I see charts from the 1960’s – 2000 showing wages keeping up with the cost of housing. Then there’s a huge boom in housing cost. What factors caused the price to jump so high? Is it only the low interest rates, or did something else happen?
For example: [https://imgur.com/a/8HWIlqx](https://imgur.com/a/8HWIlqx)
Edit:
This guys just uploaded a video today answering the question I posted. He says a lot of the same things that you guys said too[https://www.youtube.com/watch?v=eL9DBjfhWAE](https://www.youtube.com/watch?v=eL9DBjfhWAE)
In: 50
Because of [Baumol’s Cost Disease](https://en.wikipedia.org/wiki/Baumol_effect). The first thing you need to understand is that the “inflation” statistic is completely contrived. If you bought your house in 1980, your housing costs stay flat for the rest of your life. Around 63% of Americans own their own home. They did back in the 1960’s, and they do now.
So, what that means in practical terms, is that housing cost increases get jammed down to be born by younger people just starting out in life, and people who will never be able to afford a house.
The other thing you need to understand is that as other stuff gets cheaper, like TVs, computers, mobile phones, clothes, etc., that frees up the share of people’s incomes they can afford to spend on other goods, and if those goods are still scarce, their prices go **UP**. That’s why education, health care, and housing continue to outpace inflation: Because efficiencies everywhere else increase the amount of money competing for these limited resources.
Prices are, at the end of the day, a rationing mechanism. If there aren’t enough houses to meet demand, their prices will go up.
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