"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

1105 sats \ 36 comments \ @Scoresby 7h 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

2142 sats \ 15 replies \ @SimpleStacker 7h

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 \ 3 replies \ @Scoresby OP 6h

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 \ 2 replies \ @SimpleStacker 6h

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 6h

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 6h

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.

232 sats \ 8 replies \ @Undisciplined 7h

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 4h

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.

144 sats \ 4 replies \ @SimpleStacker 3h

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 2h

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 1h

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 1h

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 1h

just asked chat.

102 sats \ 0 replies \ @Undisciplined 3h

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 7h

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 7h

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

36 sats \ 0 replies \ @SimpleStacker 7h

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....

30 sats \ 8 replies \ @stack_harder 6h

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 5h

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 5h

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

He's definitely contrarian.

100 sats \ 3 replies \ @SimpleStacker 4h

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.)

129 sats \ 2 replies \ @optimism 4h

"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?

110 sats \ 1 reply \ @SimpleStacker 4h

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 4h

I guess we're aligned on that one.

100 sats \ 1 reply \ @justin_shocknet 5h

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 4h

Yes. I appreciate his takes.

202 sats \ 8 replies \ @justin_shocknet 6h

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 5h

0 sats \ 6 replies \ @SimpleStacker 4h

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.

30 sats \ 5 replies \ @justin_shocknet 4h

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 4h

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 3h

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 2h

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 \ 1 reply \ @SimpleStacker 4h

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 \ 0 replies \ @justin_shocknet 3h

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.

102 sats \ 0 replies \ @optimism 6h

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 \ @nitter 7h bot

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