The housing market has been at a sustained, inflated state since right before COVID, and buying a new construction from the ground up was the only way we could control costs and get something livable that wouldn't have required tens of thousands more in renovations at a similar price point. We lucked out in many ways... but we also didn't buy when everyone said we should have years earlier, when we could have been underwater.
The rental market has steadily inflated and outpaced real wages even more than the house buying market has. I've seen it with my own eyes, right in front of me. Most people cannot afford any apartment or home on a single income, with as many stripped down expenses as possible.
There are two primary issues at play here, and unfortunately they work synergistically to our detriment.
1. The economy is a house of cards built on everyone buying things they don’t need, often with debt.
We all saw the economy collapse almost literally overnight when the pandemic hit and people stopped buying anything but true necessities.
This is also true whether we’re talking about plebs buying avocado toast or the government buying fighter jets: as much as we talk about “personal responsibility” the Pentagon has failed half a dozen audits in a row, and the US government pays almost $1,000,000,000,000 in interest alone on it’s debt every year.
2. Productivity and GDP growth has increased steadily over the last four decades while wage growth has remained flat, and inflation has thrown gas on that fire over the last five years in particular.
In many metropolitan areas a 2 bedroom 1100 square foot rental now costs in excess of $3000 a month: that means to stay above the poverty line (ie spending 1/3 or less of our income on housing) a single income family needs to make in excess of $100,000 a year.
A single $100,000 income family when I was a child in the 90’s meant being able to afford a mortgage on a nice home, vacations, a college fund for your children, and retirement savings.
It’s not an excess of pleasure spending that has made life significantly less affordable for the majority of people: basic living necessities become significantly less affordable.
A $8 daily latte habit isn’t why so many people are struggling financially…AND if everyone stops buying non-essentials like $8 latte’s the economy collapses.
Rock, meet hard place.
Yes, but I wasn't talking about the lattes and avocado toast cliches. I am talking about structural issues. People can eat all the avocados they want.
If you look at the housing issue, it's a confluence of factors. It's partly consumer demand; people who are in a position to buy houses want "nice" houses, by which they mean big ones with lots of space around them. The way we sell houses, touring around multiple options, there's a psychological effect where you "fall in love" with the "nice" house and then the humble little ranch feels like a let down, so you run yourself into debt you shouldn't so you can be "happy" with your decision. But there's also a provider issue; contractors prefer to build bigger houses because they get a higher profit margin on them. As a result, there's less modest-sized housing on the market in the first place, which gets scooped up quickly, and the limited supply pushes prices up.
High interest rates since COVID have been an attempt to keep inflation at bay, but in housing, it means that if you got a place at a low rate before that (as we did, in 2017), now it's hard to sell because you'd take a bath getting a mortgage at the new, higher rates on whatever you move
to. So people don't sell, there's less inventory on the market, smaller supply -> higher prices. People can't afford to buy under these conditions so they rent, now there's higher demand on rentals, and off we go.
There was an interesting article a while back on walkable communities. Basically, they're better in just about every way. City planners always advocate for them. But in America, consumer demand is against them. I once asked a class (for different reasons) what they envisioned when they thought of a "nice neighborhood." The recurring answer that surprised me was, "Space between houses." The article I spoke of pointed out how the American insistence on space between houses leads to suburban sprawl. Not only is it bad for the environment; it also demands more public services. You need to do more road maintenance so people can access all those spread-out houses, water and sewer systems need to stretch longer distances to them, power lines too, and so on. This all costs more. It also means people need to drive
everywhere, to get groceries, to get kids to soccer practice, to go to church, doctor's appointments, whatever. Which means they "need" more cars per household and burn more gas (and wear out the roads more, requiring more tax-funded road maintenance...).
I had the good fortune to live in Germany for a year (2004-5). Germany isn't paradise and has its own challenges, but the comparison was revealing. We lived in a suburb of Munich with 14,000 people. We could walk pretty much anywhere in town in 20 minutes and do anything we needed without a car. The kids walked to school. The commuter station for the train into the city was a five-minute walk. We lived the entire year without a car, except for renting a van twice at the beginning and end of the year to pick up a couch from friends and then to return it. I don't know any town of 14,000 in America where we could do that. Everything was built in a compact fashion, green space was public parks around the fringes of town and community gardens rather than everyone having their own yard, yet we never felt like we lacked privacy.
So my point is not that anyone who wanted could do just fine on a minimal income if they turned off Netflix and stopped drinking lattes. This IS a structural problem. But part of the problematic structure is consumer behavior, which comes from unexamined dysfunctional cultural values. We do ourselves a lot of damage.
Oh, don't! I'm a medieval historian, and there actually was no such thing as a "feudal system," and what modern society is suffering from is not a recurrence of anything medieval.
Late stage capitalism sucks. Greed sucks. IME, much of the issues is caused by that - pure, simple greed. I've had a front row seat to a major, very well-known company almost destroy themselves over greed, and I have had another front row seat to an even bigger company literally destroy itself over greed. It's sad.
Edit: Come to think of it, I've had a front row seat to quite a few companies doing significant harm to themselves, their employees, their customers, etc. over greed.
Stock buybacks, offshoring, "rightsizing," excessive bonuses, stock gants, stock manipulation, insider trading, unfair business practices, lack of ethics, corporations buying up houses, AirBNB/Uber and the trend of ignoring laws, short term profitability (keeping the shareholders happy) over long term strategic thinking, focus on profits over all else, corporate "responsibility" guidelines, price gouging, tax loopholes and "creative accounting, outright fraud ... the list is long.
Too often these issues get blamed on "greedy corporations," but we should never forget that those corporations are actually run by people, and it's greedy people making those decisions.
I often get history students writing essays attributing this or that historical figure's actions to "greed." If I get a wave of them, I ask the class a question; who wants to have more money than they have now? Everyone raises their hand. So, we're all "greedy." That's kind of baked into human behavior, but it doesn't explain why one era is different from another, precisely because it is universal.
But another way to think about it is that we label people "greedy" when their pursuit of "more" seems to step outside of accepted boundaries. Stay within the bounds and they're just admirably "hard working," "ambitious," or "driven." That can help us think more analytically about all this. The question then isn't, whether or not they're "greedy" (since we all are), but what are the boundaries? How has society defined them, marked them, how is it enforcing them (if at all)?
An ethics professor I once had was fond of citing a verse from the Bible, commanding landowners not to harvest their fields right out to the very edges. In other words, they weren't supposed to squeeze their resources for the maximum profit; they were supposed to take enough to prosper, but leave a little around the edge for the poor to glean. There are endless stories like in the movie
You've Got Mail, not just cute little schmaltzy bookstores but family-owned bodegas and drugstores and hardware shops (and guitar shops) and things, that got driven out of business not because they weren't profitable, but because they weren't AS profitable as something ELSE, so they got squeezed out by landlords eager to maximize their rent incomes. Or other outside players.
A lot of people have posted about "late-stage capitalism," but I think the problem is not the existence of capitalist institutions and markets, but that we've let them operate in a void, untrammeled by balancing institutions and traditions that would keep them in bounds.
and that guy hauled in all the guitars and amps, set it all up, etc. The rest of the pick up band hauled in their own gear.
, I am an engineer as well. Orphan so no inheritance to bank on.
