I sometimes wonder if that event horizon is encroaching higher and higher up the economic ladder over time. Most of the people in my personal cohort - with university degrees and good careers - have no problem living a good life in the US. But with the rapid inflation of the cost of healthcare, higher education and housing, I wonder how that lifestyle can possibly become accessible to people who weren't essentially born into it. I think increased stratification in terms of lifestyle and opportunity is not good long term for social cohesion or political stability.
This is very much the trend I saw over the 2000s-2010s.
Most of the people in my personal cohort - with university degrees and good careers - have no problem living a good life in the US. But with the rapid inflation of the cost of healthcare, higher education and housing, I wonder how that lifestyle can possibly become accessible to people who weren't essentially born into it.
I know many people who were born into a middle-class or upper-middle-class lifestyle, pursued career paths that didn't involve the tech industry (because they were specifically encouraged to "do whatever you want"), and are now living below their parents' standards of living and will probably always be poorer than their parents.
They aren't bum artists either; they work in offices 8-6, and have 5+ years of experience and sophisticated professional skills. But they are being paid 2011 wages in a 2021 housing market, and it all strikes me as tremendously unfair.
Median house prices in the USA are now above their pre-crash peak, and have been increasing much much faster than the CPI[0]. Something fucky is going on, and I doubt it's all because of the "free" market.
In my peer group people are focusing on the monthly payments, rather than the loan amount. And mortgage rates are like half what they were in the last housing bubble https://fred.stlouisfed.org/series/MORTGAGE30US
My peer group is probably a bit younger, and they/I are all renting or are relatively new homeowners. The "sticker price" on houses matters to my group a lot, as does monthly rent.
I'd love to find a FRED-like data source for median rental rates over time and/or an index thereof. I suspect that rents are generally correlated with sale prices on a multi-year time scale.
Serious question: why would they care about refinancing if their rate is low? Regarding dollar devaluation: I don't there there has been a single year since we abandoned the gold standard where the dollar didn't devalue. And the Fed has explicitly okayed higher inflation going forward.
> Something fucky is going on, and I doubt it's all because of the "free" market.
At first the suburban house as bottomless bank account was a result of “natural” forces like the baby boom and white flight. But people came to assume it, and then demand it. Politicians have obliged since homeowners are an extremely large and powerful demographic. Prior to 2008 we at least pretended to have a private mortgage industry. Now we don’t even bother with a fig leaf.
21st century is: we're turning everything into a market, far fewer easy but well-paid jobs, if older people had to actually face the brunt of it they would lose their homes.
People who can't handle technology don't have a chance nowadays.
I feel like this concept of turning everything into a market has much more downside than we would like to believe. It's often sold as democratization: i.e. "anyone can just go on youtube and be a content creator now - you don't need a production company as a middleman!"
But the thing about markets is they are great for the winners, and terrible for the losers. And one of the effects of technology is that it allows scaling such that fewer providers can serve the needs of many more consumers. The confluence of these factors is that you can have markets where a handful of winners can essentially serve the entire world. I don't know where that is supposed to leave the rest of the population.
The theory of it is good—-the more efficiently the human race can produce goods and services the better. If ten people can provide the entire world’s stand up comedy needs that frees up all those other people to do other valuable things. The issues are: 1) distributional (i.e. wealth gap) and 2) people get value out of the work itself and not just the compensation.
Although we fight a lot about #1, #2 strikes me as a thornier problem.
After the 2008 crash, it became politically impossible to let house prices drop, so the government will basically do anything to prop them up. Too many elderly voters who depend on their home equity to fund their lifestyles. I think we'll look back at 2020 as the moment the same political pressure happened to stock market prices.
Definitely. At least in my generation it feels like the boat is sinking and everybody's scrambling to be above deck. The majority of my high school class is going into tech or tech-adjacent industries for that reason.
