Re:Why Firms Are Struggling with the U.S. Economy’s Soft Lan...
by com2kid on Saturday February 18, 2023 @08:57PM
(#34853338)
> The causation direction is usually that rising wages cause housing price increases (assuming a tight housing market where houses are in high demand).
40k people move to Seattle each year. 20k new housing units are built. It is sadistic musical chairs, the losers end up moving out of the city at best, or homeless at worst. The winners are stuck paying a huge % of their salary to keep a roof over their head.
When I was looking to buy in 2020, around 10-15 new properties came up for sale in "desirable" neighborhoods (e.g. schools aren't trash) each week. You got to know the same people visiting the open houses each week.
It is a complete cluster fuck around here.
Drop 100k houses on the market and watch prices go down.
The causation direction is usually that rising wages cause housing price increases (assuming a tight housing market where houses are in high demand).
People bid against each other for a house, as much as they can just afford the mortgage repayments. If wages go up, then people can get a bigger mortgage, so they bid up to the amount the limit they can mortgage.
I presume a similar effect occurs with rentals - renters compete for limited rental properties and bid up the price to what they can only just manage.
Of course, when you have a huge mortgage (or rental bill), you presumably fight to earn more money, but that is a secondary effect.