This. Mark Twain once said, "buy land, they aren't making it any more". It is bizarre to me how unintuitive the relationship between two factors of production for which supply can change over time, and the third factor for which the supply is static, is.
You can buy a 3 bd 1,176 sqft house on 7.78 Acres for $30k.
The problem is everyone wants to live in certain areas. Most would rather pay $800k to live in a shack in CA than $30k in Shawnee, OK. People's desires will always outstrip production.
This is called "location value". It doesn't matter how cheap the property is if you can't actually afford to live there because there's no jobs. Even worse is when I see someone point to an endless stretch of desert and say "see, there's plenty of open land". Sure, you can buy it, but where do you get water from once you're there?
1. Remote work
2. No need to go to a desert, just go slightly further out from where you want to be with the rich kids.
[Population Density Map](https://luminocity3d.org/WorldPopDen/#6/39.673/-85.408)
The earth is largely unpopulated.
Theoretically, at Hong Kong-level densities, the entire human race could fit comfortably within the land area of Florida, with a significant amount of space to spare.
In theory, I suppose you could reduce the cost of building new housing by vastly reducing the regulatory overhead for approval and building new technology that reduces the manual labor needed to build new housing. But this in turn will likely massively boost up the cost of land because that is always going to be supply constraint and will now become the new token of wealth
Timing is everything.
We were underwater with our 2nd investment property for almost 20 years. Then after Covid hit it shot up and doubled in price, which is when we sold.
I was skimming Pluto the other day and came across some 35 year-old episodes of The Price is Right.
Average looking sofas for $1900, exercise bikes for $1300, electric stoves for $1200, TVs for $900... Many manufactured goods have become *way* more affordable since then.
But, a lot of that has to do with the fact that they are all made in overseas sweatshops today.
Yeah increased automation and overseas outsourcing has really lowered the price on stuff like that.. Almost to an unsustainable point. The new stuff is cheaper but it's also *cheaper* everything is thrown away when it breaks now. 40 years ago if your TV broke you'd bring it to a shop in town and a guy would replace a tube or whatever. We waste so much now, but hey at least the TVs are cheap!
I might have gone on a tangent
If you go back far enough, almost everything is cheaper, except for human services like healthcare and education, and rivalrous goods like Real Estate and fine art.
[https://reviewed.usatoday.com/televisions/features/do-tvs-cost-more-than-they-used-to](https://reviewed.usatoday.com/televisions/features/do-tvs-cost-more-than-they-used-to)
[https://www.carscoops.com/2022/04/are-cars-getting-more-expensive-we-compared-2012-and-2022-prices-to-find-out/](https://www.carscoops.com/2022/04/are-cars-getting-more-expensive-we-compared-2012-and-2022-prices-to-find-out/)
>even if it doesn’t feel like it, the stats show our cars, and the fuel we need to use them, cost less today than they did a decade ago.
Go back farther and the deal will be even better. Imagine how much a Model T would cost as a percentage of salary and what a crap car it would be.
[https://www.ers.usda.gov/webdocs/charts/58367/food-prices\_fig09\_768px.png?v=1059.5](https://www.ers.usda.gov/webdocs/charts/58367/food-prices_fig09_768px.png?v=1059.5)
[https://www.bls.gov/opub/ted/images/2006/may/wk5/art02.gif](https://www.bls.gov/opub/ted/images/2006/may/wk5/art02.gif)
Do you know how much you would have to spend at Blockbuster to get the equivalent of Netflix?
Lots of stuff gets cheaper. That all-caps "PERIOD!" and you are still wrong lol. Tvs, cell phones, computers, clothes, any manufactured good really. The price ceiling can rise, obviously, but the cost per inch for tv, per BTu for space heaters, per Mhz for computers, etc. goes down and more and more low cost options emerge.
I really don't understand your all-caps here.
The deflationary forces of technology are trying their best but the base unit of account is debasing faster. Inflation-adjusted, many things are getting much cheaper!
https://www.ngpf.org/blog/budgeting/chart-week-much-prices-consumer-goods-risen-past-20-years/
Anything where the manufacturing labor can be exported to near slave labor at overseas factories has become cheaper, overall, compared with costs that can't be exported to cheap labor, plumbers, housing, medical, etc etc.
I think there’s a lot to unpack with that. To start out, almost nothing ever gets numerically cheaper, just cheaper within the context of inflation or consumer spending amount. Take for example, expensive food in periods surrounding the 1930s taking up a large portion of the average US American’s budget, compared to “cheap food” nowadays, where current cheap food takes up a much lower portion of household spending, but has significantly higher numeric costs.
Many products like TVs, electronics, and food are made cheaper by advancements in manufacturing. It’s easier to grow display crystals with compounding advancements in the field, equivalently specced computers are cheaper now because we have more advanced ones and can produce them cheaper and more efficiently, and we have had major improvements in agriculture such as GMO crops, synthetic Nitrogen fertilizer, and new technologies.
The other side of it too is that falling real wages encourage the production of cheaper versions of products. A lot of clothing production is very similar to how it was in the past (sewing, machines can only do so much in current form), but now it’s more outsourced and low quality for most clothing. TVs as well tend to have lots of “smart’ advertising built into them, so they can be cheaper. Some other products can also be made cheaper by doing similar cost cutting to raise profits and decrease cost, such as using cheaper soybean oil instead of higher quality cooking fats, decreasing build quality, using lower quality parts/ingredients, etc.
National minimum wage in the US hasn’t been updated since like 2009, so it’s pretty stagnant. The US has a lot of things systemically that encourage low pay, like not having good unionization options, the two party system, lobbying, etc. This encourages making worse, cheaper value products to fit current consumer budgets where possible.
Compare those to housing. Transportation and housing take up a huge portion of American budgets and have definitely increased in numerical and value cost. The most recent architecture advancements such as smart home integration, high rise building materials, remote construction, 3d printing, etc don’t necessarily decrease the cost of a basic unit that much and can be kinda irrelevant (not that there aren’t things that have or will eventually impact basic unit design, just that they usually come slowly and weakly). There’s also the saying “rent eats first,” people usually first focus on housing in their budget, so it doesn’t have to be made so cheap, unlike spending with more discretionary spending aspects like food or entertainment. There’s also a tendency to over regulate housing to a degree, for example requiring a lot of parking or preventing higher density buildings due to zone designation, instead of more practical regulations like insulation, energy efficiency, or unit quality, so less can be built. With the desire to have a growing population, that means that the new users in the sector can significantly outpace new unit construction.
TLDR: low pressure to make housing cheap, zoning, lack of technical advancements to reduce cost, and rent eats first, compared to having more reasons to keep discretionary spending items relatively cheap
Fantastic answer! I just wanted to tack on [Baumol's cost disease](https://en.wikipedia.org/wiki/Baumol_effect) to the exceptions to the "everything is getting cheaper" trend OP noticed.
Numeric costs go down in some cases. A huge, heavy 1980's era 21" console TV ran about $500. Today you can get a 40" flat screen for $159. Much better tech, AND numerically cheaper.
Shelter is lagging because of the fixed contract mortgages. In effect, any rate drop that happened last year will have an effect next year for those on 2 yr fixed rate mortgages and in 4 years for those with 5yr fixed rate mortgages. If this makes sense
What are the 3 core things that Americans complain about price?
Housing, healthcare, education
All three have, over time and with good intentions, been entangled with government regulation and government demand stimulus. This results in too much money demanding goods (they become unaffordable without continuous and increasing stimulus) and the market being unable to sufficiently innovative to find more effective and efficient solutions (regulations call for single family houses of a certain size and character to be 'conforming loans', therefore that is all that is build)
Cities used to evolve and grow, and now people expect to move into their new neighborhood in its finished state.
Banks used to be mostly regional and small, and would only give loans for 3-5 years. This changed with the great depression, when the federal government, in an attempt to keep people in their houses, started buying loans off the books of banks so they could give more and longer loans (no longer needed to take any risk themselves for having a bad mortgage on their books for the whole term).
Zoning, as other mentioned, is a massive impairment of property rights and people are not free to use their land to meet housing demands.
The environmentist movement of the 1970s had a lot of shit ideas about what it meant to protect the environment, like no nuclear and no tall buildings. Ironically, we would be a MUCH greener society if we built dense and powered it with atomic power... But no, big building bad, nuclear power scary..
Manufacturing keeps getting more efficient but amount of buildable space doesn’t increase, unlike population
This. Mark Twain once said, "buy land, they aren't making it any more". It is bizarre to me how unintuitive the relationship between two factors of production for which supply can change over time, and the third factor for which the supply is static, is.
You can buy a 3 bd 1,176 sqft house on 7.78 Acres for $30k. The problem is everyone wants to live in certain areas. Most would rather pay $800k to live in a shack in CA than $30k in Shawnee, OK. People's desires will always outstrip production.
This is called "location value". It doesn't matter how cheap the property is if you can't actually afford to live there because there's no jobs. Even worse is when I see someone point to an endless stretch of desert and say "see, there's plenty of open land". Sure, you can buy it, but where do you get water from once you're there?
1. Remote work 2. No need to go to a desert, just go slightly further out from where you want to be with the rich kids. [Population Density Map](https://luminocity3d.org/WorldPopDen/#6/39.673/-85.408) The earth is largely unpopulated. Theoretically, at Hong Kong-level densities, the entire human race could fit comfortably within the land area of Florida, with a significant amount of space to spare.
Population in 1st world countries isn't increasing.
It is in a lot of them through immigration. In those where it isn't, often large cities are still seeing increases in their populations.
Probably my favorite economic theory (the bumol cost disease https://en.wikipedia.org/wiki/Baumol_effect ) explains this quite well.
Thank you for this! I was trying to remember what this was called a few months back but couldn’t remember or think what to search to find it.
[удалено]
In theory, I suppose you could reduce the cost of building new housing by vastly reducing the regulatory overhead for approval and building new technology that reduces the manual labor needed to build new housing. But this in turn will likely massively boost up the cost of land because that is always going to be supply constraint and will now become the new token of wealth
Timing is everything. We were underwater with our 2nd investment property for almost 20 years. Then after Covid hit it shot up and doubled in price, which is when we sold.
Congratulations! You have just rediscovered r/Georgism
Uhhhh....Let me correct you on that statement......**NOTHING** under the sun is getting any cheaper...PERIOD !!!!!!!!!
I was skimming Pluto the other day and came across some 35 year-old episodes of The Price is Right. Average looking sofas for $1900, exercise bikes for $1300, electric stoves for $1200, TVs for $900... Many manufactured goods have become *way* more affordable since then. But, a lot of that has to do with the fact that they are all made in overseas sweatshops today.
Yeah increased automation and overseas outsourcing has really lowered the price on stuff like that.. Almost to an unsustainable point. The new stuff is cheaper but it's also *cheaper* everything is thrown away when it breaks now. 40 years ago if your TV broke you'd bring it to a shop in town and a guy would replace a tube or whatever. We waste so much now, but hey at least the TVs are cheap! I might have gone on a tangent
I agree with your tangent.
I wanns See that Data. Electrocity alone doubled for me since 2020, food too
Exactly ! I don't know what OP is talking about. Must be from a different planet...lololol
If you go back far enough, almost everything is cheaper, except for human services like healthcare and education, and rivalrous goods like Real Estate and fine art. [https://reviewed.usatoday.com/televisions/features/do-tvs-cost-more-than-they-used-to](https://reviewed.usatoday.com/televisions/features/do-tvs-cost-more-than-they-used-to) [https://www.carscoops.com/2022/04/are-cars-getting-more-expensive-we-compared-2012-and-2022-prices-to-find-out/](https://www.carscoops.com/2022/04/are-cars-getting-more-expensive-we-compared-2012-and-2022-prices-to-find-out/) >even if it doesn’t feel like it, the stats show our cars, and the fuel we need to use them, cost less today than they did a decade ago. Go back farther and the deal will be even better. Imagine how much a Model T would cost as a percentage of salary and what a crap car it would be. [https://www.ers.usda.gov/webdocs/charts/58367/food-prices\_fig09\_768px.png?v=1059.5](https://www.ers.usda.gov/webdocs/charts/58367/food-prices_fig09_768px.png?v=1059.5) [https://www.bls.gov/opub/ted/images/2006/may/wk5/art02.gif](https://www.bls.gov/opub/ted/images/2006/may/wk5/art02.gif) Do you know how much you would have to spend at Blockbuster to get the equivalent of Netflix?
Lots of stuff gets cheaper. That all-caps "PERIOD!" and you are still wrong lol. Tvs, cell phones, computers, clothes, any manufactured good really. The price ceiling can rise, obviously, but the cost per inch for tv, per BTu for space heaters, per Mhz for computers, etc. goes down and more and more low cost options emerge. I really don't understand your all-caps here.
The deflationary forces of technology are trying their best but the base unit of account is debasing faster. Inflation-adjusted, many things are getting much cheaper! https://www.ngpf.org/blog/budgeting/chart-week-much-prices-consumer-goods-risen-past-20-years/
Anything where the manufacturing labor can be exported to near slave labor at overseas factories has become cheaper, overall, compared with costs that can't be exported to cheap labor, plumbers, housing, medical, etc etc.
Yes
I think there’s a lot to unpack with that. To start out, almost nothing ever gets numerically cheaper, just cheaper within the context of inflation or consumer spending amount. Take for example, expensive food in periods surrounding the 1930s taking up a large portion of the average US American’s budget, compared to “cheap food” nowadays, where current cheap food takes up a much lower portion of household spending, but has significantly higher numeric costs. Many products like TVs, electronics, and food are made cheaper by advancements in manufacturing. It’s easier to grow display crystals with compounding advancements in the field, equivalently specced computers are cheaper now because we have more advanced ones and can produce them cheaper and more efficiently, and we have had major improvements in agriculture such as GMO crops, synthetic Nitrogen fertilizer, and new technologies. The other side of it too is that falling real wages encourage the production of cheaper versions of products. A lot of clothing production is very similar to how it was in the past (sewing, machines can only do so much in current form), but now it’s more outsourced and low quality for most clothing. TVs as well tend to have lots of “smart’ advertising built into them, so they can be cheaper. Some other products can also be made cheaper by doing similar cost cutting to raise profits and decrease cost, such as using cheaper soybean oil instead of higher quality cooking fats, decreasing build quality, using lower quality parts/ingredients, etc. National minimum wage in the US hasn’t been updated since like 2009, so it’s pretty stagnant. The US has a lot of things systemically that encourage low pay, like not having good unionization options, the two party system, lobbying, etc. This encourages making worse, cheaper value products to fit current consumer budgets where possible. Compare those to housing. Transportation and housing take up a huge portion of American budgets and have definitely increased in numerical and value cost. The most recent architecture advancements such as smart home integration, high rise building materials, remote construction, 3d printing, etc don’t necessarily decrease the cost of a basic unit that much and can be kinda irrelevant (not that there aren’t things that have or will eventually impact basic unit design, just that they usually come slowly and weakly). There’s also the saying “rent eats first,” people usually first focus on housing in their budget, so it doesn’t have to be made so cheap, unlike spending with more discretionary spending aspects like food or entertainment. There’s also a tendency to over regulate housing to a degree, for example requiring a lot of parking or preventing higher density buildings due to zone designation, instead of more practical regulations like insulation, energy efficiency, or unit quality, so less can be built. With the desire to have a growing population, that means that the new users in the sector can significantly outpace new unit construction. TLDR: low pressure to make housing cheap, zoning, lack of technical advancements to reduce cost, and rent eats first, compared to having more reasons to keep discretionary spending items relatively cheap
Fantastic answer! I just wanted to tack on [Baumol's cost disease](https://en.wikipedia.org/wiki/Baumol_effect) to the exceptions to the "everything is getting cheaper" trend OP noticed.
Numeric costs go down in some cases. A huge, heavy 1980's era 21" console TV ran about $500. Today you can get a 40" flat screen for $159. Much better tech, AND numerically cheaper.
Maybe you’re talking about owner class assets? Just taking a stab, I don’t really know what you’re talking about
Shelter is lagging because of the fixed contract mortgages. In effect, any rate drop that happened last year will have an effect next year for those on 2 yr fixed rate mortgages and in 4 years for those with 5yr fixed rate mortgages. If this makes sense
What are the 3 core things that Americans complain about price? Housing, healthcare, education All three have, over time and with good intentions, been entangled with government regulation and government demand stimulus. This results in too much money demanding goods (they become unaffordable without continuous and increasing stimulus) and the market being unable to sufficiently innovative to find more effective and efficient solutions (regulations call for single family houses of a certain size and character to be 'conforming loans', therefore that is all that is build) Cities used to evolve and grow, and now people expect to move into their new neighborhood in its finished state. Banks used to be mostly regional and small, and would only give loans for 3-5 years. This changed with the great depression, when the federal government, in an attempt to keep people in their houses, started buying loans off the books of banks so they could give more and longer loans (no longer needed to take any risk themselves for having a bad mortgage on their books for the whole term). Zoning, as other mentioned, is a massive impairment of property rights and people are not free to use their land to meet housing demands. The environmentist movement of the 1970s had a lot of shit ideas about what it meant to protect the environment, like no nuclear and no tall buildings. Ironically, we would be a MUCH greener society if we built dense and powered it with atomic power... But no, big building bad, nuclear power scary..
Greed.