If these days a house listed for x gets offers at x+10%, after average wages increase it will receive offers at x+20%. Is there any historical precedent of house prices not rising faster than inflation, absent external factors?
I think a major correction of house prices can happen in two ways:
- economic catastrophe (everyone's unemployed) / war / natural disaster / ... - we wouldn't want to buy a house anyway in that case;
- major increase of interest rates or minimum deposit required - we wouldn't be able to afford the mortgage in that case.
If existing owners are allowed to build how they want, it would actually make their portfolio shoot up. Fewer restrictions on property use makes property values rise, obviously and trivially.
They won't in major cities which are all basically real estate cartels, which is why I am bearish on major cities as anything other than office parks for rich people and young professionals without families.
Most other things like art, actual innovation, and child rearing are going to migrate to medium sized cities, towns, and the countryside for basic economic reasons. It's already slowly happening.
You're basically describing the norm in the US from post-WWII until about 20 years ago. Many large cities that many think of as desirable elite cities today (with real estate prices to match) were losing population into the 1990s.
The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
> The attractiveness of living in downtowns to mostly college educated young people is mostly a fairly recent phenomenon and there's no guarantees it won't reverse.
Especially since it already was a reversal. The white return-flight was driven by suburban and small-town white kids growing up in boring sterile sundown towns (and paying a premium to live in them.) In the city, if you were willing to put up with crime, substandard housing, and living within a mile of a brown face, you would also be exposed to the cultures of those brown faces, and the creativity of people whose rent was low enough that they had time to follow dreams.
Of course, when they (and their employers) moved back, they accidentally recreated their mallworld hellscapes as all the brown/interesting people were forced out and to the margins. Living in their circumscribed neighborhoods is now even more expensive than the suburbs they fled. Now the only benefit is that the city-suburb they live in is somewhat walkable and they may not need a car, but they're now living very close to the poors that their grandparents moved to sundown towns to avoid, there are panhandlers and shit in the streets, and armed kids make expeditions into their neighborhoods to hunt them.
edit: It's only rational to get bored by this and go back home. Especially if you've gotten married, had the dog for two years, and now you've gotten pregnant. Especially with the internet and television taking up so much cultural space now. They work everywhere.
I already see it reversing among everyone but those in high income industries. I'm seeing a ton of artists settling in small towns these days. The cost of living is low, allowing you to live on things like Patreon and Etsy and make your art.
This kind of radical decentralization is something the original boosters of the Internet in the 90s predicted, but then the great urbanism wave of 2000-2020 happened. But... remember that we tend to over-estimate the effect of technology in the short term and under-estimate it in the long term. The true decentralizing effect of the Internet might just not have been felt yet.
I'm not sure I've ever heard a good explanation for why the urbanism wave (among a fairly specific demographic) happened. As far as I can tell, it was mostly led by people and employers increased their urban presence in response to better educated/better off young people wanting to live in cities--not the other way around.
(There are some exceptions I can think of like pharma in Kendall Square Cambridge. But I assume Google, VMware, and Facebook would be just as happy if not happier establishing offices in Metro West--where most of the computer tech has historically been--rather than Cambridge.
Manhattan is somewhat of an outlier but Manhattan has long been an outlier in lots of ways.
Yeah, it's a political struggle. It's also the only solution. NIMBY landowners cannot be allowed to override human well-being and political will and economic growth indefinitely.
