Why is There a Housing Crisis?

[Jimmy Higgins]

Housing crisis continued...

Arizona is joining California in the world of class disparity in large part, driven by the two housing booms caused by low interest rates. Too many working people can't afford to live in housing.

Home prices have shot up 50 percent since 2020, from an average of $645,000 in the first half of 2020 to $971,000 in the first half of 2023, according to the staff report. Rent for an average two-bedroom apartment is now $2,150 a month.

Like many cities that depend on tourism to stay afloat, Sedona has struggled with having enough affordable housing for its workforce. The solution to the current crisis is deed-restricted affordable housing, “which takes years,” according to the agenda item.

The Sedona Oak Creek Unified School District reported 19 homeless students enrolled from 13 families. Of those, five are living in cars or campers. They usually park every night in the Coconino National Forest. The local food pantry surveyed its users and found that 39 lived in their cars and worked in Sedona.

So, Sedona, for some unknown period of time will let people live out of their cars in a parking lot.

A public outreach effort found 32 people who live in their vehicles and work in Sedona who were interested in the “Safe to Park” program. They reported working at Whole Foods, Safeway, a hotel that offers classes on crystals and yoga, a wood-fired pizza restaurant, a juice shop, a spa and a coffeehouse, among others.

 

[TV and credit cards]

Google: Billionaires who buy up residential homes

They swoop in and buy up homes in select areas driving up valuations. Good old Buster Bezos in in on it now too because there's no such thing as too much. At least MacKenzie Scott gets to do good with a nice chunk of it. Something tells me whenever Bezos marries and divorces the girl from the plastic lagoon, Lauren Sanchez, a prenup will preclude any such largesse should she be so inclined.

So what happens in these select areas are only the high earners can afford to buy and even they get stretched. Everyone else gets every last dime squeezed out of them in the form of rent by the moneygrubbers.

And there is probably an easy fix through the tax code by limiting or scaling the depreciation of these assets. But will they? Maybe after twenty years or more after people screaming about it.

 

[Harry Bosch]

Google: Billionaires who buy up residential homes

They swoop in and buy up homes in select areas driving up valuations. Good old Buster Bezos in in on it now too because there's no such thing as too much. At least MacKenzie Scott gets to do good with a nice chunk of it. Something tells me whenever Bezos marries and divorces the girl from the plastic lagoon, Lauren Sanchez, a prenup will preclude any such largesse should she be so inclined.

So what happens in these select areas are only the high earners can afford to buy and even they get stretched. Everyone else gets every last dime squeezed out of them in the form of rent by the moneygrubbers.

And there is probably an easy fix through the tax code by limiting or scaling the depreciation of these assets. But will they? Maybe after twenty years or more after people screaming about it.

It's counterintuitive, but depreciation is a tax increase; not a benefit. Assets are either expensed or depreciated. If expensed, the owner writes off the entire asset year 1. Wealthy owners would love this! Depreciation recognizes that long term assets carry value over time. So they require that long term assets are written down over the useful life of the asset (ie for equipment, 5 years; homes 30 years; commercial buildings 40 years, and etc.). I apologize in advance to any cpas out there if I wasn't exact in my wording above. I'm only an amateur!

 

[RVonse]

Housing crisis continued...

Arizona is joining California in the world of class disparity in large part, driven by the two housing booms caused by low interest rates. Too many working people can't afford to live in housing.

I thought the fed was your Savior Jimmy? Could it be by your own admission the fed caused a problem here....and in LA...and in San Francisco........and maybe Seattle too? Employed people actually out on the street and homeless? Sounds kind of dire to me.

Could it actually be that the fed might not be as good as the good "old fashioned free market"?

 

[RVonse]

And there is probably an easy fix through the tax code by limiting or scaling the depreciation of these assets. But will they? Maybe after twenty years or more after people screaming about it.

The best and easiest way to fix the tax code would be to tax the high earners (like the software developers) much more and the low earners (like the kitchen help) much lower. That way when both groups of people go to purchase a home asset, everyone will have some kind of means to actually buy it.

 

[Harry Bosch]

Housing crisis continued...

Arizona is joining California in the world of class disparity in large part, driven by the two housing booms caused by low interest rates. Too many working people can't afford to live in housing.

I thought the fed was your Savior Jimmy? Could it be by your own admission the fed caused a problem here....and in LA...and in San Francisco........and maybe Seattle too? Employed people actually out on the street and homeless? Sounds kind of dire to me.

Could it actually be that the fed might not be as good as the good "old fashioned free market"?

?? First off mortgage rates today are around 7%. Have been for a while. Secondly, it appears that we're avoiding the dreaded recession that has been predicted. If so, it was masterful job by fed to raise interest rates enough to tamp down inflation, while not so much to choke off all investment and expansion.

 

[Jimmy Higgins]

Housing crisis continued...

Arizona is joining California in the world of class disparity in large part, driven by the two housing booms caused by low interest rates. Too many working people can't afford to live in housing.

I thought the fed was your Savior Jimmy?

No, that'd be Alyson Hannigan.

Could it be by your own admission the fed caused a problem here....and in LA...and in San Francisco........and maybe Seattle too?

I'd say Greenspan was asleep at the wheel. Donald Trump was very aggressive on the Fed to not increase rates. What I think is funny is that the consequences of high rates make you mad and the consequences of low rates make you mad. I just think you want to believe that there is an easy solution to global and domestic economics.

The goal of the Fed is to have a stable dollar. In general, it has done a decently good job. The lack of regulations thanks to a libertarian minded set of decisions on ignoring certain aspects of the economy results in the massive crash of 2008 (and the S&L's). Inflation popped up for the first time in my conscious lifetime, so 40 years, which took a global pandemic to make it happen. And the Fed managed to get it down without putting the economy into a recession. The problem is that the newest generation is dealing with the impact of low rates over two generations that put housing prices much higher, and with mortgage rates higher (not high, but higher), it makes housing less affordable, especially as America has been prioritizing things to help the upper class.

Employed people actually out on the street and homeless? Sounds kind of dire to me.

Certainly isn't a good thing. Kind of indicates the "look the other way" non-regulated world isn't the best of things.

Could it actually be that the fed might not be as good as the good "old fashioned free market"?

The "free market" is an IPU. It doesn't exist. Prior to the Fed, the economy was rife with economic instability. It wasn't this utopian dream you have fantasized about.

 

[RVonse]

So, Sedona, for some unknown period of time will let people live out of their cars in a parking lot.

Baby boomers are a big factor here IMO. They have saved their entire lives and want to live either in Arizona or Florida. Look for those locations to sky rocket in price but it will not last. When the boomers die off, the next generations will actually want to live in locations that feature employers that pay good wages for raising families.

 

[Jimmy Higgins]

And there is probably an easy fix through the tax code by limiting or scaling the depreciation of these assets. But will they? Maybe after twenty years or more after people screaming about it.

The best and easiest way to fix the tax code would be to tax the high earners (like the software developers) much more and the low earners (like the kitchen help) much lower. That way when both groups of people go to purchase a home asset, everyone will have some kind of means to actually buy it.

Much lower don't pay much in income taxes at all. So their relief wouldn't make them suddenly able to afford a home.

 

[RVonse]

I'd say Greenspan was asleep at the wheel. Donald Trump was very aggressive on the Fed to not increase rates. about.

We agree.

The goal of the Fed is to have a stable dollar. In general, it has done a decently good job. The lack of regulations thanks to a libertarian minded set of decisions on ignoring certain aspects of the economy results in the massive crash of 2008 (and the S&L's). Inflation popped up for the first time in my conscious lifetime, so 40 years, which took a global pandemic to make it happen. And the Fed managed to get it down without putting the economy into a recession. The problem is that the newest generation is dealing with the impact of low rates over two generations that put housing prices much higher, and with mortgage rates higher (not high, but higher), it makes housing less affordable, especially as America has been prioritizing things to help the upper class.

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

 

[RVonse]

And there is probably an easy fix through the tax code by limiting or scaling the depreciation of these assets. But will they? Maybe after twenty years or more after people screaming about it.

The best and easiest way to fix the tax code would be to tax the high earners (like the software developers) much more and the low earners (like the kitchen help) much lower. That way when both groups of people go to purchase a home asset, everyone will have some kind of means to actually buy it.

Much lower don't pay much in income taxes at all. So their relief wouldn't make them suddenly able to afford a home.

Sadly, that would not be enough. Even paying no tax would not help the kitchen help compete in a bidding war with someone making $400k/ year. The people making over $200k/year need to pay a LOT more tax than they do now. Especially in the locations with high home prices.

 

[laughing dog]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

 

[RVonse]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

If there are side effects of supply and demand, those should be addressed without using central management. Taxation is still a huge tool of the government. And unlike central government, taxation is so simple it can more democratically be turned off or on.

 

[Jimmy Higgins]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

Yes, this is why rent control exists in cities. Because without it, housing would be more affordable?

 

[laughing dog]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

All prices are real in that they exist. I don't know what you mean by a "real" price vs an unreal price. Certainly there is no reason to think prices remain more stable without "central management".

So, I really don't understand what your point is. Whether or not there is "central management", markets allocate resources. There are winners and losers in any case. "More fair" is in the eye of the beholder - it is not an objective measure. Which means people will disagree over which system is better depending on their notions of fairness.

If there are side effects of supply and demand, those should be addressed without using central management. Taxation is still a huge tool of the government.

Taxation is a form of central management.

 

[RVonse]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

All prices are real in that they exist. .

They do exist but they do not reflect true reality.

Historically, the average cost of a house in the US has been around 5 times the yearly household income

https://www.longtermtrends.net/home-price-median-annual-income-ratio/#:~:text=Historically, the average cost of,times the yearly household income

So we know from average nationwide home pricing data, any local home price that is more than 5x is artificial and will not hold up to the test of time. It is only a matter of when the bubble breaks. Or when the fed does something else unpredictable.

 

[RVonse]

Taxation is a form of central management.

But it is democratic. We elect the people who raise our taxes.

The fed can do anything it wants at any time and I do not even get to vote for them.

 

[RVonse]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

Yes, this is why rent control exists in cities. Because without it, housing would be more affordable?

Without the fed and without all the other governmental incompetence, there probably would and should not be any rent control either. Let the individual decide whats best for him (her) self.

 

[jonatha]

top trying to fuck with what wasn't broke.

It was broke. That's why the Fed was introduced in the first place....

 

[Jimmy Higgins]

Another words, serious side effects from central management of the economy. Just let supply and demand work like it should and stop trying to fuck with what wasn't broke.

There are can be serious negative side effects from letting supply and demand like it should. Why are those side effects less undesirable than those under "central management".

Because good economic decisions based on price will still be possible. As long as supply and demand remains unrestricted everyone in the system is assured the price is real. Also, with no central management everyone can be assured to be on the same footing with no secret thumbs on the scale. Its more fair to everyone.

Yes, this is why rent control exists in cities. Because without it, housing would be more affordable?

Without the fed and without all the other governmental incompetence, there probably would and should not be any rent control either. Let the individual decide whats best for him (her) self.

You know, you are going to find it incredibly hard in life to discuss such concepts when you apparently don't understand anything about them.

Let the market decide? Without rent control, the proles wouldn't be able to live in the city. The free market would have kicked them out for higher (much higher) paying tenants.

For example, see Sedona!