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news
Joined: 14 Jul 2007
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Location: Greater Boston
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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 Posted: Tue Dec 23, 2008 1:49 pm GMT Post subject: |
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Note the graph on the left hand side of the article. In particular, notice that the years where the population was declining were largely years when housing prices were headed up. Similarly, now that the population of the state is increasing again, housing prices are heading down. So the cliche that higher housing prices are a certainty because the population is growing is demonstrably false.
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balor123
Joined: 08 Mar 2008
Posts: 1204
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| Posted: Tue Dec 23, 2008 4:48 pm GMT Post subject: |
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I think in other areas the rule is accurate - higher population means higher housing prices. If you look back a few decades, then that rule would hold true for Boston as well. The rule is no longer accurate because the population can't bear higher costs anymore. Disposable income has been fully spent so for house prices to rise income also has to rise. More competition alone won't solve the problem.
I love this statement: "You can't change the weather or the cost of living. That's the hand we're dealt.". Not entirely true that you can't change the weather (global warming) but it is hard so I'll go with it. But: "or the cost of living"? No wonder the cost of living is so high here - the politicians have already decided that they can't do anything about it! How about allowing more development? Greater supply => lower cost. Relaxed regulations, taxes, subsidies, etc Those changes do reduce the cost of living, they just choose not to do them. |
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admin
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| Posted: Tue Dec 23, 2008 5:30 pm GMT Post subject: |
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| balor123 wrote: | | I think in other areas the rule is accurate - higher population means higher housing prices. |
The rule makes intuitive sense, but there are at least two significant problems with it. 1) It makes no allowance for the possibility that the population growth rate was already baked into the price. 2) It assumes that population growth is a dominant factor. Right now, prices are declining pretty much everywhere across the US despite a growing population because other factors are dominating. I'm not saying that population growth doesn't lend some support to prices, just that the effect is a lot weaker than other factors.
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JCK
Joined: 15 Feb 2007
Posts: 559
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| Posted: Tue Dec 23, 2008 10:14 pm GMT Post subject: |
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| And the fastest growing areas (FL, AZ, NV) are experiencing the biggest declines right now. |
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