Week 14 Response: The Bigger Bubble

in #gradnium3 years ago

Do you think that the government can prevent a second housing bubble from forming or do you think that they will repeat the same mistakes?
By @jacewat

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The simple answer to this question would be no because we are already falling into the next housing bubble. While the market today is considered a seller's market, this is leading to the fact that the only people who buy are other relators or people with high amounts of wealth looking to rent. This is eerily leading to the idea that one day all homes will either be only for rent or will be a form of an air B&B. The government in my opinion has no expectation of stopping this bubble from occurring because they have a continual habit of blaming the general public for not effectively saving or working hard enough to make a steady income in order to purchase a home. They have allowed rent to skyrocket by 1000% from the 1950s to 2021, this comes from the U.S. Bureau of Labor Statistics. While the minimum wage has only increased from $.75 cents to $7.25, that is own a 162% increase. By no means is that a logically increase ratio compared between the two. Many people in the 1950s were able to fund a family of four with only one parent working and having a house and car. The government has openly allowed this divergence to occur with little intention of effectively closing the gap to allow common people the afford a decent living. While many would argue that working minimum wage should not be a career, that contradicts the original point of minimum wage. It was supposed to be a livable amount that allowed everyday people who were not able to obtain higher education to survive. Without minimum wage workers, a majority of society's favorite places would no longer exist.

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In the UK where I live, we have a Living Wage Initiative that companies can sign up to if they offer a living wage to all employees. This is a wage that is set at a higher rate than the government's statutory minimum wage. The company that I work for signed up to this and it is genuinely felt and appreciated by the employees. I think your calculations may be a bit off on the increase from $0.75 to $7.25 as this would be an increase of 867% not 162%, so actually a lot closer to the 1000% increase in rents that you mention, but I get that wages are lagging and that this is causing major issues for people desperate to get onto the property ladder in the U.S. In the UK we have a different issue that arose in that between Government incentivisation of buying property through a scrapping of stamp duty (taxes on house sales) for houses under a certain value up until Oct-21 which led to heightened demand for property by buyers, which in turn increased prices...AND the government simultaneously introducing laws to increase taxation on landlords for owned multiple properties, the landlords flooded the market with properties which initially pushed prices down, buyers rushed in to purchase at zero stamp duty which pushed the price back up again. Renters started being given notice to leave their rentals and find other accommodation as housing was sold from underneath their feet, and then they couldn't find replacement rentals because of the constriction of the rental market, but property prices were becoming beyond reach. I personally know of a number of people who were almost made homeless as a result of this government fiasco. It's a conundrum for sure. How strange that the USA and the UK appear to be adopting divergent strategies on housing at the moment, and neither approach seems to be working for either government or their citizens. The world has truly gone bonkers. You make some sound points in your article about the crisis that the US housing market finds itself in and about the dire nature of low wage levels and what that is doing for people's ability to live !PIZZA

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