The Drudge Report today is celebrating a lack of affordable housing and claiming that high home prices somehow make everything “GREAT AGAIN”:
Back during the housing bubble, home prices were frequently used as a measure of how well the economy was doing, with the assumption that asset price inflation was somehow a proxy measure of prosperity in the United States. Similar things have been said of the stock market, as if skyrocketing securities prices were also an indication of how much the standard of living of the American household was increasing.
Equating skyrocketing housing prices with prosperity, of course, is just as nonsensical as declaring “food prices at all time highs! America is great again!” Or “gasoline prices climb into the stratosphere! Happy days are here again!” Or “Healthcare prices are up ten percent over last year! Hurray!”
There is no doubt, of course, that high prices are good for some people. High food prices are good for farmers. High gasoline prices are good for owners of fracking operations. High healthcare prices are good for healthcare providers. High home prices are good for homeowners — unless, of course, one has a relatively fixed income and property taxes go up rapidly.
It makes no sense to assume that because one industry or group of people benefit from high prices that this therefore shows us that the population in general is doing well, or that the fictional construct known as “the economy” is improving for most everyone.
In reality, high home prices simply mean that many people are priced out of homeownership, and it means that the adult children of current homeowners will have to move further and further away to afford housing themselves. It means that households will go deeper into debt to afford housing near employment centers. Moreover, high for-sale prices for housing usually translate into high rents.
It is unclear why any of these things should be celebrated.
For more, see a 2015 article I wrote on this topic: “Why do we celebrate rising home prices?“
