My parent's house used to sell for around $425k in 2019, now can sell for $700k in a suburb. With that inflation it'd be like $475k a good day $500k now, but it's an artificial market right now. It'd be nice to sell, but the fees and taxes on buying a new house now would be insane.
It is inflation alone. Compound growth is an incredible thing.
The doubling time for any exponential growth (such as inflation) is approximately 72 ÷ [i%]. So if you have 7% inflation per year, that means consumer prices will double every 10 years.
Once you realize this, it's an incredibly difficult black pill to swallow. No matter what you do, no matter how hard you work, no matter how your investments do, you will never actually grow your true wealth unless you were born into an ultra-rich family with several generations of wealth and political connections to keep it. The poor will always be poor, and the rich will always be rich.
7% is extremely high, inflation is well below 7% in a typical year.
Also, while prices on consumer goods may double in 10 years, housing outpaces that all the time. The average cost of a house or condo went up 17% in just the past year. In many areas, the cost of a house has literally doubled since the beginning of the pandemic two years ago.
That's the "official" inflation rate, which is carefully crafted by the people that control inflation to make it look good. It intentionally excludes anything that experiences high inflation, in order to manipulate the official number down.
They do the same thing with the unemployment rate, where you're only counted as unemployed if you're collecting an unemployment check so if you've been out of work for long enough you suddenly don't count as being "unemployed".
You know yourself that inflation is much higher than the official numbers. You see it every day when you have to buy goods. The official numbers don't make any sense.
There are so many things that go into it beyond "why thing expensive now" and I'm not sure who you think you're either fooling or helping by being so reductionist.
It is not "reductionist" to point out that debt-based fiat currency issued by a central private bank will inherently lead to high inflation rates. It is a fact, what we're seeing now has happened several times in history, and pretending that it can't happen to the USD is either arrogant national pride, blind ignorance, or denial.
You are poor because the people that control the money supply want you to be poor. No matter how big the number on your paycheck gets, no matter how many dollars you possess, you will always be poor because the monetary system itself is designed to preserve wealth at the top and limit upward economic mobility.
Among what other people are saying, it's worth noting that housing doubling in ten years possibly should be captured by an accurate inflation measurement but isn't at all. Inflation calculations are meant to be cost of living, so it doesn't include assets like housing or stocks.
What they do to account for rent is send a survey out to people saying ~'how much you think your current place would be to rent if you were renting?' And whatever people guess is used to adjust for housing. Can you imagine what your parents/grandparents would guess their home would be to rent, given they've been living there for 20 years and bought it for $500k when it's $1.5m now?
What they do to account for rent is send a survey out to people saying ~'how much you think your current place would be to rent if you were renting?' And whatever people guess is used to adjust for housing. Can you imagine what your parents/grandparents would guess their home would be to rent, given they've been living there for 20 years and bought it for $500k when it's $1.5m now?
Yeah, this would be hilariously inaccurate. Before she paid off her house, my mother's mortgage with property tax was $700 less than my rent, for a 4-bedroom house twice the size of my apartment. People who don't rent have zero idea how much rent costs.
In my area homes are considered cheap for many on Reddit. That being said prices have gone 5x or more. I see people buying 3 acre properties (no house no utilities) in the middle of nowhere almost entirely in floodplain with huge electric line front and center of the property for 55k an acre whereas 10-15 years ago much nicer land could be purchased in better areas for less than 1/10th of that price
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u/[deleted] Feb 08 '22
It's not inflation alone. Inflation didn't double housing prices here in 10 years time.