, has increased greatly in the last 100 years.
    No, the currency has been devalued. To a lesser extent, the FED fueled speculation bubble in recent decades also messed up prices...then there are other factors I don't have time to get into.
    Last edited by heavenlyboy34; 05-05-2012 at 09:35 PM.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
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  21. #20

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    Quote Originally Posted by heavenlyboy34 View Post
    Quote Originally Posted by Me
    The price of land, measured by hours of typical wages needed for purchase, has increased greatly in the last 100 years.
    No, the currency has been devalued.
    Note the bolded portion of my post.

  22. #21

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    Quote Originally Posted by MattintheCrown View Post
    Note the bolded portion of my post.
    I saw that. It's not a good, objective measure.
    Quote Originally Posted by Ron Paul
    The government is incapable of doing what it's supposed to do. A job like the provision of security is something best left to private institutions.
    My music/art page is here"government is the enemy of liberty"-RP
    That which doesn't kill me has made a grave tactical error
    Quote Originally Posted by Anti Federalist View Post
    This whole board is a thoughtcrime in progress.
    Quote Originally Posted by danke View Post
    I carry my man purse for fashion, not function.

  23. #22

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    Quote Originally Posted by heavenlyboy34 View Post
    I saw that.
    Obviously not. You replied with a non sequitur.

    It's not a good, objective measure.
    Of course it is. You pointed out that money is not a good, objective measure: I agree. Labor is the only real constant. Money may be debased, and thus wages may grow, even though real production hasn't increased. But the amount of labor required to purchase land is a sensible measure for the change in land values over time.

  24. #23

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    I always thought they just found a suitable piece of land next to a nice stream somewhere, mixed some mud and clay with crushed rock and took a weekend to build a nice little house with a rap around porch. I learned something today. They bought their houses.

  25. #24

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    Quote Originally Posted by MattintheCrown View Post
    ...measured by hours of typical wages needed for purchase...
    Which is no valid measure at all, given the flawed implied assumption that labor and wages are somehow a standard, or that the value of "typical wages" in a growing population, growing economy, with ever-expanding technology should remain constant enough to produce reasonable equivalents between generations.

    Quote Originally Posted by MattintheCrown View Post
    Labor is the only real constant.
    That's one tenuous-at-best theory. Labor is NEVER constant. It is highly complex, with supply and demand curves of its own.
    Last edited by Steven Douglas; 05-05-2012 at 11:20 PM.

  26. #25

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    Quote Originally Posted by mosquitobite View Post
    Not sure why Roy is getting the hate from his post?
    No one is hated more than the man who tells the truth others do not want to know.
    It's why, as a REALTOR, I moved out of the city to beyond the suburbs on 5 acres.
    Yes, you obviously understand the incentives: get as much land under your house as possible, and wait.

  27. #26

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    Quote Originally Posted by showpan View Post
    I disagree. Land values are artificially inflated (in certain areas) mostly by investors. Otherwise they remain historically stable.
    That's clearly false. Inflation-adjusted land values are orders of magnitude higher than they were 100 or 200 years ago.
    They have not decreased as much as the home due to other reasons.
    Wrong. They have decreased MORE than the home since 2007, just as they INcreased more than the home in the preceding 12 years.
    The amount of dollars (used to buy land) cannot be reasonably compared since our fiat system has greatly weakened our currency.
    Wrong. They can easily be compared using a deflator index, as economists do all the time. Economic analysis would be almost impossible without such comparisons.
    The value of our dollar was much greater 100 years ago so the amount of land that could be bought was much higher per dollar than it is now. This makes the whole argument that land values have skyrocketed false.
    Wrong. Typical commodity prices have increased 10x-50x in dollar terms over the last 100 years. Wages have increased hundreds of times. But land has increased thousands of times.
    Only in investor areas have they been artificially increased.
    Wrong. Land prices are up pretty uniformly almost everywhere.
    Housing on the other hand is a necessity.
    ROTFL!! Wrong again. Our ancestors did entirely without housing, as most animals still do. But no human or animal ever lived without using land.
    The only reason that they are so low now is that there are so many vacant houses that have been trashed since people without jobs cannot afford to live in a home. As the number of homes for sale becomes higher, the price naturally goes lower.....lol...this is why the globalists are bulldozing them like they did to our factories.
    They are bulldozing houses because they are evil.
    Economics 101...without jobs, we can't afford to buy those crappy Chinese goods they are selling, we can't drive our gas guzzling SUV's and we certainly cannot buy new homes...lol
    <sigh> Even people WITH jobs can't afford to buy new homes, lol.
    People who live in trailers do not believe they have a stake in anything...lol
    You are just flat wrong, lol. Look at how they vote.
    ...it sounds as if you have never been to a trailer park.
    Wrong AGAIN. One of my clients owned one, and I had to visit it and become thoroughly acquainted with its inhabitants and operations in order to do my job.
    They are mostly elderly or very low income and now include many Illegals. Condo owners are an entirely different sort.
    They are indeed often elderly and almost always very low income, as are almost all illegals. Condo owners are a little higher on the scale because they do own some interest in land. That doesn't mean they are not still massive losers by the system of tax-funded welfare subsidy giveaways to landowners.

  28. #27

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    Quote Originally Posted by ItsTime View Post
    If I have an interest rate of 3.5%,
    How long is that going to last?
    can write it off the interest and property taxes and the real inflation rate is over 5% how is it a bad idea to buy a newer house that needs less repairs?
    It is still going to depreciate in real terms, and you can do better with an older house, many of which also need few repairs. I've found that older houses that were solid, quality upper-middle class houses when built (copper wiring and pipes, 2x6 framing, etc.) often need few or no repairs even after 50 or more years, while a cheaply built house will have problems almost from the get-go. Just make sure you get a competent inspection so you know the house's issues.

  29. #28

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    Quote Originally Posted by heavenlyboy34 View Post
    No, the currency has been devalued.
    The extent of that devaluation can be measured and compensated. Land has still greatly increased in value compared to average wages (the biggest single component of overall costs), and far more relative to the prices of standard commodities. The prices of many commodities such as crops, steel and other industrial metals, chemicals, etc. are only a few times higher now even in nominal terms. Land is thousands of times higher.

  30. #29

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    Quote Originally Posted by Steven Douglas View Post
    Which is no valid measure at all, given the flawed implied assumption that labor and wages are somehow a standard, or that the value of "typical wages" in a growing population, growing economy, with ever-expanding technology should remain constant enough to produce reasonable equivalents between generations.
    Mmm. And what would you use?

    That's one tenuous-at-best theory. Labor is NEVER constant. It is highly complex, with supply and demand curves of its own.
    Nonsense. There's tons of interactions within an economy, but the reliable measure of value is the amount of work done. We know that computers are cheaper, regardless of money, because the amount of man-hours required to produce similar outputs is far greater. It's not just prices, it's not just standards: it's input of labor vs. output of results.

  31. #30

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    Quote Originally Posted by Steven Douglas View Post
    Which is no valid measure at all, given the flawed implied assumption that labor and wages are somehow a standard, or that the value of "typical wages" in a growing population, growing economy, with ever-expanding technology should remain constant enough to produce reasonable equivalents between generations.
    It's a constant in the sense that it's a better measure of what people are giving up -- their time and effort -- in return for something.
    That's one tenuous-at-best theory. Labor is NEVER constant. It is highly complex, with supply and demand curves of its own.
    But average wages are a pretty good indicator of what something costs, because wages are the biggest single component of most production costs.

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