"Housing prices are not high by any historical standard"

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"Housing prices are not high by any historical standard" - evoskuil x.com/evoskuil/status/1958757456605040849

1257 sats \ 46 comments \ @Scoresby 22 Aug econ

Here is a very entertaining thread about housing prices and wealth on X.

It begins with a post made by Nic Carter:

Eric Voskuil then quotes Nic's post with some commentary:

This of course results in a number of replies that take issue with Voskuil. This one is indicative of most:

In general, Voskuil dismisses them as not relevant. However, this guy brings a chart:

Voskuil claims that the data is cherry-picked:

Voskuil also adds this (uncited) chunk of data:

My question:

do you think that housing is less affordable than it was 30 years ago?
do you think that young people are less wealthy now than young people were 30 years ago?

view all related items

2735 sats \ 17 replies \ @SimpleStacker 22 Aug

I don't know who Voskuil is, but he's doing one of the things I hate most that the "everything-is-fine" people do, which is to use averages to make a point about the general experience of the population.

It's often used to dismiss the lived reality that other people are experiencing, and it's often wrong.

In this case, I think he is dead wrong. In the US (and probably most of the western world), it is harder to buy a house than any time in living memory.

Here are a few of the key things I think he's getting wrong:

He says Americans of every age cohort are getting wealthier. Then he uses averages to back it up. It might be true on average, but averages are lifted up by an extremely fat right tail. I"m more concerned about the median, or even the 25th percentile.
He talks about how people have access to more investment services and that people are much less dependent on home equity. Once agian, I'm not sure what point that's trying to make when we're talking about young people, who probably don't have equity in housing or any other asset in significant quantity.
"The price for the same size and quality of housing is lower in real terms than it has ever been." Citation needed on this one. Even if it's true, these "quality adjustments" are pretty sketchy when it comes to debating whether things are getting better or worse.

It's kinda like with cars: the entry level car is getting more expensive, but defenders of the price increases say it's because there's so much more technology in them now, i.e. their quality is higher.

So take that logic to homes. If regulations are making it so that the minimum entry level house is now bigger and better than they used to be, but it's preventing young buyers from entering the market, can you really say that just because the price-per-quality-unit is stable, that young people should just gladly accept that?
If you just look at the age distributions of when people are buying their first home, it's getting later and later in life. I'm not sure what else you could say to prove Voskuil wrong. It's not because people want to buy homes later (though part of it could be explained by delayed family formation and delayed career starts---but that's all wrapped up into the same set of problems!)

TLDR, i'm not on Voskuil's side on this.

200 sats \ 4 replies \ @Scoresby OP 22 Aug

If you just look at the age distributions of when people are buying their first home, it's getting later and later in life. I'm not sure what else you could say to prove Voskuil wrong.

In a different circumstance, might not someone argue that these things are simple correlation and that one cannot draw a causal connection between them?

Let's move the example to vehicles. If we see that the average age of a car-buyer is increasing, that doesn't necessarily mean that cars are too expensive for young people to buy. Perhaps fewer people want cars; perhaps old people are buying cars for young people to drive, perhaps young people are using uber and waymo, perhaps any number of things, one of which might be cars are too expensive for young people to buy.

Same is true for houses. The age distribution of when people are buying their first home does not necessarily imply anything about the expense of a home. More info is needed in order to make such a conclusion.

If regulations are making it so that the minimum entry level house is now bigger and better than they used to be

They certainly are. But I wonder if someone would be willing to buy a house with no dishwasher, one bathroom, 700 square feet, and no central air (which is more like what a house was in the 1950s). It is untested whether a person in their 20s or 30s would be willing to buy such a house.

(Counter-argument to myself: there are a lot of such houses in big cities all over the US (just not newly constructed ones), and people do seem to buy them.

young people should just gladly accept that?

I'm not sure anything Voskuil said had to do with accepting anything. He seems to be arguing with the broader idea that the younger generations (in the US at least) are poorer than their predecessors at similar times of life.

He talks about how people have access to more investment services and that people are much less dependent on home equity.

I think this may be a reference to things like Robinhood and general buying of stocks? Maybe also bitcoin (although probably not as he's often said he doesn't think it's an investment). But he may also have been referring to payments from family.

Then he uses averages to back it up.

He doesn't include the citation, but whatever he's quoting does include medians. "the median is slightly lower at $83,300–$96,800, around $90,000. This is based on 2024 data (median earnings of $61,907–$73,897 for ages 30–39, adjusted for 4.8% wage growth"

304 sats \ 3 replies \ @SimpleStacker 22 Aug

He seems to be arguing with the broader idea that the younger generations (in the US at least) are poorer than their predecessors at similar times of life.

Then I suppose the issue is that they're talking past each other. Nic Carter's original post was about housing. Why would you then want to make a point about overall economic situation?

By the way, I would agree that young people today are richer in real terms than young people of the past.

But I'd also argue that rich in material terms does not necessarily lead to life satisfaction. Just because you can afford $80,000 of doordash but can't buy a house... I don't think that would make you happier than having an $80,000 house and no DoorDash. I think young people are probably less satisfied than in the past. This may have to do with overinflated expectations, social media, any number of things. But let's focus just on housing for now.

We could argue about causality vs correlation, and how to truly interpret the data. But in this case: if the people are saying housing is too expensive, and most of the data is saying housing is too expensive, and most economists by the way are also saying housing is too expensive.... then housing is probably too expensive.

30 sats \ 1 reply \ @Scoresby OP 22 Aug

But I'd also argue that rich in material terms does not necessarily lead to life satisfaction.

This is a great point, and well said.

then housing is probably too expensive.

I need a go look back at newspapers from the 80s or 90s and see how people were talking about housing prices.

My (un-evidenced) suspicion is that they were saying it was expensive. In the same way that old people like to deplore the morality of the youth, the youth like to bemoan the expense of modern life.

You are probably close set to the truth of the matter than Voskuil, but I enjoyed his take because it is not something I hear very often at all, and I do think it has some well-reasoned argument behind it.

102 sats \ 0 replies \ @SimpleStacker 22 Aug

You are right that people will probably be complaining about the same things in every generation, but I have a feeling that if you asked them to rank things in terms of how problematic they are, housing costs would be much higher ranked today than in the 80s and 90s.

Just a guess, I haven't looked at that kind of data.

102 sats \ 0 replies \ @MaaliMKen 24 Aug

We could also uncover the following polls:

How many people under 25 wanted to buy a house by 35 in the then year 1900, 1910, 1920, ... , 2025 vs How many bought a house.
Why did some in 1 above fail to buy a house by 1900, 1910 ... 2025.
How many people under 25 wanted to be married by 35 in the then year 1900, 1910, 1920, ... , 2025 vs How many got married.
Why did some in 3 above fail to be married by 1900, 1910 ... 2025.

These brings a subjective experience to these discussions that tracks wants and desires over time. They could also do it differently for men and women. For men, start at 30 and track them up to 40. For ladies, start at 25 (because I think many women will want to be married at 25. While one will find it had to find 25 yo guys thinking of marriage).

237 sats \ 8 replies \ @Undisciplined 22 Aug

It's a bit like saying a ladder is easier to climb because the top rungs are closer together, while omitting that the bottom rungs have been removed.

I don't fall cleanly on one side of this or the other. I think it's true that people's expectations have outpaced their means, to some degree, and they interpret that as things being less affordable. At the same time, when they say "A sole earner could afford a house and a car.", they leave out the lower quality of those things.

My beef is with the absoluteness of the claim. Clearly, there are some historical standards by which housing is less affordable than it used to be. One popular metric is to show how high median home prices have become relative to median wages. That metric has all kinds of potential problems, but it is definitely a historical standard.

42 sats \ 6 replies \ @Scoresby OP 22 Aug

a ladder is easier to climb because the top rungs are closer together, while omitting that the bottom rungs have been removed

I'm not sure I get how your analogy works. I'm inclined to agree with Voskuil, and I'd say that there is a lot of evidence that the ladder hasn't changed that much.

Here's a different angle on it:

source

If housing was significantly more expensive, we might imagine that it would begin to show up as a higher percentage of people's expenditures. I suppose it might be the case that people are not willing/able to spend any more on housing and so are downgrading, but I don't think that's true.

149 sats \ 4 replies \ @SimpleStacker 22 Aug

That's an aggregate across all age ranges, and the population is getting older.

For people 25-40, the housing component is probably growing more than the healthcare component (my guess)

42 sats \ 3 replies \ @Scoresby OP 22 Aug

This is using data from Bureau of Labor and Statistics. I'm a little unsure about it though, because some of the data points seem off (why does 55-64 have such a big jump in 2023? What's up with the 75+ spike in 1995? -- I used chat to create it...)

Anyhow, it seems to show that housing as a share of total expenditures stayed flat for most age buckets during the 2010s, but was rising before that? Curious what you think of it.

(it doesn't address @Undisciplined's points about household composition though...)

102 sats \ 0 replies \ @Undisciplined 22 Aug

It's hard to take too much away from that. The blue line contains most first time home buyers and it is growing more than some of the others, but less than red and not really differently than purple.

0 sats \ 1 reply \ @SimpleStacker 22 Aug

Did you look at the underlying data too or did you just ask chat to create it? Seems off to me

0 sats \ 0 replies \ @Scoresby OP 22 Aug

just asked chat.

102 sats \ 0 replies \ @Undisciplined 22 Aug

That's share of household expenditures, though, not per capita expenditures. Young adults live at home, in dorms, or with roommates later into life than they used to.

Without accounting for household composition, you can't conclude too much from that graph.

42 sats \ 0 replies \ @SimpleStacker 22 Aug

It's a bit like saying a ladder is easier to climb because the top rungs are closer together, while omitting that the bottom rungs have been removed.

Great analogy, and really apt for the kinds of arguments often being made by the "everything-is-fine" crowd.

37 sats \ 1 reply \ @siggy47 22 Aug

And those who don't have the ability to analyze it the way you did know it's bullshit on a visceral level.

41 sats \ 0 replies \ @SimpleStacker 22 Aug

Yeah this one is pretty egregious.

The one that I'm more on the fence about is, "Is crime really getting worse?"

The statistics (which I don't trust), seem to say "no", but.... toothpaste is locked up at the grocery store dude....

0 sats \ 0 replies \ @Drstone1234 23 Aug freebie

Concordo plenamente

110 sats \ 8 replies \ @stack_harder 22 Aug

Guy just seems like a dick head to me.

All I can say anecdotally is that people are buying houses much later (all my parents' generation had houses age 25, no special high-paid jobs), the size of the deposit is absolutely massive. People who say new houses are better quality - most of the new builds in the UK are fucking shit.

21 sats \ 7 replies \ @SimpleStacker 22 Aug

Haha, that's why I said "I don't know who Voskuil" is... because I was wondering if he's an economist. A lot of economists love being massive contrarian dickheads.

17 sats \ 6 replies \ @optimism 22 Aug

He's the current main dev of libbitcoin and author of Cryptoeconomics Fundamental Principles of Bitcoin.

He's definitely contrarian.

105 sats \ 3 replies \ @SimpleStacker 22 Aug

Cool... I can respect his contributions to bitcoin, but he's wrong on housing.

If his main point was that "life is actually better for young people now, stop complaining", I wouldn't disagree... though there'd be some nuance to add.

(Basically, I think young people are less happy, but it's in many ways self inflicted... and not correctable by moar material goods.)

134 sats \ 2 replies \ @optimism 22 Aug

"life is actually better for young people now, stop complaining"

That's kind of how I read him.

I think young people are less happy

Hyperbolically, I'd ask: but isn't that because if you grow up having everything, and the only thing you do (all damn day) is measure your life to that of a celeb on tiktok, you will not be easily satisfied?

115 sats \ 1 reply \ @SimpleStacker 22 Aug

Social media comparison game, overly high expectations, lack of purpose and identity, lack of in-person interaction, culture that promotes consumerism without telos, you name it

30 sats \ 0 replies \ @optimism 22 Aug

I guess we're aligned on that one.

100 sats \ 1 reply \ @justin_shocknet 22 Aug

Also a Top-Gun fighter pilot, sold a policy engine to Microsoft years before Bitcoin was a thing... adversarial thinker, such thinking tends to rub sheep the wrong way.

17 sats \ 0 replies \ @optimism 22 Aug

Yes. I appreciate his takes.

277 sats \ 11 replies \ @justin_shocknet 22 Aug

He's got people arguing data scope beyond the sheep bleeting "home prices as a multiple of wages", and is right in doing so.

Can't be sure if he's nominally right, because it's an endless loop of what data is legitimate to call into in scope. Getting mired in those specifics is a fools errand.

If he were simply to say "people that compare home prices to wages are retarded" then he'd be absolutely 100% correct because those same people would blame fiat, meanwhile:

130 sats \ 0 replies \ @justin_shocknet 22 Aug

0 sats \ 9 replies \ @SimpleStacker 22 Aug

Disagree with your framing. Gold is fixed supply --- why should we want housing to act like something with fixed supply?

Trying to downplay that as somehow natural is wrong. The lack of housing is a policy failure, not comparable to the price dynamics of gold.

35 sats \ 8 replies \ @justin_shocknet 22 Aug

It's not my framing, it's reality. Home prices are flat in "real money" terms.

Real estate is fixed supply, god quit making land a long time ago, yet the population is increasing that needs to live (and eat) on it.

Given that, and the cost of housing being flat, that's a miracle of market efficiency in land improvement. Home values are largely a product of the land it sits on, not the sticks it's built with.

So what we have is completely natural, costs are a mix of the thing we can't produce (land) and the things we can produce (wooden boxes, earthwork). Coming out in wash despite population growth is pretty amazing actually.

If there's a grievance to be had, it's that wages pay less gold ("money") than they used to. This too is completely natural, why should labor have the same value it did before technology was invented to obviate that labor?

Would we really want to return to an era where it took 100x more workers to farm the same acreage of land just to keep wages high? We'd starve to death.

47 sats \ 2 replies \ @Scoresby OP 22 Aug

Would you agree that regulation artificially increases the cost of housing?

And, if so, would you agree that without such extensive regulation as is present in US and EU cities, housing would likely be (even) cheaper?

0 sats \ 1 reply \ @justin_shocknet 22 Aug

Without being too precise, yes... the incumbent power will always fight entropy and lower prices are entropy. More efficient manufacturing should make housing "units" cheaper but I don't think it has a material impact on land prices in real-terms.

#1090409

I'd also tell anyone looking for housing never to buy anything that's not a homestead that can be productive or premium waterfront, those are hard money.

If you want to live in a box on shared land, rent and hold bitcoin.

0 sats \ 0 replies \ @justin_shocknet 22 Aug

What I'd really like to see are numbers that take land distortion out of the equation to the extent possible. That would necessitate controlling for density, like only comparing unit costs in a class of multi-family structures, you'd probably then have to look at the rents as a percentage of wages and not the assessed value of each unit.

That'd probably be a nightmare to gather data for though.

0 sats \ 4 replies \ @SimpleStacker 22 Aug

The amount of land is hardly the constraint. The constraint is the amount of land which is allowed to be developed for a certain purpose, or the amount of structure that is allowed to be built on the land. The market for real estate is heavily distorted by regulations.

102 sats \ 3 replies \ @justin_shocknet 22 Aug

That's a different set of goalposts and doesn't change the fact that housing prices are flat over time. By that measure Eric is 100% correct.

Now, to take the argument that housing should be cheaper than it is seriously, people need to quit whining about boomers sitting on equity-in-fiat terms (reality is that they're still down bad in real money terms).

In that much different conversation I'd agree with you completely. Government is what stands in the way between land-poors and this:

That would segue into a whole conversation about the nature of government, the shadow government, how the world actually works, and why Eric is correct to be adversarial in his thinking. To disagree with him on this, I assume in his view, is to be distracted by false narratives and therefore ineffective in achieving the greater goal.

A resourceful tact would be getting his insight on what he'd consider an effective path for lowering housing costs in the face of an incumbant power working to prevent it.

112 sats \ 2 replies \ @justin_shocknet 23 Aug

Thinking about this more because its an interesting problem, to say land is hardly the constraint also ignores how regulation fits into this equation...

You can get cheap, largely unregulated land, and put a mass-produced box on it and not impact anyone else. In that context, regulation is not a factor in prices any more than it is in anything else that consumes energy to make.

But, people looking for housing generally don't want to put their mass-produced pods in the middle of nowhere New Mexico.

There's a network-effect element to housing which is why regulation is largely a local thing as land-use is just one part of the equation. If you added a million more pods stacked on top of each other in an existing city (network) you have additional burden on things like roads, sewer, water, electricity and so on... and most importantly, on the job market which effects the ratio of wages to housing costs. Housing costs would go down in that scenario in that city but presumably so would wages.

So, when buying housing in an existing network (city as opposed to a desert) you're consenting to a covenant, with regulation being the spam filters.

Through that lens, it's not the price of housing that is high in cities, but the price of using the network in a marketplace of free association. Every city is a citadel, poorly governed as they may be.

17 sats \ 1 reply \ @Scoresby OP 23 Aug

It's not the price of housing that is high in cities, but the price of using the network in a marketplace of free association.

I think it is possible to make the argument that the value of such networks has increased over time (you can make more money/have a better quality of life living in a city now than you could 30 or 60 years ago).

How would such an argument explain the generally higher housing price in all counties in the West (even those that are rural)? I suppose the network in such cases might be the state as a whole, but I wonder what network effect I get by living in the middle of nowhere Olympic Peninsula that I don't get living in middle of nowhere Iowa.

102 sats \ 0 replies \ @justin_shocknet 23 Aug

Indeed, and I think this also ties in to what I was saying about fewer workers needed to work the same acreage in rural areas, the inverse would be true of the relative demand for knowledge workers increasing the value of cities. Aging population is a factor as well, older people are less capable of maintaining real property and need to be closer to healthcare resources that scale in population centers.

I'd think the disparity in the west coast vs. the mid-west is a combination of factors, there's still economic network effects in Oregon because you're in relative commuting distance to major economic hubs in California and Washington... as opposed to Iowa you're even further away from 3rd rate mid-west cities that aren't even a red fleck on that map in their own right.

Also if you have the the money to choose, would you rather live in the tundra of Iowa, surrounded by flat monoculture and truck stops, or have mild winters (lower heating bills) surrounded tall pines, mountains and coast, of Oregon? That gets back to some land being hard money and other land being a commodity, the network effects of either compound on themselves.

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192 sats \ 0 replies \ @ZezzebbulTheMysterious 23 Aug

Wages are 1/7th their value 30 years ago denominated in gold. Housing is 75% its price 30 years ago denominated in gold. Houses are cheaper, but your parents earned 7x as much.

The money is broken. We absolutely are not wealthier today when you consider hard asset value equivalence.

128 sats \ 0 replies \ @chaoticalHeavy 23 Aug

Houses are about 75% cheaper than they were in 1925 if we price houses in ounces of gold.

https://www.longtermtrends.net/real-estate-gold-ratio/

863 sats \ 0 replies \ @abhishandy 22 Aug

It's unrealistic to expect an affordable house in a city which is already brimming with people. Boomers chose less populated areas to settle down. Our generation have to do the same. Build new cities.

102 sats \ 0 replies \ @LAXITIVA 22 Aug

Umm I live in Vancouver and renting is already unmanageable buying a house here is not possible

102 sats \ 0 replies \ @optimism 22 Aug

do you think that housing is less affordable than it was 30 years ago?

It would be for me if I were buying. From about 2.5x annual income, to 10x (over 35y)

do you think that young people are less wealthy now than young people were 30 years ago?

Not in the West, for the moment. But I believe that the decline is just starting if there is any to be, so imho Eric is right - gains > pains. Let's re-evaluate in 5 years.

0 sats \ 0 replies \ @Ov1 23 Aug

My comment on earning my rent in 3 days 30 yrs ago wasn't based on somewhere in the middle of nowhere. Many of you may be familiar with the cost of housing these days in the Austin area. For those not around in the 90s, let me give you a glimpse of what life was like there and then, that no doubt contributed to "Keeping Austin Weird", as we had more time, attention, and resources to devote towards being creative.

The rent for a 3 bedroom, 2 bath house with a 1/2 backyard that went down to the Colorado river, located 2 miles from the Capital Building was only $695. My girlfriend bought the place my friends and I had been renting for only $80k. I didn't want anyone else to rent the 2/1 house next door I rented it for only $500/month so we could have adjoining patios in the back all to ourselves. I was earning $25/hour (in cash with no taxes taken out) working for myself as an independent green building contractor working on cob/super adobe houses, ferro-cement cisterns/ponds, and biodynamic tea fertilized wicking beds. So my rent for my half of the house at that time literally took only 10 hrs of work each month!

How different can you imagine your current life would be IF you could cover your housing costs in less than 1 1/2 days of labor, doing fulfilling work for good people while owning my own schedule and being challenged mentally, creatively, and physically..?

This IS the lifestyle that the money printing over the last 30 yrs has stolen from ALL of us. What I did NOT have back then, was hope for escaping the rigged game I knew I had been born into, OR a means of saving my surplus savings, energy, and time with protection against it all being stolen by the Government/Bankster Cartels. For those of you in your 20s and 30s today, it seems foolish to overpay for your homes that have been inflated in fiat prices due to the monetization of real estate. What you DO have today is hope, hard money, and an intellectual advantage over your peers who do not yet understand that the fiat Emperors Are Naked, with the fiat cloaks exposed as the illusion of wealth they are by Bitcoin!

So work hard, live simply, stay humble, and stack sats my friends. Because 20 years from now you will be FAR better off than your Boomer parents and grandparents with their overpriced dog houses are now. Their over-sized and under-built houses, fixed fiat incomes, and permissioned retirement accounts provide an illusion of wealth, while your self-custodied UTXOs provide the real thing. They are "house slaves" living in gilded cages falsely believing they are smart and free, while you are still early in the untelevised revolution of the entire monetary systems able to front run the money masters leaving the fiat plantations behind to build your Bitcoin Citadels where proof of work reigns.

0 sats \ 0 replies \ @nitter 22 Aug bot

https://xcancel.com/evoskuil/status/1958757456605040849