The mechanism of Net Present Value can be a real bear sometimes. Particularly when interest rates fall for over forty years, housing costs soar and your wages don’t keep up.
In 1985, for example, the median home price was about $81,000, but rose by 406 percent to about $426,000 in 2023. Obviously, any taxes, insurance, and down payments that are proportional to the home price were far lower in 1985 than they are now. Moreover, as home prices quintupled from 1985 to 2023, median household income only increased by 241 percent, rising from about $23,000 in 1985 to $84,000 in 2023.
If Pulte really wanted to see homes become more affordable, he would push for less monetary inflation and for lower federal deficits. He would push for the Fed to reduce its balance sheet of mortgage backed securities.
Thank you for the link to Mises University. Lots of valuable content there.
You can’t be serious, my friend …
https://mises.org/mises-wire/mises-institutes-abolish-fed-documentary
The BIG L … CRAZED … Mises Institute demands that the Fed be abolished! But then uses the Fed’s arbitrary and flawed CPI … which doesn’t even measure gasoline prices … FUEL prices!!! which DRIVE inflation. The FED’s CPI target of 2% to build this article of utter garbage. So Mises believes the Fed is EVIL … then uses the FED to argue what interest rates should be? Do these people even hear themselves talk?
And then … they don’t SAY what the inflation rate is now, or has been over the last 5 months … but just say the RATE increased in June 2025. Puhleeze … the CPI has been a steady 2.3 – 2.4 % over the last 5 months … down sharply since 2024. So they say it went UP to 2.7% in June. Why don’t they publish the REAL numbers … but instead build their entire premise on a small snapshot of the rate of change.
And no … the 10 year Treasury didn’t jump because of this minuscule change in CPI … no … it’s because there aren’t enough BUYERS for the Treasury auctions. You know … BIG L Mises Inst. … “supply and demand” is what changes prices.
You want to reduce the price of housing? ONE SIMPLE THING … BUILD MORE HOUSING!! You know “conservative” Libertarian Mises Inst. … Supply and Demand! You know what’s NOT happening because of high interest rates? Nobody is building housing. It’s too damned expensive. Not even “nepo baby” Pulte is building housing in this climate of unaffordable interest rates.
Sorry Dennis, this article is pure offal.
“You want to reduce the price of housing? ONE SIMPLE THING … BUILD MORE HOUSING!! You know “conservative” Libertarian Mises Inst. … Supply and Demand!”
Can’t be ignored, worked around or otherwise circumvented. You can manipulate either the supply or the demand to a limited extent, but that’s all.
” You know what’s NOT happening because of high interest rates? Nobody is building housing. It’s too damned expensive.”
AND the demand is still too high, which necessitates stopping mass immigration until enough housing can be built to catch up. Only then will the prices decrease.
Yes, it will be political suicide for any Canadian political party bold enough to do it…but there is simply NO OTHER WAY that could possibly work. Proudly taking credit for building 500,000 housing units will do us zero good if we also let in another 2 million immigrants during the same time period.
^^^ 100% ^^^
Too much of the housing discussion seems to follow Yogi Berra’s observation – ” Nobody goes there anymore – it’s too crowded”.
Houses are larger now with nicer finishes. Builders made sure to sell the most house that they could, relieving buyers of as much money as possible. Buyers obliged by buying the most house they could afford.
I had assumed that municipalities constrained supply because on Nimbyism. But it seems worse than that. Spiraling regulations and development charges seem to have gathered much of the money.
When the federal government realized that expensive homes might be a problem, they decided to supercharge the issue by enabling certain groups to spend even more (homebuyer rrsp loans, lower down payments, etc.). Everybody was able to draw more from the buyers – at the cost of the buyer’s financial security.
Now we have more people than homes so new buyers will find creative ways to get that little extra to afford a home because not everyone gets a home now.
If the true reason for high home prices becomes known Mayors and the Prime Minister will have some very uncomfortable days.
Sea can houses; the low cost solution for affordable housing?
Easily stacked on top of each other for the high density that modern socialists desire.
Bonus is they are fire resistant. A must for California. Just imagine Pacific Palisades looking like a container pier. Gavin would go positively orgasmic.
You forgot to add that people are buying all the house they can, regardless of price, because it is the ONLY stable investment they have access to. And of course because all other investments are punitively taxed. Your stocks, your bonds, your small business, all TAXED out to the moon.
Only your principal residence is a safe place to put all your earnings. Only your principal residence is a sound investment, and all because of government policies. It’s not a house, it’s your whole life’s work cast in stone and wood siding. The wealth of the nation.
That this is STUPID seems not to have bothered three generations of federal planners/MPs. They’ve been doing it since the 1950s. Here we are, 75 years later, and -now- they want to change the arrangement because they want access to all that money tied up in homes. The rubes even voted for #CarkMarney because he swore he’d protect their homes.
What’s the way out of this? TAX CUTS! If there is no punishment for investing your money in businesses and other things that make money, people will not be forced to keep pushing up the real estate ladder. But will they do that? Never.
Phantom. As always, you are RIGHT On brother! (or sister).
And let me add that my local County tax collector just BRAGGED about how much our County property tax revenues had INCREASED because the value and supply of housing in the county has increased. He wasn’t bragging about raising tax rates … because he didn’t … but reporting that the valuation and added housing had increased the tax coffers.
We ALL WIN when we invest in housing.
“What’s the way out of this? TAX CUTS! If there is no punishment for investing your money in businesses and other things that make money, people will not be forced to keep pushing up the real estate ladder. ”
Still doesn’t solve the problem of supply and demand, though. If we had equilibrium, sure, tax cuts would work…but we don’t: we have way too many people and not enough housing being built.
I don’t know if this is true, but I read somewhere that the City of Vancouver charges roughly 100-200 THOUSAND dollars in permit fees to build a house here. If so, that’s outrageous…and just another reason for the current ridiculous housing prices (and thus a large factor in the shortage of new homes).
“Still doesn’t solve the problem of supply and demand, though.”
Here’s where it makes a difference. Cities charge obscene taxes, fees and levies on new construction because of the limitless demand. The unmet demand drives people to accept costs like $200K permit fees because A) they don’t have any choice and B) because they’ll make that money back when they sell it.
They don’t have any choice because they MUST invest that money into a growth asset. The only asset that gets you a decent return on investment, a return that can’t be taxed away, is a house. That’s an unnatural, forced demand.
But now we are in the interesting position of being in a huge housing shortage, one so dire that people are literally camping in city parks in the winter, AND no new housing is being built because it is uneconomical.
And that is all down to taxes. People simply do not have $200K for a building permit anymore, the risk of the house price falling below break-even before it’s finished is too high. And there is capital gains to consider.
This will eventually end in either a hard-core tax reform, or there will be a war. I see no other way this all turns out.
I’ve said repeatedly that there are only two paths forward from where Canada is now: Chile or Venezuela. And there’s no Canadian Pinochet (nor, given how anemic the armed forces are, could there be).
Housing prices increased an average of 4.5% per year, wages increased 3.5% and the money supply increased by 8%. Draw your own conclusions.