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It's interesting when people talk about home prices being "almost up to the 2006 peak" only in absolute terms. According to the CPI Inflation Calculator, there has been 18% inflation since 2006. So if prices get back to the 2006 peak, it's still an 18% net loss of real value.
Using CPI inflation isn't really a good measure considering the beating housing took wasnt factored into CPI figures in the manner you are attempting to apply them now
According to the CPI Inflation Calculator, there has been 18% inflation since 2006.
Seriously?
I've been thinking the last few years how nice it was that costs haven't really been going up all that much, at least in my area. Housing costs are the same or lower than 2006, although on the rise the last year or two. Gas has stayed in the same range for several years now, lower now than the peak prices. Groceries are up somewhat, maybe as much as 18% overall, an average week at the grocery store used to cost me around $65, now it's more like $75, which is a 15% increase. I don't buy that much stuff other than that, so I haven't seen much of an increase overall.
I've been thinking the last few years how nice it was that costs haven't really been going up all that much, at least in my area. Housing costs are the same or lower than 2006, although on the rise the last year or two. Gas has stayed in the same range for several years now, lower now than the peak prices. Groceries are up somewhat, maybe as much as 18% overall, an average week at the grocery store used to cost me around $65, now it's more like $75, which is a 15% increase. I don't buy that much stuff other than that, so I haven't seen much of an increase overall.
He is using CPI data of which only a portion covers housing. It's a terrible marker to use in the application he is attempting
Its all relative, rents will always rise, house prices can decline, or rise within the decade. Many factors come into play, the type of neighborhood, demand, schools, amenities, property taxes ect. The house prices in my town have fallen because property taxes are 3%, and there are no amenities what so ever.
Back in the 70s and 80s we had annual (!) rent increases around 10%. Compared to this increses are very benign now. On the flip side the commonly union-negotiated contracts often had a COL allowance plus annual increase. Try to negotiate something like this today and at best you'll be laughed at. That is unless you're a CEO then the sky is the limit.
This is a chicken before the egg discussion. I think the demand for housing will continue to rise and the rents will go up because of supply VS demand. The trouble is the job market continues to be unstable as the OP and others have pointed out. Less wages mean less money to spend on housing but the mortgages on these properties continue to be high (at least in my area the North East) because the prices of homes are high. If rents are driven down because there is too much supply in that people cannot afford them due to lack of a decent job then there comes a time when it just doesn't make sense. There are not many landlords willing to supplement the rent to pay their mortgage while the renters are enjoying/ destroying the property.
There has to be a balance, good jobs, good wages and affordable housing or we are heading for another problem.
Take a drive through the south. There are abandoned homes and deserted Mcmansions everywhere.
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