Although the CPI may need tweaks since it currently has a strange way of calculating housing calculations: not mortgage payments but rental of equivalent property, I still assume the CPI is fairly useful for guiding policy as is.
The problem is the grand-parent-post's use of this number to claim it indicates almost everyone, or at least "the typical person" is twice as well off now as 1973. And worse, doing so implies nothing needs to be fixed.
>Yes, something needs to be done about housing market cycles and how much damage they cause to the economy.
Housing market cycles do harm without fixing the underlying problem. They disrupt the larger economy but only shave of 10%-20% of home prices and then only temporarily. This failure to reduce housing costs is a problem.
Consider that in 1970 with a 30 year fixed at 8%, home prices sat at 65,000 adjusted for inflation. Rates were near double that in 80's yet, adjusted for inflation, homes were over 90k. Today, with about 4% interest, median price exceeds 250,000. Evidently total housing costs exceed wage and inflation over time. Evidently prices do not genuinely cycle. Evidently interest (our sole economic tool now) does not affect this overall trend.
So the issue arises in a generation or two. It seems there is magical thinking that history is over and this will just take care of itself and that mass ownership of land is somehow an inevitable law of nature. It seems more likely that the last 80 years were a fluke requiring careful maintenance which has ended.
>sticker prices on houses (which is largely meaningless -- very few people buy houses in cash)
The sticker price of a home directly relates to financed cost as well as cash.
The problem is the grand-parent-post's use of this number to claim it indicates almost everyone, or at least "the typical person" is twice as well off now as 1973. And worse, doing so implies nothing needs to be fixed.
>Yes, something needs to be done about housing market cycles and how much damage they cause to the economy.
Housing market cycles do harm without fixing the underlying problem. They disrupt the larger economy but only shave of 10%-20% of home prices and then only temporarily. This failure to reduce housing costs is a problem.
Consider that in 1970 with a 30 year fixed at 8%, home prices sat at 65,000 adjusted for inflation. Rates were near double that in 80's yet, adjusted for inflation, homes were over 90k. Today, with about 4% interest, median price exceeds 250,000. Evidently total housing costs exceed wage and inflation over time. Evidently prices do not genuinely cycle. Evidently interest (our sole economic tool now) does not affect this overall trend.
So the issue arises in a generation or two. It seems there is magical thinking that history is over and this will just take care of itself and that mass ownership of land is somehow an inevitable law of nature. It seems more likely that the last 80 years were a fluke requiring careful maintenance which has ended.
>sticker prices on houses (which is largely meaningless -- very few people buy houses in cash)
The sticker price of a home directly relates to financed cost as well as cash.