Why did housing prices go up so much from 2000-2006 even though classical supply/demand would not have called for it
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The housing price conundrum
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Why did housing prices go up so much from 2000-2006 even though classical supply/demand would not have called for it
Duration : 0:9:21
October 30th, 2009 at 2:26 am
if you want poeple …
if you want poeple to buy houses give us the frigen means to! LOWER HOUSING AND RENT COSTS!
i call on poeple to revolt against housing price increases and land tax! if people dont, then wallstreeet and gov will do what it can to make society go mass homeless. we need to revolt against housing price hikes, and demand price freezes on housing! Wallstreet has to be banned from manipulating peoples right to shelter and wellbeing! price hiking on housing must stop now!
October 30th, 2009 at 2:26 am
its ben bernaki. he …
its ben bernaki. he when in office on jan 2006 and then it fell.
October 30th, 2009 at 2:26 am
People already …
People already there who rent; trust funds; corporations; the shadowy central bank sheisters that create our currency out of thin air and then have the gall to charge interest on it – lots of people can buy houses not just newcomers. Get you thinking don’t they these vids; very good khanacademy!
October 30th, 2009 at 2:26 am
The powers that be …
The powers that be dropped the lending criteria the mortgage interest rates and the lemmings streamed in. I know I was one of them; naive aspirational morons. They deliberately don’t teach you finance at school! Then the overlords repackaged high risk mortgages to look low risk (by CDOs and DCSs as khanacademy explains in other vids) and cashed in on that side as well; the clever greedy destroyers.
October 30th, 2009 at 2:26 am
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October 30th, 2009 at 2:26 am
Well said, good …
Well said, good tips in your videos. But to me it doesnt make sense how demand is higher w/forclosures and job losses on the rise? Because then wouldn there be less demand and more supply? And homes get more expensive every year why? So we can continue to lose them and not be able to afford them? This is why i think a lot of people nowadays just live w/parents till their like 25 and save their money cuz without any job security, whos gonna want to take out a 30 year loan??
October 30th, 2009 at 2:26 am
Good presentation. …
Good presentation. You are the first person that I have heard that has Mentioned the law of “Supply and Demand”. The US population increases 1.2 million per year which means that per year less than 1 million homes can be sold. Yet they built 1.8 million homes per year.
October 30th, 2009 at 2:26 am
Nice try. Keep it …
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October 30th, 2009 at 2:26 am
Nice work. keep it …
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October 30th, 2009 at 2:26 am
I didn’t see your …
I didn’t see your next video yet, but it seems to me that the other demand factor that you should have listed was credit availability. For the time period that you mentioned, credit standards became extremely lax, and mortgage backed securities flooded the market with cheap capital to fuel demand.
October 30th, 2009 at 2:26 am
fascinating. …
fascinating. thanks for sharing your thoughts.
October 30th, 2009 at 2:26 am
…More – Here’s a …
…More – Here’s a novel though. Maybe the world doesn’t need the Billionares’ money. If we needed it, it would be used effectively and markets wouldn’t get distorted. It sounds like the billionares need a place to invest their money more than the world needs to use their money. Hmmm, too much money in the system, I think I’ve heard that before.
October 30th, 2009 at 2:26 am
I think Sal nailed …
I think Sal nailed it. You make a good point about community increasing value. I bought an empty lot in Andahuaylas, Peru and the value tripled because they built a university next door. No buildings just an empty lot.
However, that happens always and everywhere but it sounds like this happened because these HUGE hedge funds needed places to stick their money. These securities got hot and it spiraled out of control. Hedge funds are dangerous in this way.
October 30th, 2009 at 2:26 am
jgposner: what I …
jgposner: what I did not have space to say before is that the increase of the price of housing was an increase in the price of land since houses themselves do not appreciate beyond the relatively modest increase of the cost of building. The so-called housing price run up was land speculation which everyone in the know knows busts about every 18 years. The point is that land value is created 100% by the community and taxing it would be economically just, end speculation and drive down prices.
October 30th, 2009 at 2:26 am
Well said. All the …
Well said. All the things you said go into bottom line of the price of a house, including artificially low interest rates. Even without speculators, the prices would rise because houses are normally sold on the basis of what kind of monthly payment one can afford. Once rates go up to fight inflation, America will be hit again. Of course, like you mentioned, speculators made the problem worse.
October 30th, 2009 at 2:26 am
In addition, the …
In addition, the media and realitors and the make money in realestate get rich quick programs all said housing prices will continue to rise. So people saw it as a money making opportunity.
October 30th, 2009 at 2:26 am
Yes there was more …
Yes there was more money out there. It was created by the FED. And they made it irresponsibly easy for us to get it. We were willing to go into debt because we thought we had equity in our homes and the media and realitors and the make money in realestate get rich quick programs all said housing prices will continue to rise. Boy, you serries on banking was so good and the central bank model seemed so effecient. But now I’m seeing them more as a threat.
October 30th, 2009 at 2:26 am
What do you mean ” …
What do you mean “if you buy the supply and demand argument”. Isn’t supply and demand common sense? Another thing that would drive demand is peoples willingness to dip into savings. Or in this case dip into equity which was a mirage thanks to the Fed generated housing bubble. Sorry, corrupt politics makes the central bank design unworkable.
October 30th, 2009 at 2:26 am
Thank you So Much
Thank you So Much
October 30th, 2009 at 2:26 am
This is a really …
This is a really great series of lecture vedio, very clear!
October 30th, 2009 at 2:26 am
Even though the …
Even though the table had monthly values, I think it showed the effective annual rate for each month.
October 30th, 2009 at 2:26 am
Excellet Video. …
Excellet Video. I’m about to watch the whole Series. So far and the one that got me to start from the Beginning are Excellet! I’ll take a put my prediction down here and see where we come out on this? I think that prices went up so much, so fast becuase of Loan Availability. 80/20’s and being able to buy based on Stated Income and not having to meet the rigid standards of 28/41 debt/income ratios. People could buy what they “Wanted” and not what they could afford.
October 30th, 2009 at 2:26 am
These are hardly …
These are hardly new things, though.
They do increase price volatility (actually, they increase *cyclicality* which is even worse, because it means that just as you *really need* to cash in, because you lost your job and have to move, the prices go down…).
October 30th, 2009 at 2:26 am
One could also …
One could also argue that Real Estate Investments displace other Asset classes, ie instead of buying stocks and bonds, people were buying Real Estate.
October 30th, 2009 at 2:26 am
You might include …
You might include in your analysis the fact that the market for housing and real estate in general is massively subsidized by state and federal tax policy that allow deductions for mortgage interest and property taxes with virtually no taxation of rental incomes and gains upon sale.. These policies are said to make homeownership more affordable but the reverse is true because they encourage speculators who would never be in the market at all. Imagine the market without these subsidies.