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How are you dealing with the pinch?

I know that eggs have jumped up, partly due to the bird flu outbreak last year, but I found a source of cheaper eggs- my local Farmer's Market (oddly enough). Our local big box food store has store-brand (large white) for $5.29 a dozen. My Farmer's Market was selling them for $3.49 a dozen (large, cage-free and brown).

Natural gas has jumped, of course, and I locked in a rate a few months ago before things really went sideways. Still, our bill was $60 higher than I had budgeted and our usage had gone up. I blame the icky weather and I despise being cold. I've started using my portable electric heater and a heating pad/electric blanket to keep myself cozy on the couch, or in my office. Our electric bill was about $14 higher than this time last year. I didn't check the usage, but I can deal with $14.

Anyone else keep an eyeball on utility usage? Do you keep a spreadsheet for your monthly budget like me? Am I just a giant spreadsheet and numbers nerd?

After egg prices started climbing I noticed that medium eggs are much cheaper.  They're not that much smaller than large ones, so it won't matter for most recipes.

I have a heat pump and can hardly believe that it's much more efficient than my oil furnace.  But of late the HP has been whispering and the oil furnace kicks in only to keep hot water available (difficult to get clean in the warm air from the HP).  Last oil bill was about $1K.  I do keep a cool house, but still.

Eggs?  Down a bit.  Do I begrudge the Hen Union its windfall?  Not really.  Eggs are the least of things costly (well, nearly so) in this present time for me.  As I edge close to eighty, it's not buying things that vexes; it's getting rid of stuff.

I d say Everything has gone up, and while eggs have, surprisingly, chicken has not really. 

The news indicated that the bird flu mostly hit the egg laying houses.  The meat chickens were younger and fared better. 

Pork and Beef prices are lower or stable as well, (according to the news), though this will turn.  With the drought, and covid and such, ranchers/pig growers have been sending critters to market sooner and in larger quantities.  (So those prices should be lower, BUT will be higher soon enough).


I like to eat chips with my sandwiches.  A bag of Ruffles Sour Cream and Cheddar chips (or Doritos) has risen to nearly $5!   And while I shouldnt eat them (and have not bought any since Christmas) even Oreos are close to $5 a package.

Ben and Jerry's is pushing $5 a pint too.  (I liked New York chocolate or something) 

Fortunately (Inter-thread alert) Gas Prices are 2.89 again, locally. 

McDonalds or even Whataburger lunches are pushing $9  (and though it was long ago, a Big Mac Meal in Graduate school was $2.99!)
I stopped at Jersey Mikes last week and that sub (#2, medium) was over $9. 


My Bride and I are using Blue Apron for 3 meals a week.  My Bride is learning to cook.  Blue Apron buys everything and ships it to you with a recipe card. Ideally she will see what to buy, and we will have a stockpile of recipe cards to use.  (The downside is that they have packages of spices or sauces that they have already prepared, and I dont know that we could replicate those, yet... Ive been too busy to try to figure out what is in them) .  I can happily report that she is getting much better at cooking and particularly timing the cook... (You dont start the grits which take 20 minutes, because I dont skimp and get Quick Grits, AFTER you have fried the eggs!) 
Bottom line, is that I dont THINK that Blue Apron has raised the prices much.  I think it is still about $69 a box

I like Cereal as an occasional dinner.   Especially when My Bride is away helping her family in Cancer Hospital City.  I have switched to Store Brand frosted, shredded mini wheats and Raisin Bran. 

Anyway, I have typed for too long.... Suffice it to say that I am shocked when I go to the grocery store these day...

Oh, yesterday I went to Walmart to stock up on Orville Redenbacker Popcorn.  I like the Pour Over Butter ones. it is a 2 pack box.  I believe that they are now $2.69!  The last time I picked any up I was mad that they were over $2 a box, meaning slightly more than $1 a bag!

And there was an Edmonds pie 2 pack in the frozen food section.  If I recall I would balk at paying over $2.25 a box (of 2) and now they are well over $3


So how do I deal with it? 
I balk at them most of the time, but on occasion, I just 'dont look at the price' and splurge out! 

Everything here was already prohibitively expensive. Now it's worse.

There isn't really anything to be done about it, short of somehow increasing my income (I already have a second, part-time, job, and a couple small freelance contracts). Our faculty contract is being renovated, so I look forward to a COL 3% increase, or some such BS.

I feel like *services* have gone up more than food, but then I avoid eggs and almost all dairy besides a bit of skim milk in cereal and coffee. As an example. a privately recycler/composting service I used for some things went up about 25% in each of the last 3 years. Really insane. Sorry, Planet, but I think I am just going to just trash everything if "doing the right thing" is going to cost me that much more every year.

Quote from: Thursday's_Child on February 11, 2023, 07:14:03 AM
After egg prices started climbing I noticed that medium eggs are much cheaper.  They're not that much smaller than large ones, so it won't matter for most recipes.

The store near me that has large white store-brand eggs for $5.29/dozen has the same type, but medium, for $5.19/dozen.

Quote from: Parasaurolophus on February 11, 2023, 11:55:04 AM
Everything here was already prohibitively expensive. Now it's worse.

There isn't really anything to be done about it, short of somehow increasing my income (I already have a second, part-time, job, and a couple small freelance contracts). Our faculty contract is being renovated, so I look forward to a COL 3% increase, or some such BS.

I used to do some editing on the side, but stopped after awhile. I'm considering a 2nd income stream.

Quote from: clean on February 11, 2023, 09:59:28 AM
...
Ben and Jerry's is pushing $5 a pint too.  (I liked New York chocolate or something) 
...

It's $5/pint here, on sale.

Quote from: evil_physics_witchcraft on February 11, 2023, 04:12:16 PM

Quote from: Thursday's_Child on February 11, 2023, 07:14:03 AM
After egg prices started climbing I noticed that medium eggs are much cheaper.  They're not that much smaller than large ones, so it won't matter for most recipes.

The store near me that has large white store-brand eggs for $5.29/dozen has the same type, but medium, for $5.19/dozen.

What's an egg?

The weight of a large egg is about 0.25 oz more than a medium egg, or ca 14% more. The price reported here is ca 2% more. Hence, the egg by weight is cheaper in the large size, by about 12%!

Just means to be careful about what a quantity means. :-)

I was shocked at the price of stick deodorant.  $8 to mask my body's natural odors?  Yikes.

I went back to having a baked potato for dinner.   I live simply and have everything I need so I am not affected too much by inflation.  Our raise for this year was 3.5%, much less than the state inflation rate.   I wonder how much longer they will get away with this.  I believe that back in the Carter years people got 10% raises to match inflation.   

Quote from: evil_physics_witchcraft on February 11, 2023, 04:12:16 PM

Quote from: Thursday's_Child on February 11, 2023, 07:14:03 AM
After egg prices started climbing I noticed that medium eggs are much cheaper.  They're not that much smaller than large ones, so it won't matter for most recipes.

The store near me that has large white store-brand eggs for $5.29/dozen has the same type, but medium, for $5.19/dozen.

Ouch!  I've been finding medium for a bit over half the cost of large.  Must be a regional thing, maybe?

ETA:  excellent point, Dismalist!

I have been doing something that I used to do when I lived in a place that had grocery stores on the way home from my train/walking commute.

Instead of taking one trip and stocking up for 7 days worth of stuff, I shop for 1-2 days, stopping briefly on the way home every other day at a grocery store, and ONLY buying stuff that is marked down and making sure to reject anything that I feel is priced too high, whether I want/need it or not. There are always alternative choices, and until people start availing themselves of alternatives, we will continue to be gouged.

Quote from: evil_physics_witchcraft on February 11, 2023, 04:15:02 PM

Quote from: clean on February 11, 2023, 09:59:28 AM
...
Ben and Jerry's is pushing $5 a pint too.  (I liked New York chocolate or something) 
...

It's $5/pint here, on sale.

Regular ice cream here is 13.99. B&J's, 15.99.

Groceries and incidentals today were $260.  No alcohol, not a lot of meat.  But we are not too price sensitive in our shopping so I'm sure there would be a cheaper way to do that if we wanted too.  Might just be less expensive to eat money.

There's a classic error which confuses a change in relative prices with a change in the price level. This last is what's called inflation. I know it may be counterintuitive, but one cannot explain any phenomenon by describing its components. [I have a fever. That's because my liver is at 99.7, my stomach is at 103, my throat is at 104, and so on. The insight may even go back to Aristotle.] When one tries to explain inflation with a change in individual prices one is merely confirming the definition of inflation. And this is what's all over the newspapers.

So, why do we have inflation? There are two separate reasons, one from the demand side and one from the supply side.

On the demand side, the government deficit went through the roof on account of Covid. That's not at all bad in and of itself, though one could discuss the size. This big deficit was financed not by borrowing from the public, but by borrowing from the central bank, the guys who print money. Those who received the money have not wanted to hold it in bank accounts, rather they have wanted to spend it. Thus, two channels that added to demand and raised the overall price level.

On the supply side, we've had this thing called Covid, which shut down parts of the economy. We've also had jumps in energy prices, for which there is a world market. Energy is an input to all production and makes all production more expensive. Thus, two channels that reduced supply and raised the overall price level.

We are poorer for all this: There's less stuff left over for us at the moment.

However, it looks like the current monthly inflation rate is coming down: Covid seems to be over and energy prices are always all over the place anyway.

Wage increases have lagged behind price increases and they will continue to do so until demand growth slows or labor productivity increases more rapidly. The first looks like its already happening, though I don't know if sufficiently. Meanwhile, the extra stuff wished for, like was had three years ago, is just not there.

I've been experimenting with lowering the thermostat and adding more 'draft dodgers' around the house. Right now, it's at 63 degrees F and it's 45 deg. F outside. How low do you keep your thermostat?

I have a 'smarter' thermostat.  At night i let it get to 62. It warms up to 68 in the morning, and then again just before bed.

However, in my area, the average temperatures in my town in February are 57 for the low and 67 for the highs. 

In the summer, I let the afternoon temps cool to 80, but go to 75 by bedtime. 

Anyway, I try not to turn on the heater if I can avoid it! 
In fact, only a few weeks ago when we had some freezing temperatures, I saw that my 'smart' thermostat wasnt set to automatic or heat, but to cool, so I have successfully made it much of winter so far without the heater even being on! 

I admit that i have a small heater in the bathroom that I plug in about 10 minutes before I shower, but My Bride doenst just turn it off, she unplugs it! 

Other than the heater in the bathroom, I find that throwing on a blanket or putting on socks is enough to keep me comfortable. 

How anybody reacts to changes in relative prices is their business, of course, for they know best about what they want and what they can afford.

My father used to keep the thermostat at 68° in the depths of winter. When my sisters complained, he would retort: Wear a sweater! Clearly, natural gas and wool are substitutes. :-)

Such is all fine and good, but clearly there is something psychological going on with individual prices. Why gasoline? Why heating oil? [Mercy, why eggs?] This stuff is salient at the moment, even though household fuels and utilities takes up under five percent of an average consumer's expenditures. All energy, in other words including gas for the car,  take up a shade under eight per cent of an average consumer's expenditures. [The average consumer's expenditure share on eggs is likely near zero.]

But housing [rent, or imputed rent] takes up a third of an average consumer's expenditure! [That number floored me when I looked it up just now, by the way.] We hear nothing about this except how great it is when house prices rise. So, to be better off in these trying times, live in a smaller abode!

[It's clear why housing is so expensive -- restrictive land use regulations. That's like a supply shock. Here, a stroke of the pen would lead to reduced housing costs after a short while.]

ETA: eggs.

I keep my thermostat mostly around 60 during the winter.  It saves a lot on heat.  In the summer I keep it around 78 when I'm home, and 76 overnight to help me sleep.  And use fans.

The heat in our building at work is running around 60 as well, but that's not intentional.  Our patched-up HVAC system just isn't working any better than that.

We just moved into a new place and experimented putting the thermostat at 63. But Absolutive, who is a frail waif of a thing, objected vehemently to being TOO COLD in his OWN HOME (and, to his credit, he did try for a few months, bundled up with blankets and hats and scarves and gloves), so now we keep it at 66, which he deems barely acceptable. We also have a programmable thermostat, so it goes on in the mornings, and then comes up again at about 5 until we go to bed.

Our area never gets all that cold (we had a cold snap in December with temperatures topping out at about 33 for several weeks in a row), but usually it's in the 40s, dropping into the 30s overnight. But then, the housing stock is--well, let's say 'venerable'--and rarely has good insulation, so the central heating bills can go quite high.

Aah, eggs! Down to $4.39 a dozen for extra large from $4.89 a week ago.

Why eggs cost so much, according to the NYT: https://www.nytimes.com/2023/02/03/briefing/why-eggs-cost-so-much.html?searchResultPosition=2

Here's the link to another article on eggs: https://www.nytimes.com/2023/02/06/well/eggs-health-misinformation.html?searchResultPosition=1

Eggs here are 7.99.

They were over $7 just ten days ago.

With supply disruptions that have high information, is the price bump really reflective of inflationalry pressure in the broader economy?

With egg prices, the cost went up because many of the layers had to be culled due to disease. That created a gap. But we have high information because we know new layer will be in their place, we know how quickly new layers can be produced and how long it takes for them to begin laying after hatching. So economists could model the end of the price bump quite precisely even before the shortage began to be felt.

Eggs are also really easy to substitute for a little while, at least in households that cook their own food and are price sensitive.

We has a similar situation with lettuce in November as the last Salinas plantings failed to yield, but everyone in the business knew that the desert supply would come on as scheduled in November and prices would be back. That situation differs from the pathogen outbreaks where the cause can't be found leading to low information, as well as recalls that affect demand regardless of price.

In jabbing the proverbial thermometer in these places, which jabs tell us about inflation?

Inflation is as has been said here a complex thing.   But random comments might well include:

1) move to a smaller abode?   Really?
2) Get worker productivity up higher?  It is at least twice as high now as it was in the 60s, whilst real wages are a fraction of what they were by 1970, esp for lower-income workers, and the minimum wage has been frozen at the federal level since 2007.
3) Air conditioning is a recent phenomenon in most of the country, esp for the non-rich, but heat is different.   Most people will not do at all well in a 60 degree house, or even a 66 degree one.  Especially older folks (and I do not mean superannuated-- I mind the cold much more at 55 than I did even at 40, whereas I do not miss the a/c I have almost never had (and not in 15 years, when living with family who had it).
4) Shrinkflation and skimpflation not withstanding, it is also true that increased monopolization and centralization of many aspects of our economy have allowed many firms to raise prices inordinately, thinking (often correctly) that most people would just ultimately suck it up and deal with it.

Inflation is not that complex a phenomenon. Explaining the myriad of relative price changes that occur might get a bit trying.

1. If rent goes up, why not consider moving to a smaller place? Smaller eggs, smaller houses. I know there are transactions cost that make this the last package whose size one wants to change.

2a. The true relationship between the evolution of wages and labor productivity is consistently misreported. First, one must look at total compensation, which includes benefits, and not hourly wages, which do not. Second, one must use the same deflator for the two series. When one undertakes both adjustments, the evolution of productivity and real compensation is the same. Put differently, one also sees references to falling labor's share. Adjusting GDP  for what people actually spend, i.e. subtracting taxes and depreciation, to get Gross Domestic Income,  labor's share is in its historical range.

2b. Increasing the minimum wage must induce something to offset the increased labor costs. It could reduce employment, reduce hours, reduce benefits, reduce amenities, what have you, all of the above.

4.  Increased monopolization is hard to see with globalization. There are world markets for many things.  More firms, not fewer. And how does one get to be a monopoly? Innovate, reduce costs, reduce prices. And we cannot merely absorb inflation -- we have budget constraints.

Quote from: dismalist on February 14, 2023, 10:22:04 AM
Inflation is not that complex a phenomenon. Explaining the myriad of relative price changes that occur might get a bit trying.

1. If rent goes up, why not consider moving to a smaller place? Smaller eggs, smaller houses. I know there are transactions cost that make this the last package whose size one wants to change.

Because moving is also expensive.

Quote
2a. The true relationship between the evolution of wages and labor productivity is consistently misreported. First, one must look at total compensation, which includes benefits, and not hourly wages, which do not. Second, one must use the same deflator for the two series. When one undertakes both adjustments, the evolution of productivity and real compensation is the same. Put differently, one also sees references to falling labor's share. Adjusting GDP  for what people actually spend, i.e. subtracting taxes and depreciation, to get Gross Domestic Income,  labor's share is in its historical range.

Consider that wealth inequality is the highest it has been in a century. That wealth rising to the top came from somewhere. All the homeless people, those who are stuck renting at a high percentage of their wages but unable to afford a home, those working at minimum wage, going without healthcare...

Quote
2b. Increasing the minimum wage must induce something to offset the increased labor costs. It could reduce employment, reduce hours, reduce benefits, reduce amenities, what have you, all of the above.

Apple did not have layoffs but the CEO took a pay cut. Facebook had layoffs, the executives did not take pay cuts AND they did a stock buyback to juice up the share price and enrich the shareholders.

Something tells me higher wages for the lowest paid will come out of profits and returns for the wealthiest people. Or they should. Be nice if labor laws supported a high minimum wage, stable working schedules, and we had Medicare For All to ensure a broad healthy economy.

Quote
4.  Increased monopolization is hard to see with globalization. There are world markets for many things.  More firms, not fewer. And how does one get to be a monopoly? Innovate, reduce costs, reduce prices. And we cannot merely absorb inflation -- we have budget constraints.

Also - buy up your competitors and squeeze your suppliers by becoming a monopsony (Wal-Mart). Have a high barrier to entry for competitors and nudge up prices while reducing services (Cable TV). Use the profits to continue to build market power.

Of course moving is expensive! That's what "high transactions cost" means. :-)

Raising inequality changes the subject. And the most misguided interpretation of all, the most pernicious to our thinking, is that

QuoteThat wealth rising to the top came from somewhere.

Nay, technological advance, higher productivity, luck, lower energy prices, anything, but it wasn't stolen. This is the classic "zero sum" fallacy. Two people voluntarily trading improve both their well being. We are most of the world, voluntarily trading with each other. World poverty has fallen dramatically.

How about those not working at all because there's a minimum wage: The minimum wage constitutes structural racism. The victims are unskilled Black teenage boys and young men. Make the wage high enough, and the unskilled will not be hired.

Health care -- the share of people covered by health insurance in the US has never been higher. Homelessness may be due to restrictive laws in favor of -- homeowners! A more encompassing explanation might be: One gets the number of homeless one pays for.

Wal-mart is probably the greatest contributor to poor people's welfare, ahead of Microsoft! Low, low prices. Otherwise they wouldn't have customers.

As I noted above, the wage share has been remarkably stable. No reason to count on anything coming out of profits.

All details aside, it's not a zero sum game. That some of us cling to zero-sum explanations of this world is likely a product of biological evolution. When we lived in bands of 40 forty thousand years ago, with no technical progress, with team production known as hunting, if somebody had more than somebody else, s/he must have stolen it! But that's not our world. It's an anachronism.

Quote from: dismalist on February 14, 2023, 12:42:25 PM
Of course moving is expensive! That's what "high transactions cost" means. :-)

Raising inequality changes the subject. And the most misguided interpretation of all, the most pernicious to our thinking, is that

QuoteThat wealth rising to the top came from somewhere.

Nay, technological advance, higher productivity, luck, lower energy prices, anything, but it wasn't stolen. This is the classic "zero sum" fallacy. Two people voluntarily trading improve both their well being. We are most of the world, voluntarily trading with each other. World poverty has fallen dramatically.

How about those not working at all because there's a minimum wage: The minimum wage constitutes structural racism. The victims are unskilled Black teenage boys and young men. Make the wage high enough, and the unskilled will not be hired.

Health care -- the share of people covered by health insurance in the US has never been higher. Homelessness may be due to restrictive laws in favor of -- homeowners! A more encompassing explanation might be: One gets the number of homeless one pays for.

Wal-mart is probably the greatest contributor to poor people's welfare, ahead of Microsoft! Low, low prices. Otherwise they wouldn't have customers.

As I noted above, the wage share has been remarkably stable. No reason to count on anything coming out of profits.

All details aside, it's not a zero sum game. That some of us cling to zero-sum explanations of this world is likely a product of biological evolution. When we lived in bands of 40 forty thousand years ago, with no technical progress, with team production known as hunting, if somebody had more than somebody else, s/he must have stolen it! But that's not our world. It's an anachronism.

I never said it was a zero-sum game. Still, wages (and wealth) are set by power, not by productivity.

QuoteI never said it was a zero-sum game. Still, wages (and wealth) are set by power, not by productivity.

Wages are set by productivity. People want to make profits. They gotta pay workers to make profits. :-)

Walmart has to worry about its power every day. It keeps competitors at bay by charging low prices. As does Microsoft. US Bureau of Labor Statistics says that the price of an I-phone has dropped substantially in the last year. Low power, really.

Put differently, high profits are a sing of serving customers well, not a sign of theft.

Power? Why should firms have more power to raise prices, and increase wages less than prices, in the last three years? Did they suddenly realize they had power? Were they stupid beforehand?

Power as an explanation of price setting is like the phlogiston explanation of combustion.

Quote from: dismalist on February 14, 2023, 04:50:55 PM

QuoteI never said it was a zero-sum game. Still, wages (and wealth) are set by power, not by productivity.

Wages are set by productivity. People want to make profits. They gotta pay workers to make profits. :-)

Walmart has to worry about its power every day. It keeps competitors at bay by charging low prices. As does Microsoft. US Bureau of Labor Statistics says that the price of an I-phone has dropped substantially in the last year. Low power, really.

Put differently, high profits are a sing of serving customers well, not a sign of theft.

Power? Why should firms have more power to raise prices, and increase wages less than prices, in the last three years? Did they suddenly realize they had power? Were they stupid beforehand?

Power as an explanation of price setting is like the phlogiston explanation of combustion.

High profits are also a sign of market power.

And, companies find the profit maximization part of the curve. Some have found, such as in the case of fuel, that consumers are willing to tolerate very high prices because the alternatives are unacceptable. Like... quitting one's job because the commute costs are too high.

Quote from: ciao_yall on February 15, 2023, 08:01:57 AM

Quote from: dismalist on February 14, 2023, 04:50:55 PM

QuoteI never said it was a zero-sum game. Still, wages (and wealth) are set by power, not by productivity.

Wages are set by productivity. People want to make profits. They gotta pay workers to make profits. :-)

Walmart has to worry about its power every day. It keeps competitors at bay by charging low prices. As does Microsoft. US Bureau of Labor Statistics says that the price of an I-phone has dropped substantially in the last year. Low power, really.

Put differently, high profits are a sing of serving customers well, not a sign of theft.

Power? Why should firms have more power to raise prices, and increase wages less than prices, in the last three years? Did they suddenly realize they had power? Were they stupid beforehand?

Power as an explanation of price setting is like the phlogiston explanation of combustion.

High profits are also a sign of market power.

And, companies find the profit maximization part of the curve. Some have found, such as in the case of fuel, that consumers are willing to tolerate very high prices because the alternatives are unacceptable. Like... quitting one's job because the commute costs are too high.

Ah, yes marke power. Of course they are! But to use market power to explain an increase in the general price level means market power would have to increase across the board. If anything, the opposite has been happening. There's no market power in the egg industry. Or, in the case of oil, violently fluctuating market power. Hard to believe.

One must look elsewhere to explain inflation.

Quote from: dismalist on February 15, 2023, 09:32:27 AM

Quote from: ciao_yall on February 15, 2023, 08:01:57 AM

Quote from: dismalist on February 14, 2023, 04:50:55 PM

QuoteI never said it was a zero-sum game. Still, wages (and wealth) are set by power, not by productivity.

Wages are set by productivity. People want to make profits. They gotta pay workers to make profits. :-)

Walmart has to worry about its power every day. It keeps competitors at bay by charging low prices. As does Microsoft. US Bureau of Labor Statistics says that the price of an I-phone has dropped substantially in the last year. Low power, really.

Put differently, high profits are a sing of serving customers well, not a sign of theft.

Power? Why should firms have more power to raise prices, and increase wages less than prices, in the last three years? Did they suddenly realize they had power? Were they stupid beforehand?

Power as an explanation of price setting is like the phlogiston explanation of combustion.

High profits are also a sign of market power.

And, companies find the profit maximization part of the curve. Some have found, such as in the case of fuel, that consumers are willing to tolerate very high prices because the alternatives are unacceptable. Like... quitting one's job because the commute costs are too high.

Ah, yes marke power. Of course they are! But to use market power to explain an increase in the general price level means market power would have to increase across the board. If anything, the opposite has been happening. There's no market power in the egg industry. Or, in the case of oil, violently fluctuating market power. Hard to believe.

One must look elsewhere to explain inflation.

So, eggs were a temporary price shock. If there are only a few egg producers they can signal, without colluding, to allow prices to increase. Grocery stores, of which there aren't many with all the consolidation of the industry, know they can raise prices to a certain point without losing too many sales.

To look at overall inflation, consider fuel. Oil prices affect everything, from the price of plastic to transportation of goods. Again, not many producers, demand is fairly fixed regardless of price.

There are thousands of egg producers! There is no market power.

Consider fuel prices? Yes. Not that it affects everything: Everything affects everything! Big oil consists of five companies. Some years their prices go up, some years they go down. Their monopoly power is not changing from year to year.

But back to the fundamental point: A theory of price changes for individual prices, and there are untold numbers of prices, cannot explain inflation, which is a rise in the overall price level. Otherwise, one would have to say that firms were stupid beforehand and now got smart.  Incroyable!

I'm going to try to be charitable.   Baby Boomers who came of age in a world that is simply vastly different from today's world, often do not seem to get basic economic realities that afflict the lower orders, and the younger folks whose world in almost all respects has been much harder on them than the Boomers' was.   Lemme see:

1) irrespective of the expense incurred *to move*, in many places in this country, people are stuck, because they simply cannot move anywhere that would be cheaper to live than where they are living now.   And both the new place and the old place are probably dumps, too.

2) Obviously high benefits need to be factored in when considering how much one actually earns.   Thing is, most lower-income folks get far fewer bennies than their BB grandparents did in the 70s.   Many lower-income folks get no benefits to speak of, at all.

3) Around 18% of the food stamps issued in this country are spent at Walmart, which is essentially a crony capitalism/ corporate welfare driven outfit.  Who should pay for Walmart employees' food and health care?   Hint: maybe 'the taxpayers' ain't necessarily the most moral answer.

4) There are thousands of farms that raise eggs, but very few national distributors of those eggs.   These middle men more or less get almost all the profits.

Quote from: kaysixteen on February 15, 2023, 09:38:49 PM
I'm going to try to be charitable.   Baby Boomers who came of age in a world that is simply vastly different from today's world, often do not seem to get basic economic realities that afflict the lower orders, and the younger folks whose world in almost all respects has been much harder on them than the Boomers' was.   Lemme see:

1) irrespective of the expense incurred *to move*, in many places in this country, people are stuck, because they simply cannot move anywhere that would be cheaper to live than where they are living now.   And both the new place and the old place are probably dumps, too.

2) Obviously high benefits need to be factored in when considering how much one actually earns.   Thing is, most lower-income folks get far fewer bennies than their BB grandparents did in the 70s.   Many lower-income folks get no benefits to speak of, at all.

3) Around 18% of the food stamps issued in this country are spent at Walmart, which is essentially a crony capitalism/ corporate welfare driven outfit.  Who should pay for Walmart employees' food and health care?   Hint: maybe 'the taxpayers' ain't necessarily the most moral answer.

4) There are thousands of farms that raise eggs, but very few national distributors of those eggs.   These middle men more or less get almost all the profits.

Yes, poverty sucks. Nothing to do with inflation, though.

As for bennies, I'm sure low wage earners get more stuff nowadays than they ever did 50 years ago.

As I said, Walmart has done more for poor people than -- well, anything except running water and sewage systems! The numbers provided show that Walmart is favored by the poor, and for good reason: It's cheaper than the competitors!

Yes, those middle men! Thank goodness we don't have to hatch the eggs ourselves.

No firm is stealing anything from us. The thought that they are seems hard wired into our psyche from 40 000  years ago. We are not a family; we are a society. We are exchanging, not stealing.

Ah yes, Walmart the friend of the working class.   Buy cheap 3d world crap to cause the Americans' factories to shutter, then happily take the working man's welfare bennies in payment for said cheap crapola.  Win-win!

Quote from: kaysixteen on February 17, 2023, 10:35:44 PM
Ah yes, Walmart the friend of the working class.   Buy cheap 3d world crap to cause the Americans' factories to shutter, then happily take the working man's welfare bennies in payment for said cheap crapola.  Win-win!

Buying cheap 3d world crap benefits the workers in those 3d world countries, who need it a lot more than laid off American workers.

I unashamedly believe that workers in Vietnam are just as important as workers in the US.

Quote from: quasihumanist on February 18, 2023, 08:38:17 AM

Quote from: kaysixteen on February 17, 2023, 10:35:44 PM
Ah yes, Walmart the friend of the working class.   Buy cheap 3d world crap to cause the Americans' factories to shutter, then happily take the working man's welfare bennies in payment for said cheap crapola.  Win-win!

Buying cheap 3d world crap benefits the workers in those 3d world countries, who need it a lot more than laid off American workers.

I unashamedly believe that workers in Vietnam are just as important as workers in the US.

Agree. There is a reason why the Fortune Global 500 is (1) Dominated by mass market retailers and oil companies; and (2) The WTO takes a hands-off approach to global labor and environmental laws.

Let's also remember that Wal-Mart keeps prices low by keeping wages low, then sending its workers out for food stamps, housing assistance and public health care. Something about an "Honest day's work should pay the bills?"

Quote from: ciao_yall on February 18, 2023, 08:47:53 AM

Quote from: quasihumanist on February 18, 2023, 08:38:17 AM

Quote from: kaysixteen on February 17, 2023, 10:35:44 PM
Ah yes, Walmart the friend of the working class.   Buy cheap 3d world crap to cause the Americans' factories to shutter, then happily take the working man's welfare bennies in payment for said cheap crapola.  Win-win!

Buying cheap 3d world crap benefits the workers in those 3d world countries, who need it a lot more than laid off American workers.

I unashamedly believe that workers in Vietnam are just as important as workers in the US.

Agree. There is a reason why the Fortune Global 500 is (1) Dominated by mass market retailers and oil companies; and (2) The WTO takes a hands-off approach to global labor and environmental laws.

Let's also remember that Wal-Mart keeps prices low by keeping wages low, then sending its workers out for food stamps, housing assistance and public health care. Something about an "Honest day's work should pay the bills?"

This is what ticks me off the most--the fact that I'm supposed to subsidize a global conglomerate's workers because the owners/managers don't want to pay a true working wage.

And yes, I do know that I'd have to pay more for goods and services if Walmart didn't exist. But here's the thing: In an ideal world, the world that we should have inherited, workers' wages (including our salaries) would have kept pace with productivity since the 1950s, so that the minimum wage would now be ~$25/hour and our ability to pay for those goods and services would be concomitantly healthy, leaving us in an even longer period of post-WWII prosperity than actually happened (in other words, a period of prosperity continuing into the present).

Instead, though, we voted for oligarchs (and people who sympathized with oligarchs) who were savvy enough to distract us with "religion"/"patriotism"--and, of course, good old racism and classism--so they could emplace and solidify policies and strategies to suppress wages and salaries for middle- and lower-class folks; as a result, we're now finding out what living in a Big Corporate -controlled economy bent on maintaining and even expanding income inequality (otherwise known, especially in the tropics, as a "banana republic") feels like.

:now considering how to select the optimal cardboard box in which to retire on a (future) beach in Orlando:

/snark off

Alas, guys, your causality is way off.

Walmart pays low wages because it can. That's the labor market. Walmart is tiny compared to the pool of unskilled labor. It's not dictating anything. The workers work there voluntarily at the wage Walmart offers.

The idea that welfare payments contribute to Walmart wages is just about the opposite of the truth. To get food stamps, family income must be below 130% of poverty. Two people working would get the family over poverty and take away food stamps. So, one person will not work. Lower labor supply means Walmart, and others, have to pay more than otherwise, not less. Medicaid is similarly structured.

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

Quote from: dismalist on February 18, 2023, 03:15:26 PM

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Quote from: jimbogumbo on February 18, 2023, 04:11:53 PM

Quote from: dismalist on February 18, 2023, 03:15:26 PM

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

But even here,  towns and cities emerge which do not have restrictive zoning. Some exist already. I think Houston is one, but that doesn't matter so much as many, many little Houstons. That's actually quite easy technologically even if you don't have desert all around you: Build up! That's dirt cheap.

So long as there is political competition, no bad deed goes unpunished.

We've never had it so good!

Quote from: dismalist on February 18, 2023, 04:31:45 PM

Quote from: jimbogumbo on February 18, 2023, 04:11:53 PM

Quote from: dismalist on February 18, 2023, 03:15:26 PM

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

Yes, this is true. The same people living in developer-built homes that was once open space are now howling about evil developers taking away remaining "open space."

Also, investors are buying up large tracts of developer-built homes and converting them to rentals or long-term investments (https://www.nar.realtor/magazine/real-estate-news/commercial/investors-swoop-in-to-buy-up-homes) which also reduces the supply of housing.

Still, I would also make the point that homes built today have a lot more intrinsic value than homes built in the 1950's so construction costs are higher. Insulation, higher and safer electrical services, cable connections. More so than compared to homes built in the 1900's which didn't even have plumbing.

Quote

But even here,  towns and cities emerge which do not have restrictive zoning. Some exist already. I think Houston is one, but that doesn't matter so much as many, many little Houstons. That's actually quite easy technologically even if you don't have desert all around you: Build up! That's dirt cheap.

So long as there is political competition, no bad deed goes unpunished.

We've never had it so good!

Let's also consider that food took up a much larger portion of the household budget back in the 1950's. And, quality and quantity have improved... (https://delishably.com/food-industry/What-Americans-Actually-Cooked-and-Ate-During-the-1950s) though one might make the case that the growth in factory farming hasn't really helped quality.

Quote from: dismalist on February 18, 2023, 04:31:45 PM
We've never had it so good!

Well, young Americans (and in plenty of other countries), when it comes to paying for stuff like housing or college, are actually poorer than their parents were at their age - first time that's happened since probably the Great Depression. Young people finding it harder to afford housing than their parents did is a nearly global phenomenon. Add in loss of job security, and there's a reason for the coining of the word "permacrisis."

Quote from: Stockmann on February 18, 2023, 07:41:08 PM

Quote from: dismalist on February 18, 2023, 04:31:45 PM
We've never had it so good!

Well, young Americans (and in plenty of other countries), when it comes to paying for stuff like housing or college, are actually poorer than their parents were at their age - first time that's happened since probably the Great Depression. Young people finding it harder to afford housing than their parents did is a nearly global phenomenon. Add in loss of job security, and there's a reason for the coining of the word "permacrisis."

That's not correct. Here is median [better than mean to care about distribution] real household income since 1990

https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/ (https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/)

To go back further, there is a beautiful graph

https://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf (https://www.russellsage.org/sites/all/files/chartbook/Income%20and%20Earnings.pdf)

The top graph tells us that, amidst fluctuations, all categories of groups counted by the Census were better off in 2012 than in 1950.

As for the rest of the world, I linked upthread to the dramatic decline in absolute poverty during the last thirty to fifty years.

We've never had it so good!

dismalist, your 2nd link shows that median household income has stagnated since 1980.  I also don't trust official inflation statistics where the methodology keeps on changing to understate inflation.   One example is how they don't include the price of a house but rather use imputed rent.   

Quote from: Anselm on February 18, 2023, 10:10:30 PM
dismalist, your 2nd link shows that median household income has stagnated since 1980.  I also don't trust official inflation statistics where the methodology keeps on changing to understate inflation.   One example is how they don't include the price of a house but rather use imputed rent.

I know, I know! Median household size has also been diminishing, though. :-) Seriously, I wish such data in that beautiful chart were readily findable for more recent years.

This house price vs. imputed rent bothers everybody. 'Ya gotta have have a flow expense for housing to get to a cost-of-living. Buying a home is not a cost of living; it's a choice of assets. What that asset yields each year, called rent, has to be figured out somehow.

The official inflation statistics are not trying to cheat us, they're only trying to get closer to the change in the cost-of-living. All this for the mean consumer, a well off individual. The personal weighting is far more of a measurement question than anything else.

Exactly how did Wallyworld improve those lower-income folks' lives by buying all that cheap crap, causing the factories they depended upon for work to go belly-up, and by using those (usually temporary) low prices to run all the mom and pop and small chain competition out of business?

I confess it concerns me that you use the fact that unfettered free trade improves the lives of factory workers in places like Vietnam-- which it unambigiously does do-- to justify a blase attitude towards, ahem, your countrymen whose lives have emphatically and without the shadow of any doubt been eviscerated by that selfsame free trade.   Most elite academic types have little if any experience in recent years, perhaps recent decades, with places like Rusty City, where I have been living for 15 years.  Rusty City here has lost 30k people from its all time high maybe 40-50 years back, and the only reason it has maintained even this level of pop is because of the large quantity of 3d world immigrants it has been receiving over the last decade or so, along with people recruited by the local housing authority to move here to fill up vacancies in extensive housing projects built during the 60s and 70s-- these folks are largely folks from the long-term welfare underclass, and their housing vouchers and welfare bennies work as well here as they did in Boston.   The city itself used to be a huge textile town-- my own great-great grandfather was one of a number of skilled weavers recruited from England in 1870s to come work in the mills here-- the WM in which I now work sits on a site which until the 1990s was a large factory complex employing 2k people with ft, union jobs, and now WM provides only about 200, mostly pt, and all emphatically non-union low-paid position.  Essentially all the factories are out of business, most of them just collecting dust or torn down.   And conditions here are much better than in many such places in flyover country.   And money problems notwithstanding, the deaths of despair, opioids, etc, that are engendered by this 'free trade' and its effects demonstrate that, ahem, we have indeed not never had it so good.  One wonders why anyone would hold to such a nonsensical opinion, unless one is a bad actor, a troll, senile, or just plain dumb as a box of rocks.

Oh dear, let's keep Walmart and unfettered free trade separate.

--Given whatever else happens in the universe, Walmart is good for poor people. Walmart does not dictate wages, it adjusts to them. Walmart is good at stuff aside from wages that keeps its costs low.

--Free trade creates winners and losers. The benefit of free trade is that the winners win more than the losers lose. The political system has not been astute at compensating losers from the winnings of the winners so as to leave everybody better off. That's one reason why Trump caught on. The present administration has not revoked Trump's restrictive foreign trade policies vis-à-vis China. That keeps unskilled workers' wages higher than otherwise, and skilled workers' wages lower than otherwise. Rejoice.

Never mind the contribution of free trade to growth. We're surely all rich enough. :-)

Quote from: kaysixteen on February 20, 2023, 07:26:42 PM
I confess it concerns me that you use the fact that unfettered free trade improves the lives of factory workers in places like Vietnam-- which it unambigiously does do-- to justify a blase attitude towards, ahem, your countrymen whose lives have emphatically and without the shadow of any doubt been eviscerated by that selfsame free trade

Let's face it - poor people in Vietnam need it a lot more than poor people in America, because they're poorer.

Now, I would like the lives of poor people to be improved everywhere.  I'm willing to sacrifice in various ways to do it.  I'm happy for various political measures to be taken for it.

But - frankly - almost everyone wants society as a whole to have to put as little effort as possible in the drudgery of keeping us fed and housed and clothed, because we all want to have more time and resources to do other stuff.  Most mom-and-pop stores just create extra unnecessary drudgery.  I agree that a lot more of the gain in productivity should go to workers, both in Vietnam and here, but there's no point in make-work.

There's also the problem of having more people who can only do drudge work than necessary drudge work.  It's a problem, but I'd much rather pay people to do nothing than pay people for the equivalent of digging holes and filling them back up, and the people working mostly feel the same way too.

Finally, to say that poor Americans should be more important than poor Vietnamese to me because I'm American - that strikes me as plain wrong.  Even sinful - there is neither Jew nor Greek et c.

We can't separate Wallyword and "free trade," because at worst, "free trade" means businesses being permitted to find the lowest cost way of doing business and sell into areas where there is a cost advantage. Unfortunately it turns into a race to the bottom, where

Free trade can work for everyone if we set high minimum wages and environmental standards, so a middle-class American isn't competing against a Vietnamese teenager earning poverty wages working next to an river full of sewage and industrial waste.

It might mean fewer overall goods but better quality of life for everyone in the USA, Vietnam and anywhere else.

That would be nice.

Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

Quote from: dismalist on February 21, 2023, 10:35:20 AM
Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

No, they don't. Studies show the opposite, in fact.

Quote
Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

And yet, strangely enough, that doesn't happen in real life. Why is that?

Quote from: ciao_yall on February 21, 2023, 05:05:37 PM

Quote from: dismalist on February 21, 2023, 10:35:20 AM
Mixing the notion of  free trade and Walmart leads to muddled thinking. One loses sight of cause and effect.

High minimum wages leads to unemployment, reduced work time, lower benefits or all three. Those hit hardest are the least productive -- young black males. Minimum wage laws are structural racism.

No, they don't. Studies show the opposite, in fact.

Quote
Free trade raises wages in poor countries. With the higher incomes, people there prefer a cleaner environment and they can afford it.

And yet, strangely enough, that doesn't happen in real life. Why is that?

Alas, that's wrong. Two centuries of thought on some of this and a half century of empirical evidence contradict all this. Arguments and evidence are wanted. I'm sticking to assertions so  long as everyone else is. Less work. :-)

Random points:

1 why aren't you willing to sacrifice some things to increase the prosperity of your fellow Americans?   What I said about the decimation of large quantities of working-class post-industrial America is absolutely true, even if the level of *absolute* poverty in various 3d world locales is greater.   

2) I am going to ask you to do something-- look up the Bible verse you cited, about 'there being neither Jew nor Greek', *in context*, and tell me what it means *in context*, and use your scholarly skills to ascertain whether it could reasonably be interpreted in the way you are doing.   As an added bonus, look up various other verses regarding charity starting in "jerusalem', and working eventually to the ends of the earth, charity being first given to those of the household of faith, etc., and various other verses that, taken as a whole, demonstrate what the bible's attitude may actually be wrt allowing one's own people in large measure to become impoverished, in order to save money on cheap consumer goods at Big Box America.

3) Now, dismalist, this is reality, the real world.   It is not an Econ 101 seminar at George Mason in 1975.  Put away your Ayn Rand playbook and realize that all is not best achieved through unfettered John Galt-esque leave me alone hyperindividualism.

Quote from: dismalist on February 18, 2023, 04:31:45 PM

Quote from: jimbogumbo on February 18, 2023, 04:11:53 PM

Quote from: dismalist on February 18, 2023, 03:15:26 PM

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

But even here,  towns and cities emerge which do not have restrictive zoning. Some exist already. I think Houston is one, but that doesn't matter so much as many, many little Houstons. That's actually quite easy technologically even if you don't have desert all around you: Build up! That's dirt cheap.

So long as there is political competition, no bad deed goes unpunished.

We've never had it so good!

The world is falling apart around us, but other than that you are technically correct. 

Quote from: ciao_yall on February 18, 2023, 07:37:02 PM

Quote from: dismalist on February 18, 2023, 04:31:45 PM

Quote from: jimbogumbo on February 18, 2023, 04:11:53 PM

Quote from: dismalist on February 18, 2023, 03:15:26 PM

Quote from: jimbogumbo on February 18, 2023, 02:49:33 PM

Quote from: dismalist on February 18, 2023, 12:49:23 PM
Two people working would get the family over poverty and take away food stamps.

Two people working was definitely not needed in the 1950's. Doesn't that in fact help somewhat confirm what paultuttle stated?

One can have a 1950's standard of living today quite easily: Let's try 1950's medicine at 1950's prices and incomes compared to 2020's medicine at 2020's prices with 2020's incomes. Let's try 1950's wives as cooks compared to take-away food today. Hell, McDonalds was an improvement in many places! [though not in New York :-)] Nobody ever bothered to measure household productivity and compare it to market productivity. And 1950's cars at 1950's prices with 1950's income and so on ... . One gets the picture.

Be that as it may, productivity and earnings [not wages, which are only a part of earnings], properly deflated, as I expounded upthread, have moved together since the 1950's.

One of the problems IMHO with your take is housing availability. Even if a family of 4 were satisfied with the equivalent of the 1953 median income of $4200 (just under $48,000 now), you have a problem finding a house. My hypothetical family qualifies for a $300,000 mortgage, which means that IF you live in one of the urban areas you have trouble finding a home at all. If you move to where the cheaper homes are (if you can afford the upfront moving costs), you can't get a job. Sort of a Catch-22 for hordes of people.

Good question, jimbo. Standard of living -- well-being -- depends upon income and all relative prices. Has nothing to do with inflation, except as something that depresses real incomes.

Still, we can ask why houses cost so much. As usual, the answer is: us! Homeowners have made it politically difficult to build more houses in places people want to live, so as to have an increase in the prices of their houses.

Yes, this is true. The same people living in developer-built homes that was once open space are now howling about evil developers taking away remaining "open space."

Also, investors are buying up large tracts of developer-built homes and converting them to rentals or long-term investments (https://www.nar.realtor/magazine/real-estate-news/commercial/investors-swoop-in-to-buy-up-homes) which also reduces the supply of housing.

Still, I would also make the point that homes built today have a lot more intrinsic value than homes built in the 1950's so construction costs are higher. Insulation, higher and safer electrical services, cable connections. More so than compared to homes built in the 1900's which didn't even have plumbing.

Interesting analysis here:
House size over time (https://www.darrinqualman.com/house-size/)

Quote
New homes in Canada and the US are big and getting bigger.  The average size of a newly constructed single-family detached home is now 2,600 square feet in the US and probably 2,200 in Canada.  The average size of a new house in the US has doubled since 1960.  Though data is sparse for Canada, it appears that the average size of a new house has doubled since the 1970s.

While at the same time
Household size over time (https://www.statista.com/statistics/183648/average-size-of-households-in-the-us/)

Quote
The average American household consisted of 2.5 people in 2022.

That's down from about 3.3 in 1960.

So, houses have been getting bigger as the number of people living in them has gotten smaller.

In 1961, my family had 6 people in a 900 sq. ft. house. Now two of us live in a condo that is only slightly smaller, with way more amenities. (I grew up with one black and white TV and no cable. Now we have high speed internet and streaming services on a big flat screen TV like everyone else.)

If a family now wanted to live in the style of my parents, it would be easy on a single income, without a professional job, and maybe even without being full-time. Our expectation inflation is what drives economic inflation.

I'm not convinced it would be easy to support a family of six anywhere in Ontario, let alone southern Ontario, on a single non-professional income, even in a 900 square foot apartment. There may still be some vehicle assembly plants where you can just about manage a sufficient salary (though I'm skeptical), but I doubt retail or the service industry will cut it.

Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

How things are going on?

I can only say, as my POV, "Mutantis mutantur, etc.."

Quote from: dismalist on February 23, 2023, 11:52:29 AM
Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

What that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

Quote from: Kron3007 on March 09, 2023, 10:40:22 AM

Quote from: dismalist on February 23, 2023, 11:52:29 AM
Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

What that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

I take it this is what you want to say:

QuoteWhat that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

House prices are already taken into account in the price index used to calculate real income. If your use of housing takes up a larger share of your spending than the median household, your real income has gone up less than that of the median household. Only if you are a housing addict has your real income gone down.

Quote from: Kron3007 on March 09, 2023, 10:40:22 AM

Quote from: dismalist on February 23, 2023, 11:52:29 AM
We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

My wife has a great little anecdote about her dad, who was a bit of a skinflint, spilling ink on his best work shirt and going to J.C. Penny and being outraged that a shirt cost $12 (this was sometime in the 1980s).  He had taken a $5 bill with him.

My father would not buy coffee from Starbucks.  He could not comprehend why someone would pay a $1.25 or whatever it was for coffee.

My wife was apoplectic that her new prescription glasses cost over $200.

When my brother-in-law got a new job I treated the fam to two pizzas, cheese-stuffed breadsticks, a two liter of Diet Coke, and two orders of chocolate lava cakes----when the generous tip was thrown in I was out $90.  My nephew saw this and said, "Ninety dollars!" which caused everyone else to freak out. 

When I was in high school, a Big Mac cost, according to Google, $1.30.

What I told my wife, which she did not accept, is "When everything seems like it costs way too much you've reached middle age."

Quote from: Wahoo Redux on March 09, 2023, 11:42:34 AMWhat I told my wife, which she did not accept, is "When everything seems like it costs way too much you've reached middle age."

I guess I'm middle-aged then. In high school, I was always frustrated with my baby-boomer mother because her idea of what things should cost was always about 40-70% of what they really did. "Six dollars for a fast-food meal? That's so expensive!" But now I think it should cost $6 and it costs $9 or more, so I'm more sympathetic than I used to be.

People bitch about rising individual prices as a matter of salience, probably for some particularly noticeable price changes. The bitching does not seem to be related to the share of income spent on the bitched commodity price, eggs, e.g., or even gasoline. There is no bitching about falling prices, or prices rising less than the average. We have asymmetric bitching!

Look at this beautiful graph: https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-3.png?x91208  (https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-3.png?x91208)

College cost increases are right up there!

Plenty of stuff hovers around zero price increases or even declining prices, while the average inflation rate is 75% between 2000 and 2022. This includes new cars, clothing, cellphone services, computer software and TV's. Computing power per dollar, also used in the home, but not obviously contained in the graph, "has probably increased by a factor of ten roughly every four years over the last quarter of a century (measured in FLOPS or MIPS)". Nobody bitches about these.

Even the cost of housing, that's rent and imputed rent here, is only inflating at the average rate. [That lags and averages volatile house prices.]

Average hourly wages, which understates compensation growth on account bennies are left out, grows faster than overall inflation.

Noting individual price changes is about relative price changes, not inflation.

To figure out one's own evolution of material well being, it's best to concentrate on one's dollar income relative to published inflation, perhaps re-weighting price changes with one's own spending shares, and not on the price of eggs, nor even on the price of houses alone.

Fascinating graph.

Quote from: dismalist on March 09, 2023, 11:34:35 AM

Quote from: Kron3007 on March 09, 2023, 10:40:22 AM

Quote from: dismalist on February 23, 2023, 11:52:29 AM
Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

What that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

I take it this is what you want to say:

QuoteWhat that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

House prices are already taken into account in the price index used to calculate real income. If your use of housing takes up a larger share of your spending than the median household, your real income has gone up less than that of the median household. Only if you are a housing addict has your real income gone down.

Well, all I can do is speak to my observations.  In the last 10 years, houses have approximately doubled in value around here.  Median income has not done anything close to this.  I don't know how the numbers in that link were calculated, but they do not reflect reality where I am.  Perhaps I need to move to Saskatchewan....

Quote from: Parasaurolophus on February 23, 2023, 07:37:41 AM
I'm not convinced it would be easy to support a family of six anywhere in Ontario, let alone southern Ontario, on a single non-professional income, even in a 900 square foot apartment. There may still be some vehicle assembly plants where you can just about manage a sufficient salary (though I'm skeptical), but I doubt retail or the service industry will cut it.

Agreed.  Where I am, even a small townhome would cost too much to buy on most single incomes.  It would be hard to make it work, let alone save for retirement or anything.

Quote from: Kron3007 on March 09, 2023, 04:36:24 PM

Quote from: dismalist on March 09, 2023, 11:34:35 AM

Quote from: Kron3007 on March 09, 2023, 10:40:22 AM

Quote from: dismalist on February 23, 2023, 11:52:29 AM
Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

What that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

I take it this is what you want to say:

QuoteWhat that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

House prices are already taken into account in the price index used to calculate real income. If your use of housing takes up a larger share of your spending than the median household, your real income has gone up less than that of the median household. Only if you are a housing addict has your real income gone down.

Well, all I can do is speak to my observations.  In the last 10 years, houses have approximately doubled in value around here.  Median income has not done anything close to this.  I don't know how the numbers in that link were calculated, but they do not reflect reality where I am.  Perhaps I need to move to Saskatchewan....

The price of a house, to be clear, does not enter a cost-of-living index directly. Rather, rent and imputed rent do. It takes a while for house price increases to affect average rents, but the timing smooths the fluctuations in house prices.

Buying a house is a place to live + a speculative investment. That's not why prices of houses are high, but it is why they fluctuate like crazy. [Tulips anyone?] When you buy an expensive house, you are paying a high rent to yourself! Decide if it's worth it. An alternative is to choose a smaller, cheaper house and speculate with the left over cash! Renting smooths out these fluctuations. I know that it's more fun to own than to rent, which is one reason everyone wants to do it. Wait for a house price trough, another speculation.

Complaints about high house prices are like complaints about high stock prices, which means low rates of return on the capital expended. Anyway, the house price is not part of the cost-of-living and it should not be. The rent and imputed rent are and that's proper.

If you already own, you are better off with rising house prices -- just sell and buy something smaller. Spend the money saved on booze. If you don't own, buy something smaller than you wished, or rent and wait. This last being the Involuntary Speculator! :-)

ETA: Perhaps it's best to reiterate that a single price rising faster than nominal income doesn't mean you are worse off. It just means you can't rent as many square feet of living space, so do something smaller and enjoy something  else. If you spend all your money on housing, you can't be helped. It seems Big Mac prices have risen faster than median income in the US. That does not make me worse off if I don't spend much of my income on Big Macs.

Quote from: dismalist on March 09, 2023, 05:11:02 PM

Quote from: Kron3007 on March 09, 2023, 04:36:24 PM

Quote from: dismalist on March 09, 2023, 11:34:35 AM

Quote from: Kron3007 on March 09, 2023, 10:40:22 AM

Quote from: dismalist on February 23, 2023, 11:52:29 AM
Here is a pretty thorough compilation of data on incomes in Canada over time and across provinces.

https://wowa.ca/average-income-canada (https://wowa.ca/average-income-canada)

What that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

Scroll down a bit to the graph titled "Income in Canada". It goes from 1976 to 2020, showing mean and median income deflated by the CPI, which overstates inflation, thus understating real income growth.

Real median income in Canada has grown nicely since 1996. It was in the previous 20 years that median income stagnated amidst fluctuations.

We seem to have an idyllic sense of the past which doesn't correspond to reality. I don't know whether the cause is psychological or social psychological or political or what.

I take it this is what you want to say:

QuoteWhat that shows is that income has grown about 25% since 1996.  During this same time, housing has gone up by much, much, more....

House prices are already taken into account in the price index used to calculate real income. If your use of housing takes up a larger share of your spending than the median household, your real income has gone up less than that of the median household. Only if you are a housing addict has your real income gone down.

Well, all I can do is speak to my observations.  In the last 10 years, houses have approximately doubled in value around here.  Median income has not done anything close to this.  I don't know how the numbers in that link were calculated, but they do not reflect reality where I am.  Perhaps I need to move to Saskatchewan....

The price of a house, to be clear, does not enter a cost-of-living index directly. Rather, rent and imputed rent do. It takes a while for house price increases to affect average rents, but the timing smooths the fluctuations in house prices.

Buying a house is a place to live + a speculative investment. That's not why prices of houses are high, but it is why they fluctuate like crazy. [Tulips anyone?] When you buy an expensive house, you are paying a high rent to yourself! Decide if it's worth it. An alternative is to choose a smaller, cheaper house and speculate with the left over cash! Renting smooths out these fluctuations. I know that it's more fun to own than to rent, which is one reason everyone wants to do it. Wait for a house price trough, another speculation.

Complaints about high house prices are like complaints about high stock prices, which means low rates of return on the capital expended. Anyway, the house price is not part of the cost-of-living and it should not be. The rent and imputed rent are and that's proper.

If you already own, you are better off with rising house prices -- just sell and buy something smaller. Spend the money saved on booze. If you don't own, buy something smaller than you wished, or rent and wait. This last being the Involuntary Speculator! :-)

ETA: Perhaps it's best to reiterate that a single price rising faster than nominal income doesn't mean you are worse off. It just means you can't rent as many square feet of living space, so do something smaller and enjoy something  else. If you spend all your money on housing, you can't be helped. It seems Big Mac prices have risen faster than median income in the US. That does not make me worse off if I don't spend much of my income on Big Macs.

The average rent in my city is currently about $2000/month for a 1-bedroom apartment ($24k/year).    Average income according to your numbers is about $50k/year (before taxes).  This is not really affordable based on any financial advice I have heard.  Perhaps you coudl find something even smaller than a 1 bedroom, but it will still not be affordable for many/most people.

Rental prices were much lower even 10 years ago, an easy 30%, while average salaries were almost the same (according to your data, about 10% lower).  You can show me all the graphs you like, but I can tell you for certain that in my city, and most of Ontario, anyone who didn't purchase a home a while ago is much poorer now than they were ten years ago.  I think one of the problems with data like what you show, is that it pools all groups to show that everything is fine.  While things may be fine for home owners (who represent a large demographic), it is not fine for the next generation who are just entering the workforce unless they have generational wealth.  Grad students in our program now all need to have side jobs to live, that was not the case when I was a grad student (even though my stipend was lower).  The pain will likely show up in your graphs eventually, but the lag is too great to use to evaluate current conditions.


   

The price graph was for the US. I used it to make a wider point about complaining about individual prices that rise but not those that fall.

Median real income in Ontario can be found in the link to Canadian data I posted. Median real income, i.e. adjusted for inflation, has grown by 24% since 1997 [up to 2020, pre-covid].

It is certainly true that a singe individual or a single household experiences real income growth that differs from the median. That could be because of a different consumption structure or lower nominal wage growth. But it would be wrong to infer the well being of the median household from a single household. The median is a better stab at the welfare of a society.

When it comes to housing, I think one of the problems we are facing is that the minimal standard provided by the market has risen.

One used to be able to get, 50 years ago, a private 250 sq. ft. living space for 250 sq. ft. of rent.  Now those spaces no longer exist on the market.  So, while the rent per square foot (which roughly speaking is what is and should be captured by inflation statistics) might not have outpaced earnings growth, the minimum rent for living on your own has.

We may have an increase in standard of living for the median person, but I'm also interested in how things work for the 5th percentile person.

To a significant extent, a society should not be measured by how wealthy the average person is, but rather how wealthy the poorest person is.

Quote from: quasihumanist on March 10, 2023, 08:15:57 AM
When it comes to housing, I think one of the problems we are facing is that the minimal standard provided by the market has risen.

One used to be able to get, 50 years ago, a private 250 sq. ft. living space for 250 sq. ft. of rent.  Now those spaces no longer exist on the market.  So, while the rent per square foot (which roughly speaking is what is and should be captured by inflation statistics) might not have outpaced earnings growth, the minimum rent for living on your own has.

We may have an increase in standard of living for the median person, but I'm also interested in how things work for the 5th percentile person.

To a significant extent, a society should not be measured by how wealthy the average person is, but rather how wealthy the poorest person is.

The housing point is well taken. We are richer and we want more. Perfectly natural.

Shades of Rawls! This is not the thread to argue it, but one can make the case that behind the veil of ignorance we would choose the mean, not the minimum. I chose the median on purpose to take some account of distribution. Personally, I prefer my utilitarianism to come with an insurance policy! :-)

Quote from: Kron3007 on March 10, 2023, 06:46:33 AM


The average rent in my city is currently about $2000/month for a 1-bedroom apartment ($24k/year).    Average income according to your numbers is about $50k/year (before taxes).  This is not really affordable based on any financial advice I have heard.  Perhaps you coudl find something even smaller than a 1 bedroom, but it will still not be affordable for many/most people.

Rental prices were much lower even 10 years ago, an easy 30%, while average salaries were almost the same (according to your data, about 10% lower).  You can show me all the graphs you like, but I can tell you for certain that in my city, and most of Ontario, anyone who didn't purchase a home a while ago is much poorer now than they were ten years ago. 
   

For some perspective (https://globalnews.ca/news/9503564/canada-housing-new-home-prices-january-2023-statcan/):

Quote
In non-seasonally adjusted terms, CREA said the national average home price in Canada was $612,204 in January, down 18.3 per cent year over year. CREA's benchmark Home Price Index is now down 15 per cent from the peak seen in February 2022.

Prices drops are steeper in some Ontario and B.C. markets

Quote from: dismalist on March 10, 2023, 08:27:30 AM
Shades of Rawls! This is not the thread to argue it, but one can make the case that behind the veil of ignorance we would choose the mean, not the minimum.

From behind the veil of ignorance we would choose the mean in utils, not the mean in dollars.

Now utils are a theoretical construct, and no one really knows how to convert dollars to utils, but I think we can all agree that the conversion is sublinear - your first dollar is worth more utils than your thousandth dollar which is worth more utils than your millionth.

It's also different for different people.  My conversion scale is probably more sublinear than yours - the ratio between the worth of the thousandth dollar and the millionth dollar is bigger for me than for you.  I do say that, if I ever become a billionaire, you should shoot me and put me out of my misery because I've clearly lost my mind.

Quote from: quasihumanist on March 10, 2023, 08:15:57 AM
When it comes to housing, I think one of the problems we are facing is that the minimal standard provided by the market has risen.

One used to be able to get, 50 years ago, a private 250 sq. ft. living space for 250 sq. ft. of rent.  Now those spaces no longer exist on the market.  So, while the rent per square foot (which roughly speaking is what is and should be captured by inflation statistics) might not have outpaced earnings growth, the minimum rent for living on your own has.

We may have an increase in standard of living for the median person, but I'm also interested in how things work for the 5th percentile person.

To a significant extent, a society should not be measured by how wealthy the average person is, but rather how wealthy the poorest person is.

Well, again, the increase in rental rates in  my city are for the very same apartments.  I'm sure were added over time and could have skewed the data, but an apartment that I rented for $800/month in 2008, would now go for over $2k.  Incomes have not done this.  So yes, expectations may have changed over time (especially comparing a 50 year gap), but this dosn't change the fact that over the last 10-15 years, housing and rental prices in many regions have outpaced incomes on a per square foot basis.  When looking at household data, this is masked since many households own and pay a mortgage, insulating them from the housing market.

This is coupled with the very real inflation on food and other expenses of late.  Not everyone is doing relatively better now than 10 years ago. 

Quote from: marshwiggle on March 10, 2023, 09:36:21 AM

Quote from: Kron3007 on March 10, 2023, 06:46:33 AM


The average rent in my city is currently about $2000/month for a 1-bedroom apartment ($24k/year).    Average income according to your numbers is about $50k/year (before taxes).  This is not really affordable based on any financial advice I have heard.  Perhaps you coudl find something even smaller than a 1 bedroom, but it will still not be affordable for many/most people.

Rental prices were much lower even 10 years ago, an easy 30%, while average salaries were almost the same (according to your data, about 10% lower).  You can show me all the graphs you like, but I can tell you for certain that in my city, and most of Ontario, anyone who didn't purchase a home a while ago is much poorer now than they were ten years ago. 
   

For some perspective (https://globalnews.ca/news/9503564/canada-housing-new-home-prices-january-2023-statcan/):

Quote
In non-seasonally adjusted terms, CREA said the national average home price in Canada was $612,204 in January, down 18.3 per cent year over year. CREA's benchmark Home Price Index is now down 15 per cent from the peak seen in February 2022.

Prices drops are steeper in some Ontario and B.C. markets

Sure, they may have dropped 18% but this follows a run where they jumped about 100% in just a few years.  The end result, housing is still up 80% from where it was just 5-6 years ago (these numbers are estimates based on what I see locally) while income is not.  Again, this is also coupled with other increases in the COL, as well as increased mortgage rates that eliminate much of the increased affordability expected with lower housing prices.     

Quote from: quasihumanist on March 10, 2023, 10:02:05 AM

Quote from: dismalist on March 10, 2023, 08:27:30 AM
Shades of Rawls! This is not the thread to argue it, but one can make the case that behind the veil of ignorance we would choose the mean, not the minimum.

From behind the veil of ignorance we would choose the mean in utils, not the mean in dollars.

Now utils are a theoretical construct, and no one really knows how to convert dollars to utils, but I think we can all agree that the conversion is sublinear - your first dollar is worth more utils than your thousandth dollar which is worth more utils than your millionth.

It's also different for different people.  My conversion scale is probably more sublinear than yours - the ratio between the worth of the thousandth dollar and the millionth dollar is bigger for me than for you.  I do say that, if I ever become a billionaire, you should shoot me and put me out of my misery because I've clearly lost my mind.

Interpersonal utility comparisons are not unusual. We think we know, e.g., if one person is needier than another, i.e can benefit more from more money, benefit measure by his utility function. We put ourselves in others' shoes. Be that as it may, it is hard to imagine doing so systematically. Since utility is monotonic in income, no great harm is done by using income instead of utility and by assuming identical utility functions as a first pass.

Then the argument is that behind the veil we would choose institutions that maximize total income because our chance of landing in any part of the income distribution is equal to landing anywhere else. The greater total income, the better off we are no matter where we land. This makes mean income the proper measure of social welfare. In other words, distribution doesn't matter. Pure utilitarianism.

Having done all this, we consider that we have established institutions to help the worst off. [It is perhaps surprising how generous these are even in the United States.] This redistribution makes society better off on account of the diminishing marginal utility of income. But of course this doesn't take us to equality of outcomes. Another way of putting this is that Rawls assumes too much risk aversion compared to real human beings.

So, I would be perfectly justified in using mean income to measure social welfare. I haven't. I used median income, as a tad more insurance against the risk of being too far in the bottom.

Luxuries have become cheaper, but necessities have gotten more expensive relative to income in much of the world - and that very much makes people poorer when it comes to actually affording necessities. In terms of ability to buy real estate, young Americans are poorer than the boomers were at their age. You can come up with whatever excuses for not including property prices in inflation calculations, but that's just cherry-picking data. It's not like renting has become cheaper, either.

Quote from: Stockmann on March 10, 2023, 11:38:30 PM
Luxuries have become cheaper, but necessities have gotten more expensive relative to income in much of the world - and that very much makes people poorer when it comes to actually affording necessities. In terms of ability to buy real estate, young Americans are poorer than the boomers were at their age. You can come up with whatever excuses for not including property prices in inflation calculations, but that's just cherry-picking data. It's not like renting has become cheaper, either.

No, Stockman, it's not cherry picking data. It's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

Quote from: dismalist on March 11, 2023, 09:57:51 AM

Quote from: Stockmann on March 10, 2023, 11:38:30 PM
Luxuries have become cheaper, but necessities have gotten more expensive relative to income in much of the world - and that very much makes people poorer when it comes to actually affording necessities. In terms of ability to buy real estate, young Americans are poorer than the boomers were at their age. You can come up with whatever excuses for not including property prices in inflation calculations, but that's just cherry-picking data. It's not like renting has become cheaper, either.

No, Stockman, it's not cherry picking data. It's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

It's a societal problem if young people just entering the workforce can't afford shelter/life   This doesn't show up in you assessment because it is just "individual" problems.  If the trend continues, it will appear in the averages/medians, but by then it is too late to address. 

You are just sticking your head in the sand and falsely using stats to hide the very real problem.

Quote from: Kron3007 on March 12, 2023, 06:09:50 AM

Quote from: dismalist on March 11, 2023, 09:57:51 AM

Quote from: Stockmann on March 10, 2023, 11:38:30 PM
Luxuries have become cheaper, but necessities have gotten more expensive relative to income in much of the world - and that very much makes people poorer when it comes to actually affording necessities. In terms of ability to buy real estate, young Americans are poorer than the boomers were at their age. You can come up with whatever excuses for not including property prices in inflation calculations, but that's just cherry-picking data. It's not like renting has become cheaper, either.

No, Stockman, it's not cherry picking data. It's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

It's a societal problem if young people just entering the workforce can't afford shelter/life   This doesn't show up in you assessment because it is just "individual" problems.  If the trend continues, it will appear in the averages/medians, but by then it is too late to address. 

You are just sticking your head in the sand and falsely using stats to hide the very real problem.

Most of our misunderstandings are caused by the confusion of overall inflation with changes in relative prices. House prices have indeed risen relative to all other prices and we spend a significant enough share of our income on housing, in Ontario as in the US as a whole. Still, that by itself has not made us poorer. The median household is certainly not poorer. But whether we are or not, what it does mean is that we substitute away from housing and towards other things. And here's an example of how: Pew reports that the share of young adults living with parents has risen to levels not seen since the Great Depression. That's a solution to a problem, not a problem in and of itself.

Thus, we must focus on the cause of relative house price increases, in other words the part not due to inflation. That's largely the result of speculation on the demand side and NIMBYism on the supply side. The speculation has stopped already on account of interest rate rises. [Subtract the expected inflation rate from the nominal interest rate to get the real interest rate.] As Marsh reports, house prices are already falling in Canada and Ontario. My own interest is more in the NIMBYism. I'm thinking of New York and San Francisco especially. Not Houston, interestingly. It can be done. This is a political problem. Let them build!

Sure, NIMBYism and other forms of socialism for rich people are very bad, but telling underpaid and devalued young adults that, not to worry, just move back in with mom and dad, is, well...

Quote from: kaysixteen on March 12, 2023, 08:43:48 PM
Sure, NIMBYism and other forms of socialism for rich people are very bad, but telling underpaid and devalued young adults that, not to worry, just move back in with mom and dad, is, well...

Substitution! :-)

Please let us try to keep separate conceptually  a relative price change from an increase in the price level, called inflation. We are poorer from inflation, at least for a while. We are richer when real median income rises, which takes account of a rise in inflation, including rents and imputed rents. A rise in rents and imputed rents [house prices], if compensated by a rising nominal income, leaves us no worse off, indeed, better off on average, according to the data.

Given the data, non-housing addicts are not at all worse off, though individuals might certainly be on account of their own nominal incomes not keeping up with overall inflation.

Free the builders!

Quote from: dismalist on March 12, 2023, 01:35:49 PM

Quote from: Kron3007 on March 12, 2023, 06:09:50 AM

Quote from: dismalist on March 11, 2023, 09:57:51 AM
t's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

It's a societal problem if young people just entering the workforce can't afford shelter/life   This doesn't show up in you assessment because it is just "individual" problems.  If the trend continues, it will appear in the averages/medians, but by then it is too late to address. 

You are just sticking your head in the sand and falsely using stats to hide the very real problem.

Most of our misunderstandings are caused by the confusion of overall inflation with changes in relative prices. House prices have indeed risen relative to all other prices and we spend a significant enough share of our income on housing, in Ontario as in the US as a whole. Still, that by itself has not made us poorer. The median household is certainly not poorer. But whether we are or not, what it does mean is that we substitute away from housing and towards other things. And here's an example of how: Pew reports that the share of young adults living with parents has risen to levels not seen since the Great Depression. That's a solution to a problem, not a problem in and of itself.

One factor that rarely gets discussed regarding young adults and housing, but which ought to be for historical comparison, is roommates. Decades ago, young people who left home routinely lived with at least one, often two or three, roommates. Many young people now expect leaving home means getting their [exclusively] "own place". Just like house sizes have increased even as the number of people in a household has decreased, apartment living has followed the same trend.

And when living with Mom and Dad includes all of the things like Netflix in your room, (along with free laundry and meals), being "on your own" isn't really great if it means you have to pay for (or provide) those services for yourself.

Quote from: marshwiggle on March 13, 2023, 05:52:51 AM

Quote from: dismalist on March 12, 2023, 01:35:49 PM

Quote from: Kron3007 on March 12, 2023, 06:09:50 AM

Quote from: dismalist on March 11, 2023, 09:57:51 AM
t's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

It's a societal problem if young people just entering the workforce can't afford shelter/life   This doesn't show up in you assessment because it is just "individual" problems.  If the trend continues, it will appear in the averages/medians, but by then it is too late to address. 

You are just sticking your head in the sand and falsely using stats to hide the very real problem.

Most of our misunderstandings are caused by the confusion of overall inflation with changes in relative prices. House prices have indeed risen relative to all other prices and we spend a significant enough share of our income on housing, in Ontario as in the US as a whole. Still, that by itself has not made us poorer. The median household is certainly not poorer. But whether we are or not, what it does mean is that we substitute away from housing and towards other things. And here's an example of how: Pew reports that the share of young adults living with parents has risen to levels not seen since the Great Depression. That's a solution to a problem, not a problem in and of itself.

One factor that rarely gets discussed regarding young adults and housing, but which ought to be for historical comparison, is roommates. Decades ago, young people who left home routinely lived with at least one, often two or three, roommates. Many young people now expect leaving home means getting their [exclusively] "own place". Just like house sizes have increased even as the number of people in a household has decreased, apartment living has followed the same trend.

And when living with Mom and Dad includes all of the things like Netflix in your room, (along with free laundry and meals), being "on your own" isn't really great if it means you have to pay for (or provide) those services for yourself.

Damned whippersnappers these days! 

Last time I checked, all rental princes have gone up, so the cost has increased regardless of room mates.  Many of my grad students have room mates, otherwise they likely wouldn't have a room at all...

Quote from: dismalist on March 12, 2023, 09:01:41 PM

Free the builders!

I think this is odd. It isn't that they are constrained by regulations as much as they are constrained by their desire for profits. There is plenty of market desire for small houses, but the profit per house isn't as much for the builder, so no can/will do. The same thing is true for autos. People who would be happier to purchase a smaller vehicle with fewer options can't find them, as they are not being manufactured any more.

Quote from: jimbogumbo on March 13, 2023, 12:18:48 PM

Quote from: dismalist on March 12, 2023, 09:01:41 PM

Free the builders!

I think this is odd. It isn't that they are constrained by regulations as much as they are constrained by their desire for profits. There is plenty of market desire for small houses, but the profit per house isn't as much for the builder, so no can/will do. The same thing is true for autos. People who would be happier to purchase a smaller vehicle with fewer options can't find them, as they are not being manufactured any more.

This also presumes the housing prices (bubble?) is driven by population growth.  I have not checked the figures, but it seems that is not actually the driver (see below).  If housing is keeping pace with population growth, simply building more dosn't seem like the only/best answer.     

https://betterdwelling.com/canadian-housing-grew-faster-than-population-speculative-mindset-building-bmo/

Quote from: jimbogumbo on March 13, 2023, 12:18:48 PM

Quote from: dismalist on March 12, 2023, 09:01:41 PM

Free the builders!

I think this is odd. It isn't that they are constrained by regulations as much as they are constrained by their desire for profits. There is plenty of market desire for small houses, but the profit per house isn't as much for the builder, so no can/will do. The same thing is true for autos. People who would be happier to purchase a smaller vehicle with fewer options can't find them, as they are not being manufactured any more.

Alas, this is a confusion between cause and effect.

Business people do not maximize profit per anything, they maximize total profits. The truth about autos is the exact opposite of the claim. The VW Golf, my car, is made in many countries and sold in many countries. VW stopped selling it in the US of A 'cause nobody bought it on account it's too small!

There is an ongoing discussion about building costs in the US of A.  Apparently, labor productivity in housing construction has not risen since forever, so construction costs rise. The culprit is regulation in the form of zoning and an increasing number choke points, essentially both NIMBY and points for bureaucratic decisions.

Quote from: Kron3007 on March 13, 2023, 12:28:23 PM

Quote from: dismalist on March 12, 2023, 09:01:41 PM

Free the builders!

This also presumes the housing prices (bubble?) is driven by population growth.  I have not checked the figures, but it seems that is not actually the driver (see below).  If housing is keeping pace with population growth, simply building more doesn't seem like the only/best answer.     

https://betterdwelling.com/canadian-housing-grew-faster-than-population-speculative-mindset-building-bmo/

No, the bubble is not driven by population growth, but by too low nominal interest rates. With inflation, real interest rates are negative. That's an invitation to speculation. But that's already coming down.

Completely apart from the bubble, longer term house prices are rising faster than inflation. This is because the demand for housing is increasing faster than the supply of housing. Simply building more is the only answer!

Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

1). Profit per unit is irrelevant. It's total profits that matter. If there's demand for "starter" houses, they will be built, even at a lower per unit profit.

2). Buying up means more are being developed. There's more demand for "blocks". Renting out drives down rents, because it increases rental supplies. That's a substitute for owning, so it drives down house prices, too.

Again, there is a serious confusion between cause and effect.

I think the cause is that one sees only a tiny slice of the real world in day-to-day living. One sees someone else outbid oneself on a house. One infers there are too many bidders, rather than too few houses. We see the bidder, but not the non-existent houses! A particularly egregious example occurred on this board some months ago, when someone attributed to foreigners the bidding up of Canadian house prices. Ethnocentrism is only a step away when we compete for goods. Sure, but why is supply low at old prices now, when it wasn't a quarter century ago? Yes, we want more and we have more to spend, but also building could be greater, perhaps a lot greater.

I get the potential for some savings with roommates, at least in some cases, but just as many young adults probably simply cannot move back home with mom and dad, for various reasons (including mom and dad simply saying no), so also most young adults have little experience with roommates, and know no one who should reasonably be considered potential roommate material.   There are various reasons for this as well, but that it is, is clear, and it is really unreasonable to expect a kid with no such experience to decide to live with a total stranger.

Quote from: dismalist on March 13, 2023, 12:49:13 PM

Quote from: Kron3007 on March 13, 2023, 12:28:23 PM

Quote from: dismalist on March 12, 2023, 09:01:41 PM

Free the builders!

This also presumes the housing prices (bubble?) is driven by population growth.  I have not checked the figures, but it seems that is not actually the driver (see below).  If housing is keeping pace with population growth, simply building more doesn't seem like the only/best answer.     

https://betterdwelling.com/canadian-housing-grew-faster-than-population-speculative-mindset-building-bmo/

No, the bubble is not driven by population growth, but by too low nominal interest rates. With inflation, real interest rates are negative. That's an invitation to speculation. But that's already coming down.

Completely apart from the bubble, longer term house prices are rising faster than inflation. This is because the demand for housing is increasing faster than the supply of housing. Simply building more is the only answer!

I guess the question is why is demand increasing quicker than supply when.supply is apparently keeping pace with new housing? 

Now that housing has dropped a bit, developers are talking about cancelling building projects (even though housing is still High).  This is not a zoning problem, it is a greed problem.

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

My understanding is that it is largely based on a speculation, so people are eating these costs assuming real estate will continue to increase and they will come out ahead.  This is a different calculation than someone who will actually be living in the home.  If you have a lot of cash, you can buy a house, rent it out and make profit (because you are not necessarily holding a large mortgage), and then cash out when the time is right.  In the last decade, these costs you speak of are peanuts compared to the profit.

A major issue, is that speculation drives prices,which drives speculation, all pricing out people who just need a home.  Ultimately, this sounds a lot like a bubble, but I have thought that for many years and it has yet to pop.  I feel the government will do anything it can to prevent it from popping since it would cause a lot of pain (especially for wealthy people with influence) even though it is needed if we want the next generation to be able to afford life in Canada/USA. 

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

I would also mention that many people simply don't have access to enough money to consider buying, so the cost of borrowing is a moot point and they  have to rent.  When I spoke to a bank, the pre-approved me for 400k.  You cannot buy a house here for that, and we make more than the median family income with relatively low debt.  A lot of people are simply priced out.

Quote from: Kron3007 on March 14, 2023, 06:42:08 AM

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

My understanding is that it is largely based on a speculation, so people are eating these costs assuming real estate will continue to increase and they will come out ahead.  This is a different calculation than someone who will actually be living in the home.  If you have a lot of cash, you can buy a house, rent it out and make profit (because you are not necessarily holding a large mortgage), and then cash out when the time is right.  In the last decade, these costs you speak of are peanuts compared to the profit.

Sure, that makes sense. However, it isn't sustainable in the long term. A place can only be rented to someone who can afford the rent. If an owner can't find a renter, and has to carry the house personally, then the (theoretical) rising value of the property is a moot point.

Like any other bubble, it will burst eventually.

Quote
A major issue, is that speculation drives prices,which drives speculation, all pricing out people who just need a home.  Ultimately, this sounds a lot like a bubble, but I have thought that for many years and it has yet to pop.  I feel the government will do anything it can to prevent it from popping since it would cause a lot of pain (especially for wealthy people with influence) even though it is needed if we want the next generation to be able to afford life in Canada/USA.

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

Quote from: Kron3007 on March 14, 2023, 06:42:08 AM

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

My understanding is that it is largely based on a speculation, so people are eating these costs assuming real estate will continue to increase and they will come out ahead.  This is a different calculation than someone who will actually be living in the home.  If you have a lot of cash, you can buy a house, rent it out and make profit (because you are not necessarily holding a large mortgage), and then cash out when the time is right.  In the last decade, these costs you speak of are peanuts compared to the profit.

Sure, that makes sense. However, it isn't sustainable in the long term. A place can only be rented to someone who can afford the rent. If an owner can't find a renter, and has to carry the house personally, then the (theoretical) rising value of the property is a moot point.

Like any other bubble, it will burst eventually.

Quote
A major issue, is that speculation drives prices,which drives speculation, all pricing out people who just need a home.  Ultimately, this sounds a lot like a bubble, but I have thought that for many years and it has yet to pop.  I feel the government will do anything it can to prevent it from popping since it would cause a lot of pain (especially for wealthy people with influence) even though it is needed if we want the next generation to be able to afford life in Canada/USA.

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

We are seeing the affects in larger numbers of homeless, people couch-surfing, having roommates, or living with their parents longer.

Articles I have read say that these investors are not maintaining the homes at the same level a homeowner would, but renters don't have many other options if they want 3 bedrooms and a yard.

Many cities forbid small homes.  One example is New Lenox, Illinois where a home must be at least 1800 square feet.   The desire to get into an ideal school district also pushes up prices.  Population growth for the whole nation is meaningless.  Look at how it affects an individual metro region.   Boomtowns have higher prices.  Rust belt towns have affordable Victorian mansions. 

Quote from: Kron3007 on March 14, 2023, 07:35:39 AM

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

But here, (as many other places), a few houses get demolished to make room for a high rise. The houses would accommodate maybe dozens of people, whereas the high rise accommodates hundreds. In theory, that should mean all kinds of vacant units. Where are they coming from????

Quote from: Kron3007 on March 14, 2023, 07:35:39 AM

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

Quote from: Kron3007 on March 14, 2023, 06:42:08 AM

Quote from: marshwiggle on March 14, 2023, 05:57:59 AM

Quote from: ciao_yall on March 13, 2023, 02:11:49 PM
Along with the above, also affecting housing prices -

1) Developers build larger homes rather than smaller ones because the profits are higher. So there is not much available at the "starter" end of the market.

2) Investors are buying up large blocks in new developments and renting out the houses, which drives up the prices and reduces the supply. Up until a few years ago investors stuck with the rental market because houses were too costly and annoying to maintain on a large scale.

But how are investors finding tenants for these properties? Whoever owns the property has to pay for

• property taxes
• maintenance
• financing costs on money (OR they have to be getting a higher rate of return on their money than they'd get by simply putting it in the bank or buying bonds).

Rent has to be, by definition, high enough to cover all of these costs. So if the potential tenant instead owned the property, their costs would be similar. The *only way an "investor" has an advantage over a potential renter is if the investor has access to funds at a significantly lower interest rate than the tenant.



*Because of acquisition costs of a property; i.e. legal fees, land transfer taxes, etc., then if one is only going to live in a place for a few years (less than 5 or so), renting is cheaper. For anyone planning to stay longer, those costs get offset by the value of the equity built up over time.

My understanding is that it is largely based on a speculation, so people are eating these costs assuming real estate will continue to increase and they will come out ahead.  This is a different calculation than someone who will actually be living in the home.  If you have a lot of cash, you can buy a house, rent it out and make profit (because you are not necessarily holding a large mortgage), and then cash out when the time is right.  In the last decade, these costs you speak of are peanuts compared to the profit.

Sure, that makes sense. However, it isn't sustainable in the long term. A place can only be rented to someone who can afford the rent. If an owner can't find a renter, and has to carry the house personally, then the (theoretical) rising value of the property is a moot point.

Like any other bubble, it will burst eventually.

Quote
A major issue, is that speculation drives prices,which drives speculation, all pricing out people who just need a home.  Ultimately, this sounds a lot like a bubble, but I have thought that for many years and it has yet to pop.  I feel the government will do anything it can to prevent it from popping since it would cause a lot of pain (especially for wealthy people with influence) even though it is needed if we want the next generation to be able to afford life in Canada/USA.

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

California has begun seeing substantial out-migration, due primarily, it would appear, to unaffordable housing.  Wonder how long it will take for this to have a significant effect on the price of housing?

Quote from: marshwiggle on March 14, 2023, 09:29:13 AM

Quote from: Kron3007 on March 14, 2023, 07:35:39 AM

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

But here, (as many other places), a few houses get demolished to make room for a high rise. The houses would accommodate maybe dozens of people, whereas the high rise accommodates hundreds. In theory, that should mean all kinds of vacant units. Where are they coming from????

There was a report a while ago stating that there were about 1.3 million vacant dwellings across Canada (~8% of the total).  I'm sure we could quibble about the numbers, but apparently there are indeed many dwellings that are not being used for full time housing.  In the small town I live in (near my university city), many former rental units have converted into air B&B rentals as it is much more profitable.  This has put the squeeze on the rental market locally.  I dont know how much this impacts larger centres, but there are many condos in that high rise you speak of that are not being used for traditional housing.   

Quote from: Kron3007 on March 14, 2023, 10:36:25 AM

Quote from: marshwiggle on March 14, 2023, 09:29:13 AM

Quote from: Kron3007 on March 14, 2023, 07:35:39 AM

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

But here, (as many other places), a few houses get demolished to make room for a high rise. The houses would accommodate maybe dozens of people, whereas the high rise accommodates hundreds. In theory, that should mean all kinds of vacant units. Where are they coming from????

There was a report a while ago stating that there were about 1.3 million vacant dwellings across Canada (~8% of the total).  I'm sure we could quibble about the numbers, but apparently there are indeed many dwellings that are not being used for full time housing.  In the small town I live in (near my university city), many former rental units have converted into air B&B rentals as it is much more profitable.  This has put the squeeze on the rental market locally.  I dont know how much this impacts larger centres, but there are many condos in that high rise you speak of that are not being used for traditional housing.

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

Quote from: Kron3007 on March 14, 2023, 10:36:25 AM

Quote from: marshwiggle on March 14, 2023, 09:29:13 AM

Quote from: Kron3007 on March 14, 2023, 07:35:39 AM

Quote from: marshwiggle on March 14, 2023, 07:27:47 AM

The main driver is rising population, mainly from immigration since the natural birth rate is below replacement. In any community where the population levels off, prices won't be able to keep rising faster than inflation.

Except that the data seems to show house construction is keeping pace with population growth, so it is not a simple relationship.  If population was increasing quicker than supply, that would make sense, but that is not the case, so there is much more at play.

But here, (as many other places), a few houses get demolished to make room for a high rise. The houses would accommodate maybe dozens of people, whereas the high rise accommodates hundreds. In theory, that should mean all kinds of vacant units. Where are they coming from????

There was a report a while ago stating that there were about 1.3 million vacant dwellings across Canada (~8% of the total).  I'm sure we could quibble about the numbers, but apparently there are indeed many dwellings that are not being used for full time housing.  In the small town I live in (near my university city), many former rental units have converted into air B&B rentals as it is much more profitable.  This has put the squeeze on the rental market locally.  I dont know how much this impacts larger centres, but there are many condos in that high rise you speak of that are not being used for traditional housing.

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Sure, but that point was secondary (but still one of many considerations).  Apparently, there are a lot of units sitting vacant for whatever reason.  If the report is accurate and 8% of dwellings across the country are vacant, that seems significant. 

Again, the point remains that housing has been build at about the same rate as population growth, yet prices have sky rocketed.  This suggests that the housing crises is not really driven by immigration/population growth, or at least not on its own, and other factors are driving it (ie speculation, etc.).

Quote from: Kron3007 on March 14, 2023, 11:11:19 AM

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Sure, but that point was secondary (but still one of many considerations).  Apparently, there are a lot of units sitting vacant for whatever reason.  If the report is accurate and 8% of dwellings across the country are vacant, that seems significant. 

But which 8%? If 8% of recent high rise (and thus more expensive) units are vacant, that won't really affect the low end of the market. Unless 8% of low cost housing is vacant, it's not going to have a big effect on the "affordable housing" stock.

Quote
Again, the point remains that housing has been build at about the same rate as population growth, yet prices have sky rocketed.  This suggests that the housing crises is not really driven by immigration/population growth, or at least not on its own, and other factors are driving it (ie speculation, etc.).

In the '90's, with the looming shift of Hong Kong to China, there were a lot of properties in places like Vancouver bought by Honk Kong residences and unoccupied until the changeover, so that made sense. But there's not any obvious market for large numbers of foreign investors to buy properties and keep them vacant now. And there don't seem to be lots of boarded up properties waiting for rezoning to be torn down for development. Again, my question is where all of the people are coming from who can afford the high prices if the stock is keeping pace, so it's not scarcity making them desperate?

Quote from: marshwiggle on March 14, 2023, 11:59:01 AM

Quote from: Kron3007 on March 14, 2023, 11:11:19 AM

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Sure, but that point was secondary (but still one of many considerations).  Apparently, there are a lot of units sitting vacant for whatever reason.  If the report is accurate and 8% of dwellings across the country are vacant, that seems significant. 

But which 8%? If 8% of recent high rise (and thus more expensive) units are vacant, that won't really affect the low end of the market. Unless 8% of low cost housing is vacant, it's not going to have a big effect on the "affordable housing" stock.

Quote
Again, the point remains that housing has been build at about the same rate as population growth, yet prices have sky rocketed.  This suggests that the housing crises is not really driven by immigration/population growth, or at least not on its own, and other factors are driving it (ie speculation, etc.).

In the '90's, with the looming shift of Hong Kong to China, there were a lot of properties in places like Vancouver bought by Honk Kong residences and unoccupied until the changeover, so that made sense. But there's not any obvious market for large numbers of foreign investors to buy properties and keep them vacant now. And there don't seem to be lots of boarded up properties waiting for rezoning to be torn down for development. Again, my question is where all of the people are coming from who can afford the high prices if the stock is keeping pace, so it's not scarcity making them desperate?

I dont know.  It was 8% of all housing though, so if it were only high rises it would be much greater than 8% of them.  To be clear though, it dosnt mean they are available, they were just not being lived in.  Could be foreigners second homes, investment properties they are just holding, etc?  I dont really know...

I dont know where all the people who can afford housing are coming from, but if it is investors it would be a combination of rich people who can buy up many and corpoprations.  Maybe a combo? 

All I know is it all seems off based on population dynamics, median family incomes, etc.

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Which is why rents are rising dramatically in areas with high tourist demand (San Francisco, Barcelona, Lisbon) because housing stock is being converted to de-facto hotels, pricing out residents.

Residents move to outer regions where they, in turn, push up prices and the ripple effect continues.

If you, as an owner, can make twice as much money leaving your property empty 50% of the time, wouldn't you do so?

Quote from: ciao_yall on March 15, 2023, 08:30:09 AM

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Which is why rents are rising dramatically in areas with high tourist demand (San Francisco, Barcelona, Lisbon) because housing stock is being converted to de-facto hotels, pricing out residents.

I'm surprised I haven't heard of collapse of the hotel industry over the past decade. (Not counting everything specifically related to COVID.) The number of short-term rentals should be having some effect there.

Quote
Residents move to outer regions where they, in turn, push up prices and the ripple effect continues.

If you, as an owner, can make twice as much money leaving your property empty 50% of the time, wouldn't you do so?

Sure; I'd like to see estimates of the proportion of short-term rental properties in places outside the tourist areas.

Quote from: marshwiggle on March 15, 2023, 09:19:53 AM

Quote from: ciao_yall on March 15, 2023, 08:30:09 AM

Quote from: marshwiggle on March 14, 2023, 10:52:58 AM

But short term rentals, like AirBnB, raise a similar question. If it's an area that all kinds of tourists go, like Niagara Falls, then it's easy to see how short term rentals can use up local housing. But if an area isn't particularly a tourist destination, then the market for short term rentals is going to be limited; there aren't that many people who want to stay in Podunkville on any given night.
What percentage of the year is the average AirBnB guest going to spend away from home? 10%? If so, then that means 1 AirBnB unit will accommodate the needs of roughly 12 customers, so again, outside of a tourist destination, there's just not going to be that big a market for them to the extent that it will distort local rents significantly. (In a tourist area it's a different story, since lots of people from lots of other places will be coming to stay.)

Which is why rents are rising dramatically in areas with high tourist demand (San Francisco, Barcelona, Lisbon) because housing stock is being converted to de-facto hotels, pricing out residents.

I'm surprised I haven't heard of collapse of the hotel industry over the past decade. (Not counting everything specifically related to COVID.) The number of short-term rentals should be having some effect there.

Quote
Residents move to outer regions where they, in turn, push up prices and the ripple effect continues.

If you, as an owner, can make twice as much money leaving your property empty 50% of the time, wouldn't you do so?

Sure; I'd like to see estimates of the proportion of short-term rental properties in places outside the tourist areas.

1) There is definite pressure on hotel prices but because demand is so high for tourist beds, everyone seems to be doing okay.

2) Yes, rents and home prices are also increasing in the outer rings. Not sure how much AirBnB is there but I'm sure some budget-oriented travelers don't mind commuting into the City for 30 minutes for their activities to save a few hundred dollars over their trip.

Article in the New York Times  Whatever Happened To The Starter Home?  (https://www.nytimes.com/2022/09/25/upshot/starter-home-prices.html?unlocked_article_code=L8anOFT_ZSkxRkxSP2AhDL4Mo9PqXwX_Vu0vvvBMB_16wI9Bl9C0_mD-9SVag2Fotc__qPyOelydEbJnJQ-sM-gzp5NoI858aCpSB6iH8lRzFokEWA0F50TyKnYgqfspw-N4AK5ofN7EaJ5nooje-9bfkm0CksWk6YWokt0NWQF2TuRjbn9gwav4Hxt5InsqyJGZz_mqeDHd3ASOyJ042GTOGeypxgf2sTnJaDGKtK1TlHZ8-w4ObzRAw8-CWYxJ5AqgtdlBANgD5rZHSTx_Jaj-ZO35K-BoKIn-wengNqVkc4kqX2IK-hGpJxtUwRO1tSxwvAlkJAPkWjuL)

It should not be behind the paywall, but points out that many localities will not allow homes with the size and density that fits the price point.

Just more socialism for rich people, but since 'socialism' is bad, when it is for me, we have to call it something else.

Quote from: dismalist on March 11, 2023, 09:57:51 AM

Quote from: Stockmann on March 10, 2023, 11:38:30 PM
Luxuries have become cheaper, but necessities have gotten more expensive relative to income in much of the world - and that very much makes people poorer when it comes to actually affording necessities. In terms of ability to buy real estate, young Americans are poorer than the boomers were at their age. You can come up with whatever excuses for not including property prices in inflation calculations, but that's just cherry-picking data. It's not like renting has become cheaper, either.

No, Stockman, it's not cherry picking data. It's standard practice that prices of flows go into the cost of living. A house is a stock. The price of the corresponding flow of housing services is called rent. That value is imputed to owner occupied dwellings and goes into the cost-of-living calculation. [The same should be done with any long lasting commodity, but it's not worth the bother, with say, flat screens.] As I said upthread, buying a house is a combination of providing housing services for a long time + a speculative investment. But what is relevant to housing prices is restricted supply -- NIMBY --  a political problem.

Why the focus on real estate? It might have been efficient 40,000 years ago when a nesting instinct made us make -- nice nests. As for the rest, it's also just complaining about price changes. But all those are in the cost-of-living. Real median household income is higher now than in 1985 [even without benefits] and household size is lower.

Sure, not all individuals will do as well as the median. That's a personal problem rather than a societal problem, for we have a safety net.

Real income is defined as adjusted for inflation, which in turn depends on how you calculate inflation. Now, for the elderly, particularly the affluent elderly, house prices and rents admittedly don't factor much in the inflation they experience, as they largely already own their homes. But the young, save the most wealthy, own no real estate and thus must pay rent or get a mortgage, and even if they live with their parents many are trying to save for a deposit or downpayment - which means, for them, rent and real estate prices are pretty central to their cost of living. A house being an investment or not is basically a distinction without a difference, since real estate prices, either directly or through rent, have a massive impact on the the cost of living for the young. The divide is not so much between those above or below median income, but between the generations - between those who, to quote a comedian, bought a house for eleven raspberries and it's now worth millions, and those who saw housing prices shoot beyond their reach before they even entered the workforce. I'm not sure what drives it, but it's clearly a global phenomenon. In my developing country hometown, my working class grandfather was able to buy a house and support a household of four people on his salary alone, which would be pretty much inconceivable today.
You can argue that the cost of housing is "an individual problem" for the young who don't have generational wealth, but it has ramifications that affect everyone. Anecdotally, I've hear my students say that they've either decided against having children or view it as a very distant prospect based on the cost of living. Housing isn't the only thing affecting the cost of living for the young, but it's a big part of it. Ironically enough, perhaps those who are children today will actually benefit from today's declining birth rates.

We been through all this stuff upthread.

Just re-emphasize that housing is a speculative investment. Its price behaves like an asset price, and it is coming down as interest rates rise.

Not being able to buy a house one wants is also a problem of income, which is personal. Maybe that's why one would rather talk about price, which is impersonal.

You want to claim negative externalitites of fewer children on account of expensive housing? What happened to the population explosion? Fewer humans, less global warming. Positive externalitites.

Quote from: dismalist on March 18, 2023, 10:33:06 AM
We been through all this stuff upthread.

You want to claim negative externalitites of fewer children on account of expensive housing? What happened to the population explosion? Fewer humans, less global warming. Positive externalitites.

There are certainly negative externalities: https://www.cnn.com/2023/03/17/asia/japan-population-crisis-countryside-cities-intl-hnk-dst/index.html

Quote from: jimbogumbo on March 18, 2023, 02:42:35 PM

Quote from: dismalist on March 18, 2023, 10:33:06 AM
We been through all this stuff upthread.

You want to claim negative externalitites of fewer children on account of expensive housing? What happened to the population explosion? Fewer humans, less global warming. Positive externalitites.

There are certainly negative externalities: https://www.cnn.com/2023/03/17/asia/japan-population-crisis-countryside-cities-intl-hnk-dst/index.html

Those are pecuniary externalities, money, not physical harm. My not having children hurts you through the way Social Security is financed and it benefits my wife and me equally. Even steven.  So, pay my wife and me to have children. Physical harm, so-called technological externalities, is reduced by having fewer children. We're better off on average if there are fewer children on account of the population explosion and global warming.

Warning: many graphs ahead. Analysis of financial system issues.

https://www.ft.com/content/179b9acf-e375-4471-990e-39c9772ada3b?segmentId=b385c2ad-87ed-d8ff-aaec-0f8435cd42d9

https://chapwoodindex.com/

This is the price index I use to confirm my overall negative view of the economy.

The Chapwood Index is an advertising gimmick. It must get extreme results or it will be overlooked.

It is not possible to understand their methodology

QuoteEvery six months, we take the precise price for the same item quarter by quarter and calculate the increase or decrease, then developed a weighted index based on price.

What are the weights? Surely not the guy's friends expenditure shares on these items!

The text at the link shows that these guys do not understand what a cost-of-living index is and do not know how to go about constructing one.

They criticize that the CPI contains too many prices! You can't have too many prices in a price index.

Once again: The published CPI describes the weighted average price faced by approximately the mean consumer. The weights are base period expenditure shares. For that person, the CPI overstates inflation because the base weights ignore substitution in response to price change. [The Personal Consumption Expenditures price index is the current weighted version, and understates inflation, for consumers have already substituted away from more expensive stuff.] The truth lies somewhere in between.

Inflation facing each individual will be different from the CPI on account our expenditure shares are different. Individual category price increases for the CPI are published. One can then reweight them with one's own expenditure shares.

These guys don't know what they don't know.

Quote from: dismalist on March 30, 2023, 09:08:59 AM
The Chapwood Index is an advertising gimmick. It must get extreme results or it will be overlooked.

It is not possible to understand their methodology

QuoteEvery six months, we take the precise price for the same item quarter by quarter and calculate the increase or decrease, then developed a weighted index based on price.

What are the weights? Surely not the guy's friends expenditure shares on these items!

It's a bit weird that there's a gap from the last half of 2019 until the last half of 2021. (Covid, presumably?)
However, if you calculate the cumulative increase for New York, it works out to 210% since 2016. Have prices really doubled in NYC since 2016? For the "500 most bought items"? That seems steep.

 

Quote from: marshwiggle on March 30, 2023, 09:55:37 AM

Quote from: dismalist on March 30, 2023, 09:08:59 AM
The Chapwood Index is an advertising gimmick. It must get extreme results or it will be overlooked.

It is not possible to understand their methodology

QuoteEvery six months, we take the precise price for the same item quarter by quarter and calculate the increase or decrease, then developed a weighted index based on price.

What are the weights? Surely not the guy's friends expenditure shares on these items!

It's a bit weird that there's a gap from the last half of 2019 until the last half of 2021. (Covid, presumably?)
However, if you calculate the cumulative increase for New York, it works out to 210% since 2016. Have prices really doubled in NYC since 2016? For the "500 most bought items"? That seems steep.

That's not steep; that's idiotic. New York inflation was 1.08%, 1.96%, 1.91%, 1.65%, 1.71%, 3.32% from 2016 to 2021 measured as a CPI.

https://www.in2013dollars.com/New-York/price-inflation (https://www.in2013dollars.com/New-York/price-inflation)

This is really a case of:

Q: What's the inflation rate?

A: What do you want it to be?

https://www.newyorker.com/news/persons-of-interest/what-if-were-thinking-about-inflation-all-wrong