The scope and scale of companies is just so high. Unlike the world as it used to be, where lots of companies were doing the same jobs, we've concentrated industries into so few titans.

It's hard to imagine how we keep the social contract alive, with conditions as is.

It feels like America has made leap and bounds of progress towards de-governance, towards making legislating and regulating harder and harder. The FTC has finally awoken from a near total slumber, but with the courts aligned as they are it's hard to see that they'll really be allowed leverage to tilt the scales towards more human scaled, competitive markets.

Competitive markets wouldn't just be good for consumers; making competition viable is necessary to allow new opportunities to get started. Right now, the Thomas Piketty cycle of rich organizations and people getting wealthier has no remedy, has so few vectors open for others to try to match this.

(Addressing housing and health care costs, such that the risk of doing other things is less, would help enormously.)

That's just scratching the surface. After all that, there's the decline and disappearance of third places, the hollow mirage of dating apps and the exorbitant cost of social activities (gyms, bowling, camping, even going for a coffee/drink etc.) which are now marketed as "lifestyle activities" with the corresponding markup.

In an era where groceries can get delivered and there are many more remote work/school options, I think people may have more time than they think but it gets fractured across too many activities and just falls through the cracks due to too many pulls on our attention.

I tend to think it's our expectations. An analogy is cars. The cost of a car has gone up considerably and I believe the average car costs more than the average annual salary. But most of this is caused by the increased in what I would consider non-essential tech: heated power seats, navigation, etc. If you wanted to get a manual transmission/windows hatchback, they are remarkably affordable by comparison. But people don't want that as a general rule, even though that was the norm decades ago.

I do think it's primarily a reaction to our current internet and smartphones, the social contracts which broke during COVID, etc. Many many many cities and countries have complained about the exorbitant cost of everything for centuries, but we have not seen loneliness like this before, imo.

Where is all that money going? How can a house cost so much more, but wages are stagnant? Who benefits?

The whole country is SV now, plus or minus a few percentage points.

Even in nowheresville-Michigan, any house near any job costs about 4 to 5 times what it did 15 years ago. We even have cities that have lost total population and the prices still skyrocketed. Even if you scope it to just say, a specific small town -- a house that cost $80k in 2012, that exact same house now costs $360k in 2024, and wages did not rise 400% to compensate.

Tech folks sit in SV with a $200k/yr income and think, "ah, see, Michigan is so affordable". But the people here are holding Masters Degrees and student debt and make $45k/yr, $360k is every bit as out of reach to them, as a $1.5 million house is to you in SV.

Sure, not every place is SV from a literal perspective. But from a relative percent basis, nearly every city in every state in the US is now experiencing their own SV-like housing price explosion (regardless of whether their total population has grown or shrank, regardless of whether they have made it difficult to develop, or have been very open to new development, as most of Michigan has always been).

I wonder how long before we finally admit that said student debt is the very source of money that has pushed home prices so high?

Not backed by anything real and non-dischargeable makes it a dream for the benefactors.

I also think AirBnB has increased housing prices, although I don't know how one would find evidence for that. But with AirBnB, now your house can also produce income, so the price of a home should rise to account for that. Plus it reduces supply, because some people rent out homes on AirBnB without even living in them.

None of that applies to student loans because those aren't collateralized with a real asset the way home loans are.

That's what Canada said in 2008, claiming its much more regulated financial sector avoided the situation. Yet look now...

While you are right that subprime mortgages contributed a temporary exacerbation, they still needed a catalyst to drive the price of homes higher in the first place. Said mortgages only became available because homes were increasing in value already (which was historically unusual), making lenders see it as a safe bet. That is, of course, until the homes started falling in price in late 2006, which brought on panic as the mortgages started coming up for renewal.

Exactly. Especially in economies that are struggling to turn the education into something real. The US fares a little better here compared to many other OCED countries because of its strong tech industry creating things that are real, but it is certainly not immune.

After all, if you spend $100,000 on an education, and then use that education to create a widget that sees buyers send $100,000 back to you there is no impact on housing. You got an education, they got widgets, you can pay your loan back. This is a win-win situation and the economy is better for it. If students turn the debt into something real, you don't have a problem. This is why we offer student loans. They can be leveraged to benefit an economy.

The problem is when someone spends $100,000 on an education and then resorts to taking a regular job – a job just like they would have done anyway. Now you have an extra $100,000 floating around in the economy with no home. An extra $100,000 that needs to find a home, and it turns out a literal home has been a good place for it to end up.

At least with traditional debt, if you failed to create a compelling widget you'd be forced to give up your security, and the $100,000 you borrowed would go back into someone else buying that security. Worst case, if someone declares bankruptcy then someone else ends up giving up something real. But student loans create a 'fake' situation if the student fails to create something real afterwards. There is nothing real that already exists to fall back on if they fail to succeed, and if it is also not dischargeable in bankruptcy...

> higher education doesn't cost an arm and a leg.

Not true. Any unsecured, non-dischargeable debt always costs an arm and a leg. The only way to repay it is to put those arms and legs to use. The same arm and leg that one would have otherwise used to buy their own home, now helping to pay for someone else's. It turns out that when you help someone else pay for their home with your arms and legs, they can pay more than they would be able to without your help. Who'd a thunk it.

I don't think this is as clear of a claim as, say, the manufacturing economy of previous generations. Tech creates a lot of speculative value which sometimes turns into something real, but often does not.

And, indeed, we even saw home prices fall quite considerably when that real value creation was at its peak (iPhone, Facebook, etc.) as the money started wanting to buy what that real value had to offer.

I think it is fair to say since that peak we've seen more speculation than actual value creation, but that's why money is taking more interest in housing again. Still, the US is in a better place than many OCED countries with respect to housing thanks to still seeing some real value creation (and more of it, relatively speaking).

Huh? Why would it make people poorer? If you take a $100,000 loan and then give the $100,000 to me, I'll be $100,000 richer. That is $100,000 more than I can spend on a house.

A college brings more indirection than you simply handing me $100,000, but the essence is the same. Were you under the impression that colleges burn the money?

The student is giving up the future money they would have otherwise used to buy a home in order to give it to me, sure, but we already know that. That was established in the comment about Michigan. Did you forget to the read the entire thread, or something?

If so, it's an interesting hypothesis, but there's a few questions like a) why did it only start to occur in the last decade or so when student loans have been increasing for decades, b) why does this specifically impact housing prices and not other CPI items, and c) has there been any empirical data to actually show this relationship?

I'm saying taking on debt comes with the assumption that you can create new value, over and above the debt value, in the future. Normally, lenders require a promise of value you have already created (security) to fall back on if you fail to create that future value in order to keep things in check. Not so for student loans, though. They are assumable by those who haven't created any value in the past, and who may struggle to create new value in the future. This creates a distortion in the economy.

> why did it only start to occur in the last decade or so

Why do you say that? As far as I can see it started in and around the 1950s and really started accelerating in the 1970s. Before that housing prices were almost perfectly stagnant.

> why does this specifically impact housing prices and not other CPI items

Mostly a function of what else are you going to buy? I wouldn't say housing is the only place that has attracted money (remember Bitcoin?), but may be the most notable.

If everyone saw a share of the money then you might find competition in buying things like bread, but if it is only the top 10% (for the sake of illustration) taking the proceeds, there isn't much pressure for them to pay more for bread. Only for the things the other people in the "top 10%" want to compete for.

I don't think we disagree on this. Students, by the nature of generally have no/limited assets, are able to get loans because they are backed by the government.

>As far as I can see it started in and around the 1950s

It took on a completely different character in recent decades, though. Changes in regulation and private loans have changed the rate of debt.

>Mostly a function of what else are you going to buy?

Forgive me if I'm putting words in your mouth, but it seems like you're saying money flows to education administrators and they disproportionately invest in housing. I'd need to see some data backing that up before I draw a stronger conclusion on it, otherwise it's just a neat and untested hypothesis. And you would expect other administrator-preferred asset classes to follow suit. If your stance is that money goes into the economy as a whole, I would expect a range of products to track with student loan increases, but I'm not sure the data backs that up either.

Because people buying something means they no longer have the money, and are thus, poorer. If you have $20, and you buy lunch for $10, you now are $10 poorer.

> Were you under the impression that colleges burn the money?

(looking around at my alma mater, which has tripled the size of administration and built like four new sports stadiums, while the wages of professors have remained flat for ten years and cost-per-credit-hour has tripled) -- um, yes? Are there colleges that don't just burn the money, or dump it into stocks/bonds/trusts/etc?

I don't follow. If college administrators were driving the price of housing, my point would fall apart immediately. That was in response to someone who thought colleges burn money, not the greater topic at hand.

> you're not going to convince many of us

Okay...? Why would I want to convince anyone of anything? That doesn't make any sense.

I think this is making a similar mistake in sampling. Your baseline is a price that still hadn't recovered from the housing market crash of 2008-2010. I lived in Michigan during that time and I distinctly remember the ability to find reasonable homes for less than my annual salary. To be clear: I am not saying housing prices aren't inflated now, I'm just saying it probably isn't as bad as the author insinuates because they are cherry-picking their comparisons and also not controlling for important factors like home size. Houses built in the last decade are 40%-50% bigger than those of previous generations (although this trend may be reduced in more recent years as a response to increased construction cost).

>But the people here are holding Masters Degrees and student debt

I think this is a real driver of unaffordability, but not necessarily home prices. If all student loans were forgiven, I would expect home prices to increase (because people now have more money to pay for a home without a commensurate increase in supply). My opinion is that there are too many bad incentives in the housing market. Local municipalities prefer high property values because it increases tax revenue. Existing home owners like high housing prices because it makes them feel rich and gives them a revolving line of credit in home equity loans. When people have 70% of their net worth tied up in a single asset class, they are going to go to great lengths to protect it even if it screws other people over.

My point was if you're part of the population that has a good job and still can't afford a home where you live, because of how we've allowed this situation in the housing market to happen, and which is a large population of people, then I don't think your zip code matters very much.

https://www.longtermtrends.net/home-price-median-annual-inco...

If the average car was a manual hatchback 40 years ago and now the average is a huge SUV, comparing the absolute costs neglects the impact that the change in preference has on the cost. It assumes preferences are constant but the data shows they are not.

Even conceding that there is minimum size for a builder, why is that minimum size increasing when manufacturability is also increasing? If home building is getting more efficient, you'd expect that minimum viable size to go down. Maybe labor costs have gone up? If so, I don't know if that is a net negative for society.

E.g., if housing in 1960 was 25% of median household income and averaged 1500 sqft and housing in 2024 was 40% and averaged 3000 sqft, that doesn't immediately appear to me that the problem is housing affordability, but rather housing expectations. In other words, a change in preference leads the change in cost. Similarly if housing went up 10% of total income, but food went down 15% of total income, it doesn't necessarily mean the overall situation is less affordable.

The main aspect that's "new" now seems (at a casual glance) to be the amount of student debt being carried now compared to previous generations. Even with that, if you look at real disposable income per capita, it seems to be going up over the last few decades (ignoring the anomalous COVID years).

i think you can narrow your focus down considerably to just the post-2000 era, average houses have grown by about 30% since 2000 but housing prices have increased 70%

even more tightly you can look at the post-2008 housing crisis (assuming you feel there was a crisis) and note that the housing/income ratio has almost doubled in a decade, with little change in the housing stock and with interest rates increasing significantly

i suppose time, as always, will tell

This gets back to my original point. My claim is that most of the post-2000s (or a specific location) is not normal from historical perspective, but we’re treating it like it is. Just because it may be the totality of a person’s/generation’s experience doesn’t mean it defines a good measure of “normal” or even “ideal”. In many ways, housing prices of that era may have even been a lagging indicator of sub-ideal aspects of the economy.

edit: i suppose I should say that I consider most of the 2000s a housing bubble, 2000-2008: the main growth, 2008-2014 the crash, 2014-covid the echo bubble, covid is covid, and now a hyper-bubble. so I agree entirely that the 2000s have never been "normal"

I would wager that minimum size is increasing because new developments are happening further and further away from population centers, so land is plentiful. For building in populated suburbs and cities, there will likely be municipal limits in place.

https://introductorystats.wordpress.com/2011/09/04/when-bill...

Homebuilders have to pay higher wages, higher material costs, better materials too. I'm sure they're also making it work for them but the banks are pure profit, very little risk. It'd be silly to ignore the possibility they're the ones driving prices as they benefit most from higher loans.

Income and inheritance taxes have created a biased system that is destroying the economy for average Americans.

PSA: Don't forget to pay your quarterly estimated tax payment by Sept 16.

That said, have any of these predictions ever managed to stop the cycle? As far as I know, both Turchin and Ibn Khaldun (who Turchin calls out a lot in his books) felt that such cycles were inevitable. The more common response to these predictions seems to be some variant of "this is cherry-picked data, our society is different!"

Or are such predictions instead intended to speed the advent of the next cycle? Perhaps we should be like King Wen Zhou in pre-imperial China, watching the skies for a sign from heaven to bring about the new age.

Well…yeah. Hasn’t this always been true?

Why? Because 1) they were starting ahead of everyone else. And 2) because long-term investing (done reasonably wisely) gives higher returns than short-term investing. So if you started out with more assets than everyone else, and got higher returns for a generation, of course you're far ahead of everyone else!

But more, most of labor is saving single-digit percentages of the return from labor, if they are investing at all. The people who had capital to invest a generation ago, and left it invested for a generation, kind of by definition kept all of that capital invested for a generation.

So I don't think it's as simple as "return from capital > return from labor". (Or maybe I'm demonstrating that it is exactly that, and I'm just thinking of it using different words.)

But you can work for more than one person. Professional athletes and move stars in particular seem to have that figured out quite well, working for many millions, if not billions, of people when they work in a professional capacity. Labour scales quite nicely when doing work that a lot of people want to have done.

Often better than capital, even! The stadium can only hold so many people. He who owns the capital often has less ability to scale than the worker.

You can't scale the labor of being on an assembly line, or the labor of being a lawyer or a doctor or a farmer or an auto mechanic. (You may be able to replace them with software, but that's not the same thing.)

(And, yes, you can "scale" them in a way by giving them better tools. A farmer today with a combine is easily 100x a farmer 150 years ago with a sickle - probably more like 1000x. There's not another factor of 10 available to scale them up right now, though, no matter how hard they try.)