Economy Halfway to a recession- US GDP shrinks by .3% in Q1

[Islam Imamate]

Everything you said is shit.

A. The home price drop in Austin has nothing to do with YIMBY. Austin is one of the few cities which over developed and prices(like in most places) were negatively impacted. The ADUs just recently passed and haven’t even been installed in numbers which could impact the overall market.

Why do you think they were able to "over develop"? It's because of YIMBY inspired zoning reform. YIMBYism is not specifically about tiny homes and ADUs and in fact most YIMBYs prioritize apartments. ADU laws are just one component of YIMBYism.

B. Money being the issue has to do with the cost of living(something you’ve avoided this entire time because of your obsession with tiny homes) alongside inflation and debasement.

I'm avoiding the cost of living discussion... by talking about the single biggest expense for household budgets and how to bring that cost down? I don't think that's a fair claim all things considered.

Even adding an additional million homes a year on top of the 1.4 million built yearly wouldn’t make a dent in the overall market if they were ~1100 sqft feet. The market for small homes would drop, but no family is going to willingly leave a 2000 sqft home to move into a 1100 sqft home.

Under the right circumstances of course they would. If it meant cutting a commute by 90% and getting access to better schools then a lot of families would consider that trade off even if many wouldn't ultimately make the move.

That's what adding more housing and different kinds of housing does, give people options to balance their priorities.

Additionally, by the time you add those 10 million tiny homes, inflation would have cause the purchasing power of the dollar to drop another 25-35% over those 10 years. So WOW you built 10 million tiny homes and maybe reduced the cost of entry homes by 10%… meanwhile your dollar debased by ~30% and your wages might rise by 10%.

This does NOTHING to impact affordability.

You don't think adding supply in a low supply, high demand market would help? Strikes me as wrong.

As far as cost of living, nothing threatens to increase that pressure right now more than the trade war. Turns out free trade and access to cheaper goods, which means lower cost of living, wasn't so bad after all.

If you want lower costs for childcare you could relax immigration to allow for more foreign workers to take those jobs. Of course there's also the expanded child tax credit that Biden temporarily passed, I think bringing that back and making it permanent would help those families on the fence about having a kid.

C. During the baby boom women didn’t work and they didn’t have to pay for child care. So even if people live in 1100 sqft homes(they won’t) who tf is taking care of the kids when it’s 2k per kid for childcare?

Back to the topic as hand.

Every couple has to make their own choices but women's expanded freedoms in the workplace give families more, not fewer, options. Mom can choose to work and pay for childcare or stay at home if she likes, that's better than when women only had access to low paying, low status jobs like being secretaries.

Btw labor force participation for women was obviously lower than it is now but many women did work, they were just poorer and less educated than today.

 

[Islam Imamate]

I don't know where you are but in San Diego developers have found it only takes a few dollars into the Mayor's pocket to build an entire apartment complex on a SFH zoned lot. Zoning laws only set the cost to build here.

Idk about San Diego in particular but California in general is pretty bad when it comes to housing development.

 

[Rob Battisti]

Why do you think they were able to "over develop"? It's because of YIMBY inspired zoning reform. YIMBYism is not specifically about tiny homes and ADUs and in fact most YIMBYs prioritize apartments. ADU laws are just one component of YIMBYism.

Austins over development has happened due to the fact that Texas is fucking enormous and has the capability for your worst nightmare: suburban sprawl.

I'm avoiding the cost of living discussion... by talking about the single biggest expense for household budgets and how to bring that cost down? I don't think that's a fair claim all things considered.

Literally did a line item of the costs with rent. You’re willfully ignoring it. Buying a home is never going to be less than $1500 a month by the time your pipe dream of tiny homes infiltrating the land arises.

Under the right circumstances of course they would. If it meant cutting a commute by 90% and getting access to better schools then a lot of families would consider that trade off even if many wouldn't ultimately make the move.

That's what adding more housing and different kinds of housing does, give people options to balance their priorities.

says the guy who lives in a rural area. Frankly, you’re simply either willfully ignorant or dense.

You don't think adding supply in a low supply, high demand market would help? Strikes me as wrong.

As far as cost of living, nothing threatens to increase that pressure right now more than the trade war. Turns out free trade and access to cheaper goods, which means lower cost of living, wasn't so bad after all.

If you want lower costs for childcare you could relax immigration to allow for more foreign workers to take those jobs. Of course there's also the expanded child tax credit that Biden temporarily passed, I think bringing that back and making it permanent would help those families on the fence about having a kid.

Adding supply is totally fine. I never argued against adding supply. I showed you how adding supply of tiny homes serves only to slightly reduce the price of tiny homes and does nothing to offset the effect of inflation and debasement all the while real wage growth will continue to fall behind. YOU’RE IGNORING THE ENTIRE ARGUMENT.

Every couple has to make their own choices but women's expanded freedoms in the workplace give families more, not fewer, options. Mom can choose to work and pay for childcare or stay at home if she likes, that's better than when women only had access to low paying, low status jobs like being secretaries.

Btw labor force participation for women was obviously lower than it is now but many women did work, they were just poorer and less educated than today.

Now you’re just being stupid and ignoring my entire argument.

Either counteract my points or piss off.

It’s the money. I showed you how cost of living doesn’t allow people to have children earlier in life which is why birth rates will continue to fall. They can barely afford themselves!

 

[Islam Imamate]

Austins over development has happened due to the fact that Texas is fucking enormous and has the capability for your worst nightmare: suburban sprawl.

Literally did a line item of the costs with rent. You’re willfully ignoring it. Buying a home is never going to be less than $1500 a month by the time your pipe dream of tiny homes infiltrating the land arises.

says the guy who lives in a rural area. Frankly, you’re simply either willfully ignorant or dense.

Adding supply is totally fine. I never argued against adding supply. I showed you how adding supply of tiny homes serves only to slightly reduce the price of tiny homes and does nothing to offset the effect of inflation and debasement all the while real wage growth will continue to fall behind. YOU’RE IGNORING THE ENTIRE ARGUMENT.

Now you’re just being stupid and ignoring my entire argument.

Either counteract my points or piss off.

It’s the money. I showed you how cost of living doesn’t allow people to have children earlier in life which is why birth rates will continue to fall. They can barely afford themselves!

Oh I think I get you know. This ties into your heterodox monetary theories about how we need to buy crypto and why land speculation is good actually.

I don't really buy into that thinking, I believe that when we talk about cost of living and how to reduce it we're looking underlying supply and demand factors and looking for ways to improve efficiency by removing bottlenecks and whatnot and not so much monetary policy per se.

Of course in the short term hyperinflation can eat into wage growth but idk if that holds overtime if the inflation rate is kept low enough and the underlying fundamentals like supply/demand, human capital, and demographics are there. Which is to say idk if I buy your underlying theory here

 

[Rob Battisti]

Oh I think I get you know. This ties into your heterodox monetary theories about how we need to buy crypto and why land speculation is good actually.

I don't really buy into that thinking, I believe that when we talk about cost of living and how to reduce it we're looking underlying supply and demand factors and looking for ways to improve efficiency by removing bottlenecks and whatnot and not so much monetary policy per se.

Of course in the short term hyperinflation can eat into wage growth but idk if that holds overtime if the inflation rate is kept low enough and the underlying fundamentals like supply/demand, human capital, and demographics are there. Which is to say idk if I buy your underlying theory here

Jesus H. Christ it’s like conversing with a wall.

Address the cost of living.

People aren’t having kids because of the cost of living.

With a 70,000 salary(median is 61,000) people have 3500-4000 disposable income a month. The cost of living is 3500. I did a line item of all the expensives.

That is with $1500 RENT WITH A ROOMMATE.

There’s no amount of tiny homes which is going to magically make the cost of living less.

Money will lose 25-30% of its purchasing power in 10 years. Real wage growth will be 10%.

Stop worrying about housing and realize ITS THE MONEY!!

 

[Rob Battisti]

For goodness sake, we’re addicted to money printing. US M2 +41% in 5 years.

 

[Islam Imamate]

Jesus H. Christ it’s like conversing with a wall.

Address the cost of living.

People aren’t having kids because of the cost of living.

With a 70,000 salary(median is 61,000) people have 3500-4000 disposable income a month. The cost of living is 3500. I did a line item of all the expensives.

That is with $1500 RENT WITH A ROOMMATE.

There’s no amount of tiny homes which is going to magically make the cost of living less.

Money will lose 25-30% of its purchasing power in 10 years. Real wage growth will be 10%.

Stop worrying about housing and realize ITS THE MONEY!!

Well like I said I don't really buy into your heterodox ideas about monetary theory, orthodox economists believe in monetary neutrality which is basically the idea that the supply of money affects nominal variables like prices but not underlying real factors like wage growth or supply and demand.

Of course in the short term that's not always true and acute inflation can eat into wages but in the time frame you're suggesting things balance out.

Further, I'm not even sure you fully understand what you're trying to say here. For example you say that money will lose 25%-30% of is value while real wage growth will only be 10%. But real wage growth refers to wage growth that has accounted for inflation so real wage growth of 10% would mean we're getting richer despite whatever effect you think orthodox monetary policy has.

 

[Rob Battisti]

Well like I said I don't really buy into your heterodox ideas about monetary theory, orthodox economists believe in monetary neutrality which is basically the idea that the supply of money affects nominal variables like prices but not underlying real factors like wage growth or supply and demand.

Of course in the short term that's not always true and acute inflation can eat into wages but in the time frame you're suggesting things balance out.

Further, I'm not even sure you fully understand what you're trying to say here. For example you say that money will lose 25%-30% of is value while real wage growth will only be 10%. But real wage growth refers to wage growth that has accounted for inflation so real wage growth of 10% would mean we're getting richer despite whatever effect you think orthodox monetary policy has.

I’ll try to be more civil, but you’re very clearly hooked on thinking housing supply will cure everything when it clearly won’t.

I get that monetary neutrality sounds tidy in econ textbooks, but it’s a pipe dream over a decade. From 2020-2025, M2 surged 41.6% ($15.3T to $21.7T), tanking the dollar’s value by 24% and pushing home prices up 50%. Real wages? Barely budged at 0.5% a year. That’s not neutral THAT is a rigged game where asset owners win, and workers get crushed. Over 2005-2025, the dollar lost 40%, and real wages grew maybe 10-15%. Where’s your “balancing out”?

As I said before, 10 million new 1,100 sqft homes could cut prices 5-15 that means a $412,000 home drops to $370,000. But if M2 keeps growing 5-7% a year, housing inflation (3-4%) pushes it to $450,000-$480,000 by 2035. A median earner making $62,000 today might hit $72,000(remember 70,000 today is barely above water)with 10% real wage growth, but good luck affording that home, plus healthcare (up 100% since 2005) or college (up 60%) or EVERY OTHER EXPENSE. This isn’t about lifestyle changes.

For goodness sake I showed you how RENTING is unaffordable today.

Real wage growth isn’t “getting richer”—it’s treading water against costs that CPI ignores.

Monetary policy fuels this mess. It’s always the money.

Cheap money inflates land, materials, and investor demand (20% of homes were bought by funds in 2021). Without slamming the brakes on M2 growth, 10 million homes just get gobbled up by the same forces. And with debt at 120% of GDP, heading to 140%, dollar debasement could spike import costs, making everything pricier. Housing supply helps BARELY, but it’s a half-measure when monetary policy keeps the cost of living on steroids.

You need to care about the money the same way you do about tiny homes.

 

[chardog]

The idea of building 2500-3000 sq ft homes is so foreign to me living here. There's barely room to throw up a handful of 1000 sq ft houses let alone mcmasions on huge lots.

Nowadays developers are just trying to build up to build condos, which are now starter homes. Even then they'd rather rather build apartments because profit margins are thin on sale properties and they don't want to have to deal with lawsuits from HOAs several years later.

But is interesting how families have no problem making due with 1300 sq ft homes but some feel compelled to moved out of state so they can buy a house three times the size for the same price as what they bought here. It's like they're sacrificing a much better quality of life just so they can have a big fucking house. They move somewhere they have to spend 70 percent of the year indoors in their massive house cause the weather is so extreme and the geography is boring as shit

Maybe 15 years ago, KB built a bunch in perris CA because smaller was not profitable, maybe hundreds of homes simply popped up.

 

[Islam Imamate]

I’ll try to be more civil, but you’re very clearly hooked on thinking housing supply will cure everything when it clearly won’t.

I think housing supply will address housing costs which is usually the biggest expense for the average household.

Of course other costs matter too. For example childcare is an important cost but has to be addressed on its own terms like through increased immigration to bring down labor costs.

If anything I think you're the one who has this wonky monetary theory of everything that you think will act as a cure all though of course I'm skeptical.

I get that monetary neutrality sounds tidy in econ textbooks, but it’s a pipe dream over a decade. From 2020-2025, M2 surged 41.6% ($15.3T to $21.7T), tanking the dollar’s value by 24% and pushing home prices up 50%. Real wages? Barely budged at 0.5% a year. That’s not neutral THAT is a rigged game where asset owners win, and workers get crushed. Over 2005-2025, the dollar lost 40%, and real wages grew maybe 10-15%. Where’s your “balancing out”?

As I said before, 10 million new 1,100 sqft homes could cut prices 5-15 that means a $412,000 home drops to $370,000. But if M2 keeps growing 5-7% a year, housing inflation (3-4%) pushes it to $450,000-$480,000 by 2035. A median earner making $62,000 today might hit $72,000(remember 70,000 today is barely above water)with 10% real wage growth, but good luck affording that home, plus healthcare (up 100% since 2005) or college (up 60%) or EVERY OTHER EXPENSE. This isn’t about lifestyle changes.

For goodness sake I showed you how RENTING is unaffordable today.

Real wage growth isn’t “getting richer”—it’s treading water against costs that CPI ignores.

Monetary policy fuels this mess. It’s always the money.

Cheap money inflates land, materials, and investor demand (20% of homes were bought by funds in 2021). Without slamming the brakes on M2 growth, 10 million homes just get gobbled up by the same forces. And with debt at 120% of GDP, heading to 140%, dollar debasement could spike import costs, making everything pricier. Housing supply helps BARELY, but it’s a half-measure when monetary policy keeps the cost of living on steroids.

You need to care about the money the same way you do about tiny homes.

If there's any disagreement on monetary neutrality among orthodox economists it's in regards to short term effects but my understanding is that long term most economists believe that monetary neutrality holds.

So yeah I'm deeply skeptical of your paradigm here and I think it ties into your other bad takes like your crypto obsession and support for land speculation.

Of course I agree that in many cities rent is out of control but the way to address housing costs is with housing policy and specifically more supply. Your theory here seems to downplay these fundamental market forces in favor of focusing on monetary policy and the supply of money which I think is misguided.

 

[Rob Battisti]

I think housing supply will address housing costs which is usually the biggest expense for the average household.

Of course other costs matter too. For example childcare is an important cost but has to be addressed on its own terms like through increased immigration to bring down labor costs.

If anything I think you're the one who has this wonky monetary theory of everything that you think will act as a cure all though of course I'm skeptical.

Are you just going to ignore everything I laid out? You can’t just keep saying that more housing supply will fix everything when I spelled out how it won’t.

If there's any disagreement on monetary neutrality among orthodox economists it's in regards to short term effects but my understanding is that long term most economists believe that monetary neutrality holds.

So yeah I'm deeply skeptical of your paradigm here and I think it ties into your other bad takes like your crypto obsession and support for land speculation.

Of course I agree that in many cities rent is out of control but the way to address housing costs is with housing policy and specifically more supply. Your theory here seems to downplay these fundamental market forces in favor of focusing on monetary policy and the supply of money which I think is misguided.

You keep saying “long term” I’ve shown you over 20 years how it hasn’t worked. You think 50 years is good? I’m not downplaying anything. I’ve spelled it out.

I’ll do it again maybe this time you’ll address my points instead of simply saying “not uh”.

Sure, housing’s a huge expense (30% of budgets), and 10 million new 1,100 sqft homes could drop prices 5-15% over TEN YEARS. $412,000 to $370,000 as I said earlier, but you’re dead wrong if you think that solves affordability while ignoring monetary policy.

From 2015-2024, we built 13 million new units, yet home prices jumped 50% because M2 grew 41.6% ($15.3T to $21.7T) in just five years, fueling investor demand (20% of 2021 buys) and inflating land (up 40%) and materials (30%).

Building more homes does nothing if you have the same monetary policy.

This also touches on Pan thinking it’s just bigger homes! Such BS!

If M2 grows 5-7% annually, a $370,000 home hits $450,000-$480,000 by 2035 and that’s without any other market conditions OR factoring in interest rates.

A $62,000 median earner (maybe $72,000 with 10% real wage growth) can’t afford that, especially with healthcare (doubled since 2005), tuition (up 60%), and food (up 30%) eating their budget. Again, I’ve said this before you and continue to ignore it.

Your “monetary neutrality” is a textbook fairy tale. It’s for 50-year horizons, not 10 not 20.

From 2015-2025, the dollar lost 24%, real wages grew 5%. From 2005-2025, 40% loss, ~10-15% wage growth. That’s not neutral—it’s workers getting schlonged while assets soar (stocks up 200%). Debt at 120% of GDP (140% by 2035) and dedollarization risks could tank the dollar further, spiking costs.

My “wonky” theory? It’s just data: M2 fuels bubbles, not affordability.

Childcare fixes via immigration? Cool story bro, but it doesn’t touch healthcare or education costs, which outrun CPI. Supply’s great, but without reining in money creation, it’s like fighting a fire with a squirt gun. Your market forces are real, but they’re on monetary steroids. Crypto and land speculation? You like to keep brining those things up but they are distractions.

Stick to the numbers, and you’ll see why housing policy alone can’t tame the cost-of-living monster.

THIS is why people can’t have kids. It’s not that houses got bigger. It’s not simply housing affordability.

 

[TeTe]

Maybe 15 years ago, KB built a bunch in perris CA because smaller was not profitable, maybe hundreds of homes simply popped up.

Lol yeah... Perris, Murrieta and Temecula... About the only place in Southern California where there's been legit single family home development in the past few decades.

 

[TeTe]

Also, we may as well change the thread title to something housing related at this point.

 

[curryjunkie]

Also, we may as well change the thread title to something housing related at this point.

I'm Surprised it hasn't morphed into a Bitcoin discussion ..

 

[TeTe]

I'm Surprised it hasn't morphed into a Bitcoin discussion ..

Give it time

 

[Rob Battisti]

I'm Surprised it hasn't morphed into a Bitcoin discussion ..

Every discussion is a bitcoin discussion.

But seriously it’s always the money

 

[Rod1]

People aren’t having kids because of the cost of living.

someone ought to tell poor people that.

 

[Rod1]

Over 2005-2025, the dollar lost 40%, and real wages grew maybe 10-15%. Where’s your “balancing out”?

This guy is really something.

 

[Rob Battisti]

someone ought to tell poor people that.

 

[Rob Battisti]

This guy is really something.

By all means, just on the housing is the issue train.