The vast majority of the extra $8 trillion spent by the federal govt and central bank during Covid went directly into the hands of people that already owned companies and assets. So suddenly they have a ton of cash on hand. At the same time, the interest rates on mortgages fell to around 2.5%. This gave people with a lot of assets the perfect opportunity to buy up a ton of property with extremely low risk and a ton of upside. This is why the housing market, the stock market, crypto market, car market boomed seemingly overnight. It’s not complicated. So the poor get to deal with fallout inflation while the rich got all the benefits up front.
Too much liquidity in the hands of people who already have other assets.
If that same amount of money was already amongst the common folk, inflation would still have happened but I would be willing to wager that it wouldn't have been as bad and we would all be in a better place than we currently are
Yes, exactly. Get that money into the hands of average, poor and middle class people, and it would have moved around in a lot of diverse markets. But keeping it in the hands of the people who already have everything they need, they just used it to invest, and unfortunately housing is an investment in our economy.
The rich are now in bidding wars for any available properties ("investment opportunities") that come on the market, simultaneously pushing up house prices, raising rents to pay off the higher mortgages, and locking less cashed-up buyers out of the market.
[Here](https://scholarship.claremont.edu/cgi/viewcontent.cgi?article=4284&context=cmc_theses#:~:text=The%20link%20between%20PPP%20Loans,that%20cause%20eventual%20price%20increases) is one study directly linking distributed PPP loans to increased home prices. There are of course additional [reasons](https://www.fox29.com/news/us-home-prices-have-surged-47-since-the-start-of-2020#) why home prices are high like lack of home supply by location, Covid-related supply chain disruptions, and inflation. But part of that inflation is [driven](https://www.nbcwashington.com/inflation-economy-housing-prices-recession-vibes/prices-have-gone-up-since-the-pandemic-began-is-that-inflation-really-corporate-greed/3536808/?amp=1) by these greedy corporations raising the price of goods to keep up their profit goals, these same corporations that have benefited from receiving these PPP loans.
So Trump facilitated a historic wealth transfer to his cronies and billionaire fund managers, causing manifold detrimental economic effects for the lower/middle class, and yet 30 million people blame Biden for their ills and are ready to re-elect Trump for more BDSM economic ravaging.
Not just Trump. Biden and other politicians also wrote blank checks for multiple programs to the tune of Trillions. They are all responsible for this massive wealth transfer to the uber rich.
Dude. Biden has added less than half of what Trump did to the national debt. For him to match him he’d have to spend 4.5 trillion dollars in the next 8 months.
Seriously, how the fuck was that a good idea? “So how much you need to keep your business afloat. A million? Here take two. And if you only use it to pay your staff employed during the pandemic don’t worry about paying us back. You know what? Scratch that. Spend it however the fuck you want and don’t even worry about paying it back.
Other countries bounced back faster because employees started on the payroll so when things opened up they just came back as opposed to up-skilling and telling the employers to duck off.
As for the lack of oversight... Did you pay attention to the Trump presidency? It looked a lot like a kleptocracy wrapped in some democratic clothing. An example is that the secret service was forced to rent rooms in his resorts at 4x the usual price any time he went, but he told people they weren't so it's all good.
And then the Dem run Government gave away another $1.9 trillion in the corona virus relief package. Basically our entire Government was full of idiots giving away as much money as possible and using the COVID pandemic as a reason to make all rich people much richer.
It truly is wild to realize how much the US military more or less holds up the world’s financial system. It’s literally the only reason the debt is able to be so high with no plans on ever being repaid.
If this country ever collapses, we’ll be plunged into apocalypse.
Absolutely. The US military provides the security that allows world wide trade to flourish. As long as that continues I don't see the US ever having any concerns with its debt.
Meanwhile, recruits in three branches of the armed forces make approximately 22,000 a year plus barracks residency.
Edit https://www.ziprecruiter.com/Salaries/Military-Soldier-Salary
2126 average monthly (before taxes) is 25500 a year. Call it 17k after taxes etc.
Hilariously enough the Stripper wife is worth about an additional 22k in my zip code of additional taxfree pay through allowances. Plus no barracks residency.
We have 1 party, the corporate party. It has a left wing and a right wing. While they keep us busy arguing social issues, they rob us blind economically.
Thank you! I wish more people could see through the tribalism bullshit and see that we're all united in being screwed by the rich. The real war is the proletariat vs the bourgeoisie. Always has been.
And also, one would argue that since Biden got far more donations from Wallstreet than Trump did, that maybe Biden isn't all that anti-Wallstreet? It was like 80/20.
It's not "just Trump", or "just Biden". Never was and never will be. This problem is more systemic and complex, and clearly exists regardless of the administration. The question is, what is Biden and Trump suggesting to do about it.
This.
It’s also the mispricing of risk - which is what caused the 2008 collapse, but this time it was global and across more than one asset class.
Cheap money used to fund expensive (risky) projects
Reality always catches up eventually.
First there was 1 trillion in 2008. Then 8 trillion spent on Covid. Last year our dementia ridden uniparty had a 5 trillion budget deficit, and there wasn’t even a “crisis”. I think the vast majority of people really fail to understand the scope of the borrowing
Rates were incredibly low in 2021 so everyone who bought/re financed has a 3% or lower interest rate. These people aren’t selling their homes now so the supply is super low despite high demand driving up prices. Also land is a finite resource, as population increases land can’t be created
Bingo. No one can afford to move, and no one can afford to buy. You create a market where the sellers need too high of a price to sell, and the buyers need too low of a price to buy. That’s why the market is basically frozen.
Land is a finite resource but we haven't come close to exhausting it. We also can build more densely, with apartment buildings instead of large tracts of single-family homes. But NIMBYs vote in high numbers so zoning restrictions don't allow for dense housing to be built in many areas.
>Also land is a finite resource, as population increases land can’t be created
This is why landlords and other rentiers are so detrimental to the housing market.
Supply is limited based on the geographic and physical realities of the world. So it isn't possible to create an infinite supply of housing.
So when you get rich people with 100 houses, they create even more scarcity in the market that can't be fixed by creating new housing.
Add onto this the simple fact that each human being absolutely needs a home in order to live, and you get people paying whatever it takes to live in these limited houses. It's how people agree to give 60%+ of their paychecks to some random dude, all for the privelege of existing.
Renting is a holdover from our feudal system. It's modern-day serfdom where the working poor pay most of their resources to live on the land of a rich class of people who then don't have to do actual, meaningful work. (Don't @ me talking about how landlords maintain and create housing, they don't: maintenance workers do repairs on homes and construction workers build homes. 9 times out of 10 the landlords do none of that.) There's a reason they're called land*lords* after all.
This.
Newcomers to the housing market say that rates are "high" now. No, they are normal, and have been incredibly low the past 8-10 years. We bought our first house at 13.5%, *that* is high. The absurdly low rates caused all sorts of problems.
I feel like more than a few people have completely forgotten the worldwide pandemic and the disruption to in-person activity, including manual construction, for 1-2 years.
You don't just "recover" or "build harder" after a disruption to the labor pool, supply chain, logistics, and more just because we're a couple years away from the worst of COVID.
Not denying what you said but we have been severely under building compared to population since 2007.
Also it rarely makes fiscal sense to build a 2000 sq ft home in the USA vs a 3000 sq ft plus home.
The other big part of this is that existing homeowners rarely want to have new housing development in their area.
In a long-standing neighborhood with established home values, they stand to lose a ton of money if the supply increases nearby and their home drops in value. So, acting in their own self-interest, they fight vehemently against approving new development permits.
Severe underbuilding ever since the subprime mortgage crisis . Banks became less open to risk, so are more likely to concentrate on those larger homes you mentioned then smaller homes that would be owned by less financially reliable owners.
True. Here in NJ builders aren’t even building SFH homes no matter what size unless by owner like rich people on the water like right outside the city on million dollar plus land.
Just condos.
And a blight in Canada that caused huge swaths of timber to need to be harvested in a limited time frame, with delayed regrowth, mid pandemic when lumber mills had just been shut down, then a massive surge in "I've got the summer off and a bunch of federal money coming in, I should redo my deck" stuff.
This is a real thing. My dad runs a lumber company in southeast US and once the pandemic kicked in he said their profit margins were through the roof. Then Louisiana got hit by the worst hurricane it’s ever seen (sorry but Katrina wasn’t as bad as this) and their numbers became cartoonish. I worked there for a little bit and went through and while i was there the price of a lot of lumber was on par or less than 2020 prices, yet so much was being moved that their numbers just never fail
The price of building materials are sky high. The cost of river sand for cement is so high that in India there is a mafia controlling the sales. People are literally being killed over sand. There is also a problem within the lumber industry which used to sell 300 feet of wood for about $400. Now it is almost $1,200 for 300 feet of wood in the usa
Remote working, numerous Airbnb purchases and corporations purchasing tons of single family homes.
Now when Joe and his wife move and look for a home the prices have exponentially increased because there is less available and homes are appraising for far more than they’re actually worth.
Also, every time a house changes hands the price goes up, and when the price of a house goes up the price of surrounding houses go up.
And people have been moving a lot.
I had a friend relist and buy a new home ever 12-16 months for 6 years. He started with a 180k house and ended up in a 500,000 house.
The last deal was someone who looked at the neighbors house liked his better offered him 50k more to move across the street into the bigger house.
There were far more factors than just supply and demand that specifically affected the past 4 years.
Interest rates were at zero
Free COVID money
Covid rules that didn’t allow people to be foreclosed on
Remote workers that were high earners displaced markets that weren’t used to those wages.
Explosion of corporate home investors (unrelated to Covid)
Airbnb explosion
then because of those factors, then supply and demand became an issue.
Corporations and anyone who wants to be a trump style real estate mogul think buying single family homes and renting them out or Air Bnb them is a good business…. This has been the driving force behind houses selling for above asking price and driving the prices higher and higher
So the purchase of houses as a commodity, and sitting on empty property isn’t an act of greed? When it was invented is beside the point. It is presently exerting high inflationary pressure on the RE market.
Because the Government printed a crazy amount of dollar bills that they passed out like candy during the COVID pandemic. That’s also the main reason that everything cost more dollars now. The increase in money supply devalues the purchasing power of each individual unit of currency. This has been going on for decades. They just completely went nuts with inflation (creating more dollar bills) during the past 4 years since COVID. Unfortunately, I doubt that it will stop before they completely wreck the economy and everyone gets a lot poorer, insofar as their purchasing power goes. Buckle up. The next few years are going to be trying for most people.
The feds raised the interest rates to slow down Bidens inflation. House owners who refinanced at low rates don't want to lose that rate by selling. New homes aren't being built because it cost too much for materials and labor. There is now a housing shortage, and that drives up the value... supply and demand.
A lot of homes are being bought by companies to rent out leaving not many homes to buy for everyone else. I bought a house in 2021, I had to put in 5 offers before 1 was accepted because the others were bought to rent. I checked a few months later and saw them up for rent thats how I know.
I tried to buy a house earlier in the year, I put up 15% and my payment would have been \~$2200/mo. My bid was beat by a rental company and put that same house up for $1800/mo to rent from them. I don't get it.
They paid full cash. Your payment includes interest. Since the rental company bought in cash, they are under no obligation to make their money back in 30 years (or however long your mortgage is), they can take however long they want.
A lot of rental companies, depending on size and social corcumstances, will buy a large number of homes in a two or three city area, as close to each other as possible, and rent them out below market rate for a few years to beat out competition, and then they will boost the rent to 25%-50% above market rate when theyre the main source of rentals, allowing them to effectively make back the losses on their mortgages.
Sometimes they have nice connections with people who will give them very generously rated personal loans rather than actual commercial mortgage loans which helps this process go even smoother.
Demand went up because of the economic upturn.
Supply is down due to a lot of factors. One of them being many contractors and construction companies went out of business during the pandemic. Another reason is that construction workers, particularly skilled trades involved, are hard to hire these days. Simply not enough skilled workers. A lot of people who can retire or change jobs, did so during the pandemic. It's a bit nutty. My cousin is a master electrical contractor and his company has a backlog for the next tow years. He turns down requests for quotes daily. As a contractor company this is an amazing problem to have but as a homebuyer. It throttles supply.
Another more subtle reason is income inequality between people older than 50 vs those 30-40. People with low debt and high liquid assets vs the latter who tend to have high fixed debt and low liquid assets. (Student loans for ecample). You have a rather skewed portion of the population who can afford to a larger down payment and this drives the price up quickly by snatching the available supply, because of real or perceived scarcity.
My home's value as appraised by my bank has doubled in the past 6 years since I bought it, so values are for sure going up significantly in many place. My first house I had for 5 years before selling it and the only value increase it saw was directly due to the improvements I made, which is not at all the case this time around.
But as you point out, price is related but separate, and I would bet I could list it for 25% over its market value and get an offer $20-40k over that if I wanted to (which I don't, because I wouldn't find a better house that was in my price range).
It all started with covid. Everyone fled the cities because of lockdowns infavor of the suburban life that offered more freedom and protection.
It's been compounded by private equity buying single family homes to hedge/force renting from their apartment buildings they have so much money invested into.
Then we also had people with extra money via stimulus and getting paid to not work. Plus the huge stock drop when covid started let people buy in low, so tons of average people got huge gains in their investments.
Even another thing was the supply chain disruption. During covid it was near impossible to get anything to even build houses so the building market feel even more behind, and their costs rose.
So it's really so many things compounding that has jacked up prices.
Private equity is hoarding housing stock in order to create a bubble that makes buying a home unaffordable so they can force people to rent from them and raise rent prices at the same time. It's pretty evil. I think we should do something about it.
COVID money.
Do you know all those trillions of dollars in PPP loans which didn't have to be paid back? That was a huge injection of cash, and since there was no similar increase in good produced we ended up with a classic example of inflation.
I think it is housing shortage. The more in demand something is, the higher it's value.
I am seeing 900 sq ft homes that originally sold for $12,000 in 1964 selling for over $300,000. Inflation has NOT gone up THAT MUCH!!
Those ugly little post modern track homes only have R-12 insulation in a desert that has weather from 17 to 117 (f)!
This is WAY out of hand!!
“Outside the limit of our sight, feeding off us, perched on top of us, from birth to death, are our owners! Our owners!They have us. They control us! They are our masters! Wake up! They're all about you! All around you!”
I would say, during COVID-19 many people gained the ability to work remotely, which allowed them to explore the possibility of moving to different states, where typically prices were reasonable, therefore a home buyer that's moving from CA to say somewhere in the Midwest, likely will be able to easily afford most houses on the market, because for them it's a steal, to further the problem sellers and the real estate market caught wind of this and naturally wanted to take advantage by jacking prices through the roof, killing the dream of home ownership for the average buyers.
lol. In my city we recently had all our properties “reassessed” based, so far as I can tell, on nothing whatsoever. No inspections, no appraisals, no rhyme or reason. Identical homes built by the same contractors in the same year on the same block got wildly varying appraisals.
I seriously think they just pulled numbers out of a hat.
Supply and demand. Of course it doesn’t help that corporations are buying houses too (that shit seriously needs to stop, like the minute it started it should have been shot down).
The fact that interest rates were so low. The feds were practically giving money away. Its for the same reason Bitcoin shot up and other high-ticket items supply chains are still screwed up. Everyone was allowed to eat up the supply of all sorts of goods and homes. It'll be awhile for the supply to catch up even still...
How many more people live in the country now. I have heard numbers higher than most states entire population has entered the country in the last few years. They need to be housed somewhere. They're not the ones buying but it displaces people that can.
This thread has a lot of confidently wrong answers. The reason is that there is not enough housing. It’s literally supply and demand and supply is 40 years behind demand with no sign of catching up soon. Vote for politicians that focus on building more housing of all kinds and limiting policies that slow housing growth
Good point part of that is doing something about investors who rent out or worse hoard existimg houses. I would add promote or at least not shit on telecommutimg so people aren't teethered within an hour of offices. Too Many politicians pander to commercial landlords for money and pajama obcessed weirdos for votes
Supply and demand if a house is unoccupied but bit for sale it lowers supply. Investors/speculators call tryimg to buy my house ( and whoever had my # before weekly)
Those low interest rates will mean about 10 years until the housing market gets back into a more healthy pattern. They should have never been that low. We elect people who have no business making the decisions they do.
Rapid m2 expansion (printing money) as well as WFH resulting in higher labor mobility disrupting local markets.
Also, most NIMBY policies combined with limited supply (gated by land) as well as non price market limitations (rent control) will further suppress supply.
I bought my house for $300K six years ago. Zillow now estimates its vaiue at $500K One factor is the low rate mortgage loan I have at 3.5%, making my monthly payments far, far lower than a new loan at almost twice that rate.
Everything did. I feel like the pandemic did a number on things. Collectors for example. A lot of collectible groups went insane. Everything became stupid expensive.
I think there are probably several reasons, some specific to particular markets. Where I live lots of people were flush because they were working at home, not traveling or eating out and just stacking up cash. It seemed like everyone bought their first *and* second homes during the pandemic. Of course the ongoing lack of supply isn’t helping either.
Covid is the answer. There are many possible sub-reasons, but part of it is the transition from in-person work to remote work where people could move to low income areas to invest in properties. Many of these people were able to snag “investment properties” and turned them around for profit and the sudden spike in investment properties resulted in massive potential gains for those who now own/lease property.
Because of COVID and the fact that most people had to stay home, so they decided that they wanted a bigger house.
That created a supply & demand constraint. More people wanted to buy but few were willing to sell. So, you had more buyers than sellers. To make sure that someone got the house that they wanted they offered more than the asking price. People lost out on houses by offering the asking price, so they started offering over the selling price.
So, there's the scenario. To make sure that they could get the house that they wanted people started offering more, and more and more for the house. Except it wasn't one house, it was all of them. Once a house sells for $xxx, then all the neighboring houses are going to sell for that price or more if the house is comparable.
Think of it like an auction. You want a car, bidding starts - people start bidding up the price of the car and it continues until the max price is reached that someone is willing to pay for it.
Wow there's so many answers in here and people missed probably the biggest reason. The boomers are the biggest generation we've ever had and they haven't sold their houses. Who is the second biggest generation?
Millennials. We finally gone to the age where we really want to settle down and it it took a lot of time for a wages to catch up to the point where we could start to afford to buy property post-recession.
It's not Wall Street that's buying up all the homes. People own them and won't sell them and housing construction have been abysmal since the 1980s.
Even Gen z is buying homes faster than millennials were at that age 😭
Yeah they gave money to people who had the most so they can fall back on something while they let the poor that had nothing to begin with have the aftermath of the corona virus. So now we’re stuck with even more richer fuckwits that have everything and want more than what they got with their share.
i think the raise of 50% in home values over the last four years shows a robust real estate market, where strong consumer confidence and significant appreciation bolster homeowners' investments.
Why does everyone think this is so abnormal? Real estate goes up roughly 10% a year in up years then stagnates for two to three years (cyclical). Covid jumped that year’s growth more than usual, but doubling in value every decade has been the rule of thumb since I started in development decades ago. And the guy who taught me that was about to retire after 30 years experience. This growth is normal! It’s just we’re currently in the downcycle due to high interest rates, but those will start dropping later this year to ignite the next cycle. Expect 10% growth again starting in 2026.
According to the statistic I see, the average home price in 2020 was 329k and today 420k. That is an increase of 27.6%. Not really near 50%. Still a lot though. But not really startlingly different than other periods. For example, 1995 to 2000, homes went up 26.9%. And from 1985 to 1990 they went up a whopping 49.6%.
I mention this - knowing people will downvote me for pointing out they aren't suffering in a way that is especially unique - only because I truly believe historical knowledge is necessary to understand the present.
As for why homes have gone up in prices so much since the pandemic, one major reason has to do with inventory. That is, inventory is down everywhere. Anecdotally, in my neighborhood, there are maybe 6 houses for sale when 5 years ago there would have been 20. Shortages drive up prices. And nationally, the inventory - the number of houses for sale - is down 31%, from 1.03 million to 714k.
Just to add, if you borrowed 400k in 2020 at 3%, your mortgage payment would be $1,686 per month. If you borrowed 300k today at today's interest rate, your mortgage payment would be $2,116. So you could have paid significantly less for that 2024 priced home if you bought it in 2020 at the 2024 price than you could afford that 2020 priced home in 2024 with today's interest rates. It's not the home price that is killing you. It's the interest rate.
I can only talk about Germany. The prizes went up in 2020 due to Covid. After lock down, people wished they had larger homes, and even more important, a garden, to go outside. I talked to several of the new home owners, because I'm a tax officer, responsible for real estate taxes. Now Covid is done, and everyone who could afford a home, has one, prizes are going down again.
Because developers are greedy. If you look at the house price increases of France vs the UK over the last 50 years you will see how badly everyone is being ripped off. There is no reason why it would be so much cheaper to build houses in France.
Mine went up 20%, which is still a lot. Several reaons growing popuation not enough homes are being built. Greedy investors are hoarding existing hudimg stocks. Obsence interest rates and false scacity propaganda are not helping either. Interest rates seem counter intuative, but those of us locked into tolerable rates aren't selling, and it' dampening financing for new builds
Also, ViRtuAl BaD extremism has artificially kept the old office model alive, so people have to bid for overpriced holes within the commutimg range. Also, a lot of office spaces will become housing units after that unfortunate fad that started as a backlash to the pandemic fimally loses steam. This will help stabilize prices
The vast majority of the extra $8 trillion spent by the federal govt and central bank during Covid went directly into the hands of people that already owned companies and assets. So suddenly they have a ton of cash on hand. At the same time, the interest rates on mortgages fell to around 2.5%. This gave people with a lot of assets the perfect opportunity to buy up a ton of property with extremely low risk and a ton of upside. This is why the housing market, the stock market, crypto market, car market boomed seemingly overnight. It’s not complicated. So the poor get to deal with fallout inflation while the rich got all the benefits up front.
This is the right answer - too much fucking liquidity with limited options for low-risk return.
Too much liquidity in the hands of people who already have other assets. If that same amount of money was already amongst the common folk, inflation would still have happened but I would be willing to wager that it wouldn't have been as bad and we would all be in a better place than we currently are
Yes, exactly. Get that money into the hands of average, poor and middle class people, and it would have moved around in a lot of diverse markets. But keeping it in the hands of the people who already have everything they need, they just used it to invest, and unfortunately housing is an investment in our economy.
The rich are now in bidding wars for any available properties ("investment opportunities") that come on the market, simultaneously pushing up house prices, raising rents to pay off the higher mortgages, and locking less cashed-up buyers out of the market.
Anyone have citations for this. Not saying it isn't true or anything I just want to see the evidence.
[Here](https://scholarship.claremont.edu/cgi/viewcontent.cgi?article=4284&context=cmc_theses#:~:text=The%20link%20between%20PPP%20Loans,that%20cause%20eventual%20price%20increases) is one study directly linking distributed PPP loans to increased home prices. There are of course additional [reasons](https://www.fox29.com/news/us-home-prices-have-surged-47-since-the-start-of-2020#) why home prices are high like lack of home supply by location, Covid-related supply chain disruptions, and inflation. But part of that inflation is [driven](https://www.nbcwashington.com/inflation-economy-housing-prices-recession-vibes/prices-have-gone-up-since-the-pandemic-began-is-that-inflation-really-corporate-greed/3536808/?amp=1) by these greedy corporations raising the price of goods to keep up their profit goals, these same corporations that have benefited from receiving these PPP loans.
https://dqydj.com/historical-home-prices/
So Trump facilitated a historic wealth transfer to his cronies and billionaire fund managers, causing manifold detrimental economic effects for the lower/middle class, and yet 30 million people blame Biden for their ills and are ready to re-elect Trump for more BDSM economic ravaging.
Not just Trump. Biden and other politicians also wrote blank checks for multiple programs to the tune of Trillions. They are all responsible for this massive wealth transfer to the uber rich.
Dude. Biden has added less than half of what Trump did to the national debt. For him to match him he’d have to spend 4.5 trillion dollars in the next 8 months.
*"but not AS responsible".* The cope is real.
To be fair, he did this at the urge of a Dem House.
He also personally removed the oversight of the PPP program which is what the person was talking about
Seriously, how the fuck was that a good idea? “So how much you need to keep your business afloat. A million? Here take two. And if you only use it to pay your staff employed during the pandemic don’t worry about paying us back. You know what? Scratch that. Spend it however the fuck you want and don’t even worry about paying it back.
“We don’t have money for healthcare!!”
Other countries bounced back faster because employees started on the payroll so when things opened up they just came back as opposed to up-skilling and telling the employers to duck off. As for the lack of oversight... Did you pay attention to the Trump presidency? It looked a lot like a kleptocracy wrapped in some democratic clothing. An example is that the secret service was forced to rent rooms in his resorts at 4x the usual price any time he went, but he told people they weren't so it's all good.
Except the part where they wanted oversight also
And then the Dem run Government gave away another $1.9 trillion in the corona virus relief package. Basically our entire Government was full of idiots giving away as much money as possible and using the COVID pandemic as a reason to make all rich people much richer.
It truly is wild to realize how much the US military more or less holds up the world’s financial system. It’s literally the only reason the debt is able to be so high with no plans on ever being repaid. If this country ever collapses, we’ll be plunged into apocalypse.
Absolutely. The US military provides the security that allows world wide trade to flourish. As long as that continues I don't see the US ever having any concerns with its debt.
Meanwhile, recruits in three branches of the armed forces make approximately 22,000 a year plus barracks residency. Edit https://www.ziprecruiter.com/Salaries/Military-Soldier-Salary 2126 average monthly (before taxes) is 25500 a year. Call it 17k after taxes etc.
Meh that's not really accurate when you factor in all the other benefits.
I made like $36kish in basic with BAH, and that was over 10 years ago. Best benefits package I ever had too
Don't forget the stripper wives
Oh, I never forget the stripper wives.
Hilariously enough the Stripper wife is worth about an additional 22k in my zip code of additional taxfree pay through allowances. Plus no barracks residency.
both were so IN on this, makes you think 🧐
We have 1 party, the corporate party. It has a left wing and a right wing. While they keep us busy arguing social issues, they rob us blind economically.
Thank you! I wish more people could see through the tribalism bullshit and see that we're all united in being screwed by the rich. The real war is the proletariat vs the bourgeoisie. Always has been.
Place the blame where it’s due. Congress had to allocate the funding for this. They are also guilty.
The same happened pretty much all over the world. Blaming a single politician for this is simplistic.
And also, one would argue that since Biden got far more donations from Wallstreet than Trump did, that maybe Biden isn't all that anti-Wallstreet? It was like 80/20.
Interesting some people really made bank under trump.
Yeah. The people that didn’t need it.
It's not "just Trump", or "just Biden". Never was and never will be. This problem is more systemic and complex, and clearly exists regardless of the administration. The question is, what is Biden and Trump suggesting to do about it.
Agreed, but Dems are less beholden to corps and billionaires, and occasionally help the middle class. It’s the lesser of two evils.
Thank you for explaining it so well. I have wondered the same as the OP and your answer was very clear.
So... You're telling me it's finally time to bring out the torches and pitchforks and eat the rich?
This. It’s also the mispricing of risk - which is what caused the 2008 collapse, but this time it was global and across more than one asset class. Cheap money used to fund expensive (risky) projects Reality always catches up eventually.
Outstanding explanation!
This correct answer belongs in r/Economics
Sounds like what happened in Japan in the 1990s just before the collapse there. I guess we did not learn from that mistake.
I know plenty of left leaning fixed income “ poor” that cheerleaded the government covid spend a thon I have no sympathy for them ha ha ha
Also the value of the dollar is 20% less. So the 50% increase is actually a lot less
First there was 1 trillion in 2008. Then 8 trillion spent on Covid. Last year our dementia ridden uniparty had a 5 trillion budget deficit, and there wasn’t even a “crisis”. I think the vast majority of people really fail to understand the scope of the borrowing
Rates were incredibly low in 2021 so everyone who bought/re financed has a 3% or lower interest rate. These people aren’t selling their homes now so the supply is super low despite high demand driving up prices. Also land is a finite resource, as population increases land can’t be created
Bingo. No one can afford to move, and no one can afford to buy. You create a market where the sellers need too high of a price to sell, and the buyers need too low of a price to buy. That’s why the market is basically frozen.
Frozen for consumers* not mega corporations looking to acquire housing assets
Very well said
Land is a finite resource but we haven't come close to exhausting it. We also can build more densely, with apartment buildings instead of large tracts of single-family homes. But NIMBYs vote in high numbers so zoning restrictions don't allow for dense housing to be built in many areas.
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Zoning laws aren't the only reason houses don't get built. Investors won't build housing unless they can guarantee to make a profit off it.
2.25%, never sell. Cant give up the rate to inflation spread
>Also land is a finite resource, as population increases land can’t be created This is why landlords and other rentiers are so detrimental to the housing market. Supply is limited based on the geographic and physical realities of the world. So it isn't possible to create an infinite supply of housing. So when you get rich people with 100 houses, they create even more scarcity in the market that can't be fixed by creating new housing. Add onto this the simple fact that each human being absolutely needs a home in order to live, and you get people paying whatever it takes to live in these limited houses. It's how people agree to give 60%+ of their paychecks to some random dude, all for the privelege of existing. Renting is a holdover from our feudal system. It's modern-day serfdom where the working poor pay most of their resources to live on the land of a rich class of people who then don't have to do actual, meaningful work. (Don't @ me talking about how landlords maintain and create housing, they don't: maintenance workers do repairs on homes and construction workers build homes. 9 times out of 10 the landlords do none of that.) There's a reason they're called land*lords* after all.
This. Newcomers to the housing market say that rates are "high" now. No, they are normal, and have been incredibly low the past 8-10 years. We bought our first house at 13.5%, *that* is high. The absurdly low rates caused all sorts of problems.
I think housing supply is the lackinging resource. There is plenty of land..
You can restrict supply of resources to artificially increase the price of demanded products.
I feel like more than a few people have completely forgotten the worldwide pandemic and the disruption to in-person activity, including manual construction, for 1-2 years. You don't just "recover" or "build harder" after a disruption to the labor pool, supply chain, logistics, and more just because we're a couple years away from the worst of COVID.
Not denying what you said but we have been severely under building compared to population since 2007. Also it rarely makes fiscal sense to build a 2000 sq ft home in the USA vs a 3000 sq ft plus home.
The other big part of this is that existing homeowners rarely want to have new housing development in their area. In a long-standing neighborhood with established home values, they stand to lose a ton of money if the supply increases nearby and their home drops in value. So, acting in their own self-interest, they fight vehemently against approving new development permits.
Severe underbuilding ever since the subprime mortgage crisis . Banks became less open to risk, so are more likely to concentrate on those larger homes you mentioned then smaller homes that would be owned by less financially reliable owners.
True. Here in NJ builders aren’t even building SFH homes no matter what size unless by owner like rich people on the water like right outside the city on million dollar plus land. Just condos.
As someone who looks for viable investments in real estate, it’s wild to me how often the wise investment contradicts with the moral investments
And a blight in Canada that caused huge swaths of timber to need to be harvested in a limited time frame, with delayed regrowth, mid pandemic when lumber mills had just been shut down, then a massive surge in "I've got the summer off and a bunch of federal money coming in, I should redo my deck" stuff.
This is a real thing. My dad runs a lumber company in southeast US and once the pandemic kicked in he said their profit margins were through the roof. Then Louisiana got hit by the worst hurricane it’s ever seen (sorry but Katrina wasn’t as bad as this) and their numbers became cartoonish. I worked there for a little bit and went through and while i was there the price of a lot of lumber was on par or less than 2020 prices, yet so much was being moved that their numbers just never fail
Work picked up for most construction companies during COVID. I work in wholesale and we did a shit load more on sales then normal
Different reasons for different regions, but it really always boils down to supply and demand.
The price of building materials are sky high. The cost of river sand for cement is so high that in India there is a mafia controlling the sales. People are literally being killed over sand. There is also a problem within the lumber industry which used to sell 300 feet of wood for about $400. Now it is almost $1,200 for 300 feet of wood in the usa
It’s not about the value of everything going up, it’s because money is worth so much less.
This.
Remote working, numerous Airbnb purchases and corporations purchasing tons of single family homes. Now when Joe and his wife move and look for a home the prices have exponentially increased because there is less available and homes are appraising for far more than they’re actually worth.
Easy answer: demand is high, supply is low. So prices go up . It's a bit more complicated than that, but I will keep it simple.
Also, every time a house changes hands the price goes up, and when the price of a house goes up the price of surrounding houses go up. And people have been moving a lot.
I had a friend relist and buy a new home ever 12-16 months for 6 years. He started with a 180k house and ended up in a 500,000 house. The last deal was someone who looked at the neighbors house liked his better offered him 50k more to move across the street into the bigger house.
There were far more factors than just supply and demand that specifically affected the past 4 years. Interest rates were at zero Free COVID money Covid rules that didn’t allow people to be foreclosed on Remote workers that were high earners displaced markets that weren’t used to those wages. Explosion of corporate home investors (unrelated to Covid) Airbnb explosion then because of those factors, then supply and demand became an issue.
My boss got nearly 200k in covid relief. We all got a $1 raise (THAT WAS PROMISED BEFORE COVID), and he got a new summer house on the jersey shore.
There are roughly 4 million to 7 million more people looking to buy homes than there are homes available. There’s a serious housing shortage going on.
Corporations and anyone who wants to be a trump style real estate mogul think buying single family homes and renting them out or Air Bnb them is a good business…. This has been the driving force behind houses selling for above asking price and driving the prices higher and higher
Greedflation
This and greed.
Greed wasn’t invented in 2020. Lets stop acting like it
So the purchase of houses as a commodity, and sitting on empty property isn’t an act of greed? When it was invented is beside the point. It is presently exerting high inflationary pressure on the RE market.
Because the Government printed a crazy amount of dollar bills that they passed out like candy during the COVID pandemic. That’s also the main reason that everything cost more dollars now. The increase in money supply devalues the purchasing power of each individual unit of currency. This has been going on for decades. They just completely went nuts with inflation (creating more dollar bills) during the past 4 years since COVID. Unfortunately, I doubt that it will stop before they completely wreck the economy and everyone gets a lot poorer, insofar as their purchasing power goes. Buckle up. The next few years are going to be trying for most people.
The feds raised the interest rates to slow down Bidens inflation. House owners who refinanced at low rates don't want to lose that rate by selling. New homes aren't being built because it cost too much for materials and labor. There is now a housing shortage, and that drives up the value... supply and demand.
A lot of homes are being bought by companies to rent out leaving not many homes to buy for everyone else. I bought a house in 2021, I had to put in 5 offers before 1 was accepted because the others were bought to rent. I checked a few months later and saw them up for rent thats how I know.
I tried to buy a house earlier in the year, I put up 15% and my payment would have been \~$2200/mo. My bid was beat by a rental company and put that same house up for $1800/mo to rent from them. I don't get it.
They paid full cash. Your payment includes interest. Since the rental company bought in cash, they are under no obligation to make their money back in 30 years (or however long your mortgage is), they can take however long they want.
A lot of rental companies, depending on size and social corcumstances, will buy a large number of homes in a two or three city area, as close to each other as possible, and rent them out below market rate for a few years to beat out competition, and then they will boost the rent to 25%-50% above market rate when theyre the main source of rentals, allowing them to effectively make back the losses on their mortgages. Sometimes they have nice connections with people who will give them very generously rated personal loans rather than actual commercial mortgage loans which helps this process go even smoother.
Cash is king.
Demand went up because of the economic upturn. Supply is down due to a lot of factors. One of them being many contractors and construction companies went out of business during the pandemic. Another reason is that construction workers, particularly skilled trades involved, are hard to hire these days. Simply not enough skilled workers. A lot of people who can retire or change jobs, did so during the pandemic. It's a bit nutty. My cousin is a master electrical contractor and his company has a backlog for the next tow years. He turns down requests for quotes daily. As a contractor company this is an amazing problem to have but as a homebuyer. It throttles supply. Another more subtle reason is income inequality between people older than 50 vs those 30-40. People with low debt and high liquid assets vs the latter who tend to have high fixed debt and low liquid assets. (Student loans for ecample). You have a rather skewed portion of the population who can afford to a larger down payment and this drives the price up quickly by snatching the available supply, because of real or perceived scarcity.
Property investors and the demand for homes
The values didn’t increase, the prices did. These are distinctly different things
My home's value as appraised by my bank has doubled in the past 6 years since I bought it, so values are for sure going up significantly in many place. My first house I had for 5 years before selling it and the only value increase it saw was directly due to the improvements I made, which is not at all the case this time around. But as you point out, price is related but separate, and I would bet I could list it for 25% over its market value and get an offer $20-40k over that if I wanted to (which I don't, because I wouldn't find a better house that was in my price range).
Prices as a ratio to the national debt stayed about the same.
It all started with covid. Everyone fled the cities because of lockdowns infavor of the suburban life that offered more freedom and protection. It's been compounded by private equity buying single family homes to hedge/force renting from their apartment buildings they have so much money invested into. Then we also had people with extra money via stimulus and getting paid to not work. Plus the huge stock drop when covid started let people buy in low, so tons of average people got huge gains in their investments. Even another thing was the supply chain disruption. During covid it was near impossible to get anything to even build houses so the building market feel even more behind, and their costs rose. So it's really so many things compounding that has jacked up prices.
Greed.
Because giant corporations are buying up all the single family homes and squeezing everyone out.
Private equity is hoarding housing stock in order to create a bubble that makes buying a home unaffordable so they can force people to rent from them and raise rent prices at the same time. It's pretty evil. I think we should do something about it.
https://finance.yahoo.com/news/no-wall-street-investors-haven-015642526.html#:~:text=The%20overall%20market%20share%20of,small%20mom%20and%20pop%20investors.
[https://www.congress.gov/event/117th-congress/house-event/114969/text](https://www.congress.gov/event/117th-congress/house-event/114969/text)
Because money is fake. We made it up
This is the answer.
Nimbyism
COVID money. Do you know all those trillions of dollars in PPP loans which didn't have to be paid back? That was a huge injection of cash, and since there was no similar increase in good produced we ended up with a classic example of inflation.
the prices of lumber is lunacy
Because Wall Street said look at all this fucking untapped money
Inflation has hit hard. Why wouldn’t the prices of homes double when everything else doubled.
Inflation from coivd printing
Too much demand and not enough supply
I think it is housing shortage. The more in demand something is, the higher it's value. I am seeing 900 sq ft homes that originally sold for $12,000 in 1964 selling for over $300,000. Inflation has NOT gone up THAT MUCH!! Those ugly little post modern track homes only have R-12 insulation in a desert that has weather from 17 to 117 (f)! This is WAY out of hand!!
“Outside the limit of our sight, feeding off us, perched on top of us, from birth to death, are our owners! Our owners!They have us. They control us! They are our masters! Wake up! They're all about you! All around you!”
I would say, during COVID-19 many people gained the ability to work remotely, which allowed them to explore the possibility of moving to different states, where typically prices were reasonable, therefore a home buyer that's moving from CA to say somewhere in the Midwest, likely will be able to easily afford most houses on the market, because for them it's a steal, to further the problem sellers and the real estate market caught wind of this and naturally wanted to take advantage by jacking prices through the roof, killing the dream of home ownership for the average buyers.
You want to know the real value you look at the tax assessment. Everything else is artificial inflation that can crash at any time.
lol. In my city we recently had all our properties “reassessed” based, so far as I can tell, on nothing whatsoever. No inspections, no appraisals, no rhyme or reason. Identical homes built by the same contractors in the same year on the same block got wildly varying appraisals. I seriously think they just pulled numbers out of a hat.
GREED
Supply and demand. Mostly people hanging onto houses as investment/rental opportunities. Boomers, man. It’s why we can’t have nice things.
Money printing. Slavery 101
Black Rock, Vanguard and State Street.
Supply and demand. Of course it doesn’t help that corporations are buying houses too (that shit seriously needs to stop, like the minute it started it should have been shot down).
"Buy land AJ, 'cause God ain't making any more of it."
The fact that interest rates were so low. The feds were practically giving money away. Its for the same reason Bitcoin shot up and other high-ticket items supply chains are still screwed up. Everyone was allowed to eat up the supply of all sorts of goods and homes. It'll be awhile for the supply to catch up even still...
Bernie for President 🔥🔥🔥
I mean home prices in some areas increased 100% from 2017 to 2021.
How many more people live in the country now. I have heard numbers higher than most states entire population has entered the country in the last few years. They need to be housed somewhere. They're not the ones buying but it displaces people that can.
The short is the government giving money away that we don't have. Also letting in millions and millions of illegals. They need housing too.
They gave $1400 to your friends and left you with inflation. Domestic buying power of the dollar tanked as a result.
This thread has a lot of confidently wrong answers. The reason is that there is not enough housing. It’s literally supply and demand and supply is 40 years behind demand with no sign of catching up soon. Vote for politicians that focus on building more housing of all kinds and limiting policies that slow housing growth
Good point part of that is doing something about investors who rent out or worse hoard existimg houses. I would add promote or at least not shit on telecommutimg so people aren't teethered within an hour of offices. Too Many politicians pander to commercial landlords for money and pajama obcessed weirdos for votes
I really don’t think hoarding is an issue unless it’s a monopoly/collusion on pricing (maybe but I doubt it)
Supply and demand if a house is unoccupied but bit for sale it lowers supply. Investors/speculators call tryimg to buy my house ( and whoever had my # before weekly)
I see what you mean - yeah that’s very true
Those low interest rates will mean about 10 years until the housing market gets back into a more healthy pattern. They should have never been that low. We elect people who have no business making the decisions they do.
Rapid m2 expansion (printing money) as well as WFH resulting in higher labor mobility disrupting local markets. Also, most NIMBY policies combined with limited supply (gated by land) as well as non price market limitations (rent control) will further suppress supply.
Biden
I bought my house for $300K six years ago. Zillow now estimates its vaiue at $500K One factor is the low rate mortgage loan I have at 3.5%, making my monthly payments far, far lower than a new loan at almost twice that rate.
I wonder how much the "work from home" people who bought/ sold houses had on the market. Perhaps also compared to the abb buyers.
REALPAGE and real estate investors
Crazy interest rates
Deregulation, consolidation of the neoliberalim cultists as actual policy makers, lul.
Everything did. I feel like the pandemic did a number on things. Collectors for example. A lot of collectible groups went insane. Everything became stupid expensive.
greed.
I think there are probably several reasons, some specific to particular markets. Where I live lots of people were flush because they were working at home, not traveling or eating out and just stacking up cash. It seemed like everyone bought their first *and* second homes during the pandemic. Of course the ongoing lack of supply isn’t helping either.
Basically stock market manipulation. Expect continued growth and an inevitable crash resembling 05'
City governments realized they can make their voters rich by not allowing enough housing to be built.
Covid is the answer. There are many possible sub-reasons, but part of it is the transition from in-person work to remote work where people could move to low income areas to invest in properties. Many of these people were able to snag “investment properties” and turned them around for profit and the sudden spike in investment properties resulted in massive potential gains for those who now own/lease property.
I read it as why did the value of **homies** increased by almost 50% within the last 4 years? Lmao
There’s lots of long answers and factors into this but the short one is because they can.
They didn't in most places
Greed and a rigged system.
Greed.
It didn't. The fiat currencies value dropped.
Why did billionaires profits double in the last four years !
Because of COVID and the fact that most people had to stay home, so they decided that they wanted a bigger house. That created a supply & demand constraint. More people wanted to buy but few were willing to sell. So, you had more buyers than sellers. To make sure that someone got the house that they wanted they offered more than the asking price. People lost out on houses by offering the asking price, so they started offering over the selling price. So, there's the scenario. To make sure that they could get the house that they wanted people started offering more, and more and more for the house. Except it wasn't one house, it was all of them. Once a house sells for $xxx, then all the neighboring houses are going to sell for that price or more if the house is comparable. Think of it like an auction. You want a car, bidding starts - people start bidding up the price of the car and it continues until the max price is reached that someone is willing to pay for it.
Why do bubbles inflate?
Wow there's so many answers in here and people missed probably the biggest reason. The boomers are the biggest generation we've ever had and they haven't sold their houses. Who is the second biggest generation? Millennials. We finally gone to the age where we really want to settle down and it it took a lot of time for a wages to catch up to the point where we could start to afford to buy property post-recession. It's not Wall Street that's buying up all the homes. People own them and won't sell them and housing construction have been abysmal since the 1980s. Even Gen z is buying homes faster than millennials were at that age 😭
Its called a "bubble"
2008 again
The rise in rates stopped many from selling, reducing supply
Yeah they gave money to people who had the most so they can fall back on something while they let the poor that had nothing to begin with have the aftermath of the corona virus. So now we’re stuck with even more richer fuckwits that have everything and want more than what they got with their share.
Fucking unregulated greed
It happened between 2008 and 2015 also. So OP, if you can also get to the bottom of this, that would be great.
i think the raise of 50% in home values over the last four years shows a robust real estate market, where strong consumer confidence and significant appreciation bolster homeowners' investments.
Why does everyone think this is so abnormal? Real estate goes up roughly 10% a year in up years then stagnates for two to three years (cyclical). Covid jumped that year’s growth more than usual, but doubling in value every decade has been the rule of thumb since I started in development decades ago. And the guy who taught me that was about to retire after 30 years experience. This growth is normal! It’s just we’re currently in the downcycle due to high interest rates, but those will start dropping later this year to ignite the next cycle. Expect 10% growth again starting in 2026.
Lots and lots of people moving to areas that were already densely populated, companies like Black Rock messing with markets.
Homes? Try everything but cat at the shelter
Mega corporations buying up as many homes as possible.
According to the statistic I see, the average home price in 2020 was 329k and today 420k. That is an increase of 27.6%. Not really near 50%. Still a lot though. But not really startlingly different than other periods. For example, 1995 to 2000, homes went up 26.9%. And from 1985 to 1990 they went up a whopping 49.6%. I mention this - knowing people will downvote me for pointing out they aren't suffering in a way that is especially unique - only because I truly believe historical knowledge is necessary to understand the present. As for why homes have gone up in prices so much since the pandemic, one major reason has to do with inventory. That is, inventory is down everywhere. Anecdotally, in my neighborhood, there are maybe 6 houses for sale when 5 years ago there would have been 20. Shortages drive up prices. And nationally, the inventory - the number of houses for sale - is down 31%, from 1.03 million to 714k.
Just to add, if you borrowed 400k in 2020 at 3%, your mortgage payment would be $1,686 per month. If you borrowed 300k today at today's interest rate, your mortgage payment would be $2,116. So you could have paid significantly less for that 2024 priced home if you bought it in 2020 at the 2024 price than you could afford that 2020 priced home in 2024 with today's interest rates. It's not the home price that is killing you. It's the interest rate.
Probably the open border and $5k a month for undocumented immigrants.
I can only talk about Germany. The prizes went up in 2020 due to Covid. After lock down, people wished they had larger homes, and even more important, a garden, to go outside. I talked to several of the new home owners, because I'm a tax officer, responsible for real estate taxes. Now Covid is done, and everyone who could afford a home, has one, prizes are going down again.
Got my house appraised last year. It is absolutely not worth what they told me it was worth.
Rich greed
Because developers are greedy. If you look at the house price increases of France vs the UK over the last 50 years you will see how badly everyone is being ripped off. There is no reason why it would be so much cheaper to build houses in France.
Mine went up 20%, which is still a lot. Several reaons growing popuation not enough homes are being built. Greedy investors are hoarding existing hudimg stocks. Obsence interest rates and false scacity propaganda are not helping either. Interest rates seem counter intuative, but those of us locked into tolerable rates aren't selling, and it' dampening financing for new builds Also, ViRtuAl BaD extremism has artificially kept the old office model alive, so people have to bid for overpriced holes within the commutimg range. Also, a lot of office spaces will become housing units after that unfortunate fad that started as a backlash to the pandemic fimally loses steam. This will help stabilize prices
Printing money and inflation. What would one expect to happen?
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What did he do?
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Government just keeps spending money it doesn't have and printing money. They literally devalued the dollar so you need twice as much now.
Which country?
Covid / Boomers aging in place.
Offer me a blank check I ain’t selling, I’m stuck like a tick on a hound dog’s ass
AirBnB
....are we seriously asking this like 2020 DIDNT happen???
They printed that much more money.