Now two people work instead of one and they are no better off. Who is the second parent working for? The banks. Who pays? The kids.
The financialisation of land is a disaster, we are not more free we are enslaved by debt.
Prices are related to available credit. Wages (and rent) have hardly budged but land prices have rocketed.
Low interest rates allows banks to more efficiently financialise housing (that is to say price housing at the optimal point to extract as much economic rent as possible). You get to spread your repayments over a long time and end up paying lots of lovely interest.
Higher rates (and therefore more wage inflation) quickly erodes the debt whilst putting a ceiling on the asset price bounded by wages at the time you sign the mortgage deeds.
The west has been utterly captured by banks. We've seen politicians walk rates down to zero to allow the asset price bubble to continue to extract value from labour.
This is the issue. It's not off-topic for this - all families are working two jobs for the banks.
ps also dude as you are in Canada (so am I):
Vancouver is nuts. Calgary: timber
I'm not convinced this is as true as a separate issues: many desirable cities and first-tier suburbs have implemented severe land-use controls that force families who want better school districts to pay for housing. This is a point Avent makes in The Gated City (http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005...) and Yglesias makes in The Rent is Too Damn High (http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0...).
I read Progress and Poverty: An Inquiry in the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth but am worried that land-use controls weren't really even on George's radar for obvious reasons; in the 19th C the U.S. was a different place. I don't think the book is bad exactly but much has changed. think the causal issue runs from "land use restriction" -> "higher prices" rather than "dual income" -> "higher prices."
So, people don't pay for housing or land use, they pay for school district.
Perhaps, in the US, there are indirect ways that land use impacts school quality, but it wouldn't have to be that way.
Anybody who's overpaying for good school district is chasing home ownership in the area that's expensive to begin with.
What policies and/or regulations can we make to incentivize a market where house prices reduce over time? Is that the goal? Houses are on average twice as big as they were not too long ago. How much of the increase is due to people wanting bigger homes?
Therefore to have a free market in credit with these constraints it's inevitable that it will be used for speculation. We should have land value tax to win back our right to exist instead of credit fueled full land enclosure. It's an unmitigated disaster - the defining issue of our times.
Credit is near infinite as thanks to fractional reserve banking banks can create as much of it as demand requires. They are not constrained by savings. Most bank lending is against land, it's how money is being printed.
How has the market adapted when we are working 25 times 2 years for the same pile of bricks our parents worked for 15 years for? It's simply the banks taking more of a share of your labour. You get nothing else back.
There is no point in being more productive. It will feed through into land prices as disposable income (briefly) increases and then land prices go up and we are back where we started. This is how banks capture all productivity.
Read http://www.amazon.com/Progress-Poverty-Industrial-Depression...
ps in the UK house sizes are falling, in part because of smaller families / divorces but mostly because of land price ramping
I drove by it recently, and can say that the square footage hasn't changed. Don't take anecdote for data, only illustration, but my scenario was repeated hundreds of thousands of times in South Florida alone. (Some) houses are getting bigger, but that doesn't explain house prices.
As you note land prices per square foot have increased massively.
My parents paid $80,000 for a house in 1988. They haven't sold it, but it's probably worth around $200,000 today, which is an increase very slightly higher than the rate of inflation.
House prices (or, more significantly, house/land/building-permission bundles) where demand exceeds supply (in the US, generally rich coastal areas with tight zoning) are determined by available credit. House prices elsewhere are determined by marginal construction cost.
There are a lot of additional complications, many involving the use of single-family-only zoning and the cost of new construction as an implicit or explicit mechanism of segregation in the fair housing era.
I was a kid in the 1970's and grew up in a middle to upper-middle class neighborhood in, what was at the time, a newly-minted suburb of New York City. I was pretty fortunate, but back then I remember neighbors who didn't have central air conditioning, and whose kids slept two to a bedroom (sometimes, three), and who -- if they took a vacation -- went camping for vacations. Hand-me-downs were no big deal. And not everyone drove a new car. The really well off drove Cadillacs. We got McDonalds or Pizza once a week, to give mom a break.
If you take the equivalent lifestyle today, things are much different. Homes are bigger and better equipped. Cars are nicer -- and just about everyone in the family of driving age has one, of some kind. Vacations are more extravagant. People eat out more. Clothes are stylish.
The middle and upper-middle class don't aspire to the standard of living we had 40 years ago. Many of them would turn their noses up at it. But, truthfully, a number of them could get by on one income, if they lived more modestly.
I had a cousin of mine complain, a few years back, about how it takes two incomes to "survive." Do you want to know her idea of "surviving"? They have a big house with an in-ground pool, and an outdoor Tiki bar. They drive Volvos, and take nice vacations.
For me, that about sums it up.
Average square footage of a single-family dwelling in 1950 was 983 sq. ft. http://www.npr.org/templates/story/story.php?storyId=5525283 and guess what happened to the square footage once two incomes came into the equation.
I feel like there's a healthier (both physically and economically) balance somewhere around 50/50.