This entire story is a perfect example of how economic reporting has missed the story. They interview one (1) working class woman who has been legitimately screwed by her employer ($1/hr raise in 5 years) and then note that wages for working people in the aggregate have outpaced inflation!
Again, the conceit of the piece is perfectly reasonable, as is some of the reporting, but if you scratch it, you see the actual data belies the thesis.
www.nytimes.com/2024/07/03/b...
There’s testable hypothesis here and I’m willing to make a prediction: choice an empirical metric to measure low and middle income people taking summer trips and I will bet they are up YoY when summer is over.
Again, none of this is to say American capitalism is awesome for working people, it manifestly is not! But we’re talking about change vs constants. And the *trends* have been more money in the pockets of lower wage earners, in real terms, over the past two years.
There are 86 million homeowners. Rapid inflation, assuming your income keeps pace, absolutely helps reduce the mortgage burden, no wash about it. If money doubles, your mortgage halves. Renters do not get this benefit. This causes a disparity and could account for the vibecession.
This is anecdotal, but in my experience, homeowners aren’t the ones feeling down about the economy; it’s us renters who keep seeing the possibility of owning a home slip through our fingers.
I’m convinced it’s never going to happen. No way I can save faster than price increases. The game is fixed.
yes, exactly. this is a key point being missed in the vibecession debate.
rent control and tenant protections are a huge help, but most renters don't have that, and they're getting double-hit from inflation and a housing shortage.
Yeah, precisely. My rent is 40% of my income. A down payment for a house out here is $100k+. Wages outpacing inflation by a few % points (which mine didn’t, btw) would do diddly squat to improve my future prospects. I’ll be renting until I die, and probably never be able to retire 😕
FWIW, there are MANY countries where one can live reasonably well on a straight Social Security income. I expect that a lot of GenXers who are permanently shut out of owning a home will find this a better option than working til they die or retiring by living out of their cars or tents.
Fair point. I'm hoping that after the Baby Boomers kick off that those countries will be happy to have retirees with a guaranteed income. But yes, definitely something to pay attention to.
There are several markets where owning a house is difficult even for the upper middle class. NY, LA, SF, DC. This is true now. And it was true 20 years ago. But there are many many places where this is not true.
They’re quite literally in the millions. And, there’s a law here that anything over $1mil requires 20% down payment. So anything $900k gets snatched up immediately. It’s insane.
totally, and this is place where the aggregate data *does* show a grim scene, it's not just anecdotal. I'd say the cost of housing is probably the single biggest economic issue right now (along w high interest rates on credit card debt)
This is clearly an urban/coastal issue. My students, when they graduate college, are all buying homes in the Midwest within 5 years of graduating. I see their posts about all the time.
Yes but rents are bad everywhere. It’s basically the key driver of inflation in the CPI data, and obviously 7% mortgage rates make home purchasing more expensive as well (although asking prices tend to move to accommodate that a bit)
Yes, but average rent in St. Louis, according to google, is like $1000-$1200. But generally speaking, yes, it's way too expensive in way too many places.
I am not certain it is purely coastal verse middle. I live in rural AL and my 1275 sq. ft. home was 100K in 08 at bottom of the market now it is 199K and on my salary I could not afford a single home at 7%. I make way more than I did in 08. Average prices are now 2-2.5x more here salaries are x1.5.
I live an hour away from the coast, and homes are $2-3million. Down payments are 20x average salary. If I go another hour away they’re still over $1mil. Like… how am I supposed to plan for that?!
There is no way. Builders mostly are making luxury ones since that is where profit for them is. Older Boomers go to townhalls to speak against allowing affordable homes and apartments being built to preserve their home prices. Private equity firms are buying out homes and renting them for profit 1/2
Not to get TOO contrarian, but how many are NOT posting about buying a home because they couldn’t buy one? Like, you’re guaranteed to see the posts about people buying a home because only those buying them are posting about it. There’s a term for this but I can’t remember it right now… 🤔
Honestly, if you can convince Oklahoma to provide tax incentives for the film industry, you’ll get a lot of "blue" film industry workers. Also those incentives pay for themselves something like 2-3x over, since the employees you bring to the state spend all of their money in-state anyway.
“Assuming your income keeps pace” is the key to your point. Actually converting the upside on your home into “real” money you can use for other things means downsizing or moving to a lower cost of living area. HELOC doesn’t count in my mind because it is just access to more debt near term.
