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I agree we have a problem with inflation, but having been a young adult in 1978 I can tell you that today the problem is much less serious
Wrong - it's a lot more serious for two reasons. A) wages have not kept up, and B) look at the cost of real estate, healthcare, autos, higher education, and childcare today. All of them much higher than in the past.
I said it in another thread (which was deleted), that I think we are well on our way to another 2008 real estate crash. People can't afford to live.
My Boomer parents and relatives always cite the higher rates "back in the day" as evidence that things were less affordable back then.
It's not the rates per se that are the problem - the prices are. The "nice town" here has a median sale price of around $400,000, with a median HHI of about $50,000. Sure, the median HHI isn't capturing a lot of out-of-area wealth coming in, which IS causing the high prices, but the typical household dependent on locally earned wages are being battered by terrible price:earnings ratios.
Back in 2019, rates were 4.x% and the median sale price was around $250,000 there. At 8% and a $400,000 median sale price, many buyers with the typical low-paying, local jobs are effectively priced out of the market.
My Boomer parents and relatives always cite the higher rates "back in the day" as evidence that things were less affordable back then.
It's not the rates per se that are the problem - the prices are. The "nice town" here has a median sale price of around $400,000, with a median HHI of about $50,000. Sure, the median HHI isn't capturing a lot of out-of-area wealth coming in, which IS causing the high prices, but the typical household dependent on locally earned wages are being battered by terrible price:earnings ratios.
Back in 2019, rates were 4.x% and the median sale price was around $25HH0,000 there. At 8% and a $400,000 median sale price, many buyers with the typical low-paying, local jobs are effectively priced out of the market.
You, and others, have kind of made the same mistake/assumption. Looking at forty years ago prices and seeing they're low while forgetting about the wages then.
Yes, a full size 3Musketeers bar was a dime but median HHI was $24K. I'll grant you houses in certain areas have outpaced the market but in other areas they haven't. Some of that is due to the fact that houses are much larger now than then.
Stupid example: a one story 600 sq. ft. beach cottage was recently torn down near me. The replacement is a three story, 40 foot tall house on the same 25X100 lot.
Mrs. NBP and I are going to look at a 1200 sq. ft. three BR, 2B house with 3 acres backing on a National Forest. today. Asking price is $59,900. Now it is rural. It's more than affordable for the local people. If it was where I live it would be listed at $300K, on a small lot not acreage.
You, and others, have kind of made the same mistake/assumption. Looking at forty years ago prices and seeing they're low while forgetting about the wages then.
Yes, a full size 3Musketeers bar was a dime but median HHI was $24K. I'll grant you houses in certain areas have outpaced the market but in other areas they haven't. Some of that is due to the fact that houses are much larger now than then.
Stupid example: a one story 600 sq. ft. beach cottage was recently torn down near me. The replacement is a three story, 40 foot tall house on the same 25X100 lot.
Mrs. NBP and I are going to look at a 1200 sq. ft. three BR, 2B house with 3 acres backing on a National Forest. today. Asking price is $59,900. Now it is rural. It's more than affordable for the local people. If it was where I live it would be listed at $300K, on a small lot not acreage.
Nope, Serious Conversation is correct.
It's not the interest rate - it's the combination of the interest rate AND the skyrocketing prices.
Again: not just real estate, but look at child care, look at higher education costs, look at autos -- you can't get a new car below $20k now. Look at healthcare. The middle class is squeezed to the limit.
Nope, Serious Conversation is correct.
It's not the interest rate - it's the combination of the interest rate AND the skyrocketing prices.
Again: not just real estate, but look at child care, look at higher education costs, look at autos -- you can't get a new car below $20k now. Look at healthcare. The middle class is squeezed to the limit.
You forgot to mention taxes too. Not just federal like my source says, but even local taxes have increased in many places all over the country.
"For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data."
You forgot to mention taxes too. Not just federal like my source says, but even local taxes have increased in many places all over the country.
"For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data."
Property taxes are up generally because as property values increase, property tax bills to homeowners increase as well. The flipside though is that the average property owner can sell his property for much more money than he could have ten or fifteen years ago. I bought a home for $300,000 in 2009. That home now appraises for $633,000. I'd rather have the home with this increased value and pay the additional property taxes.
If federal income tax rates have gone up, someone needs to show me where.
I have to interject here that the above is a WONDERFUL thing. Absolutely wonderful.
The reason is technical innovation and the returns to owners of invested capital. By investing in technology and the capital infrastructure of the nation, productivity and competitiveness has gone up and the investors have enjoyed the ROI.
That's a wonderful thing.
Employees must up-their-game to compete. Far too many employees do not increase their human capital, allowing their skills to languish and their productivity does not keep up. Many of those employees just want a 9-5 no-stress job ("I just work here'), others focus on personal consumption of clothing, cars & concerts rather than finding new ways to add value, thereby actually earning wage growth that exceed inflation.
The great news is many employees do in deed focus on finding new ways to add value and those employees reap huge benefits.
That is the story inside the numbers - just looking at averages of, say, entry level worker wages over the decades hides the inside story.
Property taxes are up generally because as property values increase, property tax bills to homeowners increase as well.
Property taxes are a dumb way to finance government.
A property tax is a pernicious form of wealth tax, and economists agree wealth taxes are a bad idea. Far better to fund government by other means such as a consumption tax.
I have to interject here that the above is a WONDERFUL thing. Absolutely wonderful.
The reason is technical innovation and the returns to owners of invested capital. By investing in technology and the capital infrastructure of the nation, productivity and competitiveness has gone up and the investors have enjoyed the ROI.
That's a wonderful thing.
Employees must up-their-game to compete. Far too many employees do not increase their human capital, allowing their skills to languish and their productivity does not keep up. Many of those employees just want a 9-5 no-stress job ("I just work here'), others focus on personal consumption of clothing, cars & concerts rather than finding new ways to add value, thereby actually earning wage growth that exceed inflation.
The great news is many employees do in deed focus on finding new ways to add value and those employees reap huge benefits.
That is the story inside the numbers - just looking at averages of, say, entry level worker wages over the decades hides the inside story.
So a full day's work and 5 days a week (let's not forget commute time) isn't enough for you. Now you need employees to "do more", be "more productive".... "up their game"...work off hours, and so forth. Maybe go to bed at midnight while they sharpen those skills after eating dinner and doing all of the other things that they need to do, activities outside the home, kids activities etc. God forbid you should have some downtime at night. No thanks. 40 hours a week, plus my commute time, is enough. My time at night is my time, not my employer's and the last thing I'm thinking about is work or sharpening my skills so that the employer can get richer. They have enough already. I'm not a union guy by any means but this is why unions became powerful.... ownership wants your entire life! This is also why so many people in this country are miserable. (I'm not - I'm quite content with my situation) - but I can at least understand why people are unhappy. We're working longer and harder for less.
You forgot to mention taxes too. Not just federal like my source says, but even local taxes have increased in many places all over the country.
"For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data."
Academic studies show that during the 1950s and 1960s when income tax rates exceeding 90%, the federal government raised minuscule additional tax revenue.
America’s federal tax code is already the most progressive in the Organisation for Economic Co-operation and Development (OECD) and has become sharply more progressive over the past 40 years. Much of this tax progressivity is the result of drastic cuts to low- and middle-income taxes while leaving upper-income-tax rates closer to international norms.
Treasury data show that, in 2023, the bottom 40% of earners collectively pay no income tax and will instead receive a collective tax rebate of $123 billion. Overall, the bottom-earning 60% of families altogether financed just 23 days of federal spending in 2023.
Let me state that agin: the bottom-earning 60% of families altogether paid for a mere 23 days of federal spending in 2023.
THAT is the problem that must be addressed.
Meanwhile, the top-earning quintile—while earning 58% of all income—pays 69% of all federal taxes and 90% of all income taxes. And the top 1% of earners—while earning 18% of all income—pay 25% of all federal taxes and 40% of all income taxes. By contrast, the bottom-earning 60% earns 23% of all income, yet pays just 13% of the total federal taxes, including a combined negative income tax.
When it comes to the budget deficit and the national debt, the real problem is the vast majority of people with no skin in the game.
You, and others, have kind of made the same mistake/assumption. Looking at forty years ago prices and seeing they're low while forgetting about the wages then.
Yes, a full size 3Musketeers bar was a dime but median HHI was $24K. I'll grant you houses in certain areas have outpaced the market but in other areas they haven't. Some of that is due to the fact that houses are much larger now than then.
Stupid example: a one story 600 sq. ft. beach cottage was recently torn down near me. The replacement is a three story, 40 foot tall house on the same 25X100 lot.
Mrs. NBP and I are going to look at a 1200 sq. ft. three BR, 2B house with 3 acres backing on a National Forest. today. Asking price is $59,900. Now it is rural. It's more than affordable for the local people. If it was where I live it would be listed at $300K, on a small lot not acreage.
Many cities in my area have had household incomes between $40k-$45k for years.
The top 10%-20% are able to afford the housing here. They've had no problems before or after the run-ups of the last few years. Their purchasing power might be somewhat diminished, but they're not locked out.
The bottom level of wage earners have seen big wage gains. If you went from $9/hr. in retail pre-COVID to $14/hr. now, sure, you've had big wage gains, but you're still going to struggle to afford housing.
The squeeze is in the middle of wage earners whose wages haven't gone up much, while both property prices and rates have skyrocketed.
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