vania-janet/multiturn-rag-retrieval-data huggingface dataset:
If you go back to the 1970s around 53% of women would go out to work but in 2013 this figure increased to 67% as it became more common for households to have double incomes. This extra supply of cash also pushed up house prices. http://www.ons.gov.uk/ons/dcp171776_328352.pdf Your question regards a debt based monetary system is not entirely clear, but there are limitations put onto how much money people can borrow that are potentially limiting how much house prices can rise by. Today most lenders are more conservative in how much they will lend but this wasn't the case in the mid 2000s when house prices rose very quickly. Lenders are more cautious today after the crash of the late 2000s, but things are begining to relax again and they are starting to lend more which could in turn lead to further house price rises in line with what was seen in the 2000s. Recessions have coincided with house prices falling back or at least being stable. In the 1980s house prices trebled from 1980 to 1988 but then fell back a little as the recession hit, before starting to rise again in 1997. This rise was sustained until 2008 during which time prices trebled again. Based on this you could assume prices will treble again as we come out of the recession, as long as this is sustained for 8 years or so. However, as the potential for more households to become double income is reduced (high female employment already) and wages are unlikely to raise that quickly, this may not be realistic, unless the mortgage lenders become extremely lax, to the point of reckless! To answer your other question, about the affordability of housing, this will be based on the level of wages in the UK and how strict or lax the lenders are, also taking into effect the availability of housing for purchase. If wages rise, house prices will rise, if lenders are willing to lend more money, house prices will rise and if demand continues to outrstip supply, prices will rise. None of the major UK political parties are likely to solve the problems of population growth and not enough houses being built so it is likely prices will rise but you could argue that they are not far off a peak based on current wages and lenders attitudes.
I am from Australia, so my answer is based on my experience over here, however it should be similar for the USA. Generally, what determines both the price of houses/apartments and the rents for them is supply and demand. When there is high demand and low supply prices (or rents) generally go up. When there is low demand and high supply prices (or rents) usually go down. What can sometimes happen when house prices go down, is that the demand can drop but so can supply. As the prices drop, developers will make less money on building new houses, so stop building new houses. Other developers can go bankrupt. As less people (including investors) are buying houses, and more people (including investors) try to sell their existing houses, there will be more people looking to rent and less rental properties available to rent. This produces a perfect storm of high demand and low supply of rental properties, causing rents to rise strongly. When the property prices start to go up again as demand increases, there is a shortfall of new properties being built (due to the developers not building during the downturn). At this time developers start to build again but there is a lag time before the new houses can be completed. This lack of supply puts more pressure on both house prices and rents to go up further. Until equilibrium between supply and demand is realised or an oversupply of rental properties exists in the market, rents will continue to rise.
The higher the debt, the higher inflation needs to be to wash the debt away.  This is why the debt and US equities move upward hand in hand. The same goes for US housing. Just as homeowners borrow money through mortgages so that house prices rise, the banks borrow the money for mortgages through the central banks. Thus, the cycle circulates. The more debt, the higher the prices!  Everybody makes money from debt. That is why the US has the highest external debt on the globe, yet they are considered one of the wealthiest countries in the world.
To answer your other question, about the affordability of housing, this will be based on the level of wages in the UK and how strict or lax the lenders are, also taking into effect the availability of housing for purchase. If wages rise, house prices will rise, if lenders are willing to lend more money, house prices will rise and if demand continues to outrstip supply, prices will rise. None of the major UK political parties are likely to solve the problems of population growth and not enough houses being built so it is likely prices will rise but you could argue that they are not far off a peak based on current wages and lenders attitudes. If the UK economy continues to recover from the recession, it is possible they will fuel another housing boom by lending ever increasing salary multiples as happened in the 2000s, unless there is government intervention, ie regulation of the lenders."
"As a rental, this is not an ideal set of numbers. You manage to show a $255 'gain' but $275 is from payment to principal. So, from the start, you're out $20/wk.  This ignores the $170K down payment, which has an opportunity cost, however you calculate it. You can assign the same rate as the mortgage, and it's nearly $10K/yr. Or the rate you feel your choice of stock market or alternate investment would rise. Either way, you can't ignore this money.  Your mortgage rate isn't fixed. A 1% rise and it would jump to $1663 ($842/week) Ideally, a rental property is cash positive without counting principal paydown or even the tax refund. It's a risky proposition to buy and count on everything going right. I didn't mean to scare you off with ""1%"" but you should research the costs of repair and maintenance. Last year my Heat/AC system needed replacement. US$10K. This year, it's time to paint, and replace rotting trim, $7000.  In the US we have property tax that can range from 1-2% of the house value. If you don't have this tax, that's great, just please confirm this."
I just don't see that many suckers falling for cheap or subprime loans, given their student loans. Yellen raising rates will dampen aggressive bank profits somewhat. Smucks will be smucks, but smarter buyers would appraise their debt load and opt for renting or cheaper houses.  But then again, people don't even learn from recent history. US market is at recovery/pre-euphoria stage now. Canada is soon to pop a year after rates rise courtesy of Yellen. Given the size of the US gen y cohort, it is likely that many in their 30s in 2020 will buy. And will cry when the next bubble pops, as Boomers start selling assets to fund their retirements.
Because they could move, the same reason you don't raise it today. If demand for housing doesn't increase then if you raised your rent by 50% after minimum wage went up that much you would be well above the market rate. Also in your scenario you know your renters are minimum wage workers who just got a raise. Most landlords don't know that much detail about their renters finances.
It is almost a sure thing that the housing market will crash again hugely.For this reason I prefer to own several houses that way when it does no one can ask for their money back and leave me homeless. Current economics suggest a fall of between 40-60% from 2011 prices meaning that if you have bought a house in the last 12 years you can wave bye bye to any and all equity, and this will happen very soon. I recommend saving your money and buying a house outright (like I did 3 times) from someone who has spent 12 years or so paying a mortgage.
The housing bubble manifested itself thus: not as simply a boom in quantity and a lowering in price, but a lowering in price as a result of faulty (dishonest and misleading) risk assessment - (by the same folks who downgraded US debt), and an implosion as a result of that debt systematically dissolving through defaults and foreclosures (to put it very, very, very, simply). Instead of an increase in consumer credit, we need greater investment by the companies who currently sit on trillions of dollars of frozen cash. Those investments could be better managed, with transparent risk assessment and greater restrictions on lending policy. Or, ideally, that money could be used to hire workers, expand plants and lower marginal costs. To tie it back to your concluding paragraph, credit makes it possible to satisfy the demand for those barrels of apples by buying them at a fair market value from China. If it weren't for China's ability to provide the apples at a ""fair"" price (you can, for our purposes here, consider this price to be fair market value if you make a transaction - the selling price equals the buying price), there would be an apple shortage, and the price of apples would climb ridiculously high."
Even without an adjusting ARM to contend with, these guys are still facing the fact that they paid top dollar for a house that likely will not be worth its purchase price again in their lifetime. Even with a fixed mortgage rate, they'll be underwater, effectively losing their entire payment to the bank as if it were rent, for much longer than it would take to have this entire mess completely behind them if they just walked away from the whole thing, moved back into an apartment and waited it out. So, these guys decide on a ""strategic default""; give the bank the house (which doesn't cover the outstanding balance of course) and if they sue, file bankruptcy. That really makes the banks nervous; if people who did everything right are considering the hell of foreclosure and bankruptcy to be preferable to their current state of affairs, the bank's main threat keeping people in their homes is hollow. That makes them very reluctant to sign new mortgages, because the risk of default is now much less certain. Now people who do want houses in this market can't buy them, further reducing demand, further decreasing prices... You get the idea. That's the housing collapse in a nutshell, and what banks and our free market have been working through for the past five years, with only the glimmer of a turnaround picking up home sales."
They can't keep rising with respect to people's income because eventually you run out of buyers. If there's roughly one house for every five people, then you'd better make sure that the price you set to sell your house is affordable to people in the upper fifth of income scales, or else you are mathematically guaranteed not to have any customers. Now, it's true that the price of particular houses can get much higher, but they tended to be higher in the first place. Housing isn't exactly an efficient market, but for the most part you have to pay for the house that you get, or else someone else will outbid you. An individual area might, temporarily, buck these trends because it suddenly becomes popular and there are a lot of extra buyers putting money on the table. In the long run, someone is going to build for those buyers, even if it means moving up the chain from enormous rural lots to suburban single-family homes to low-density garden apartments to residential towers.
"I don't see how I'm biased in favor of the banks. Make no mistake, the banks are to blame for the collapse, more so than the government.  However I'm acknowledging the timeline and all the major players in this game, and that includes the government.  I addressed the role of banks selling risky mortgages susceptible to default, which includes predatory lending rates, highly leveraged individuals who buy investment properties, and subprime ARM loans.  Thank you for providing more detail.  I also addressed the securitization of risky mortgages into investment-grade debt, which could be sold to satisfy the ""Giant Pool of Money"".  Plus, I addressed how the banks lowered their standards to continue the supply of mortgages.  Feel free to directly cite [Paul Krugman](http://krugman.blogs.nytimes.com/2010/01/07/cre-ative-destruction/) as the source of your argument regarding the simultaneous growth of the residential and commercial RE.   Commercial RE was pulled along by  residential RE and the broader market rally (commercial land is highly cyclical).  Commercial RE prices rose as the market showed lower interest rates and higher land prices.  So commercial RE slightly lagged the housing market."
Real estate is always an interesting dynamic.  In most cases prices have always gone up.   Price is mainly a function of demand.  Sometimes demand is artificially inflated over a short term period and can come down quickly due to corrections.  During recessions the housing market will usually slow down.  There are some rare instances where certain areas never recover (see Subprime Mortgage Crisis Savings & Loans Crisis where scores of unwanted properties exist).  Things to consider:
First consider the basic case of what you are asking: you expect to have a future obligation to pay interest, and you are concerned that the rate when you pay it, will be higher than the rate today. In the simplest case, you could theoretically hedge that risk by buying an asset which pays the market interest rate. As the interest rate rises, increasing your costs, your return on this asset would also increase. This would minimize your exposure to interest rate fluctuations. There are of course two problems with this simplified solution: (1) The reason you expect to pay interest, is because you need/want to take on debt to purchase your house. To fully offset this risk by putting all your money in an asset which bears the market interest rate, would effectively be the same as just buying your house in cash. (2) The timing of the future outflow is a bit unique: you will be locking in a rate, in 5 years, which will determine the payments for the 5 years after that. So unless you own this interest-paying asset for that whole future duration, you won't immediately benefit. You also won't need / want to buy that asset today, because the rates from today to 2022 are largely irrelevant to you - you want something that directly goes against the prevailing mortgage interest rate in 2022 precisely. So in your specific case, you could in theory consider the following solution: You could short a coupon bond, likely one with a 10 year maturity date from today. As interest rates rise, the value of the coupon bond [for it's remaining life of 5 years], which has an implied interest rate set today, will drop. Because you will have shorted an asset dropping in value, you will have a gain. You could then close your short position when you buy your house in 5 years. In theory, your gain at that moment in time, would equal the present value of the rate differential between today's low mortgage rates and tomorrow's high interest rates. There are different ways mechanically to achieve what I mention above (such as buying forward derivative contracts based on interest rates, etc.), but all methods will have a few important caveats: (1) These will not be perfect hedges against your mortgage rates, unless the product directly relates to mortgage rates.
Well keep in mind until the 2007ish housing crash Fannie and Freddie MADE money, they received no help from the federal gov't. The whole idea of the secondary mortgage market was to keep money flowing to home buyers and everyone who bought a home benefited (via rates a few points lower than if banks had to keep all the capital on hand to back all the loans)  Both these institutions worked well for about 40 years, the criminality here was that ratings agency rated these bonds as AAA, when in fact they were junk, that's who failed in their due diligence and really should be held accountable. (as if they were rated junk, the banks would have no one to buy them except at junk bond interest rates, meaning they wouldn't have made these loans to people who couldn't really afford houses.) The rating agencies were *supposed* to be neutral evaluators of the debt, and instead they essentially took what amounts to bribes from the banks to rate them highly.
Your main choices are ISAs and property. You can put over £15,000 per year into an ISA, which means over £450,000 by the time you retire, not allowing for growth in your ISA investments. But if you're paying rent, and worried about being able to pay rent when you retire, the obvious choice is to buy a flat now on a thirty-year mortgage so that you can stop paying rent and the mortgage will be paid off by the time you retire.
The article John cites says no correlation, but this chart from the article says otherwise;  One sees the rate drop from 14% to 4% and housing rise from an index of 50 to near 190. (reaching over to my TI BA-35 calculator) I see that at 14%, $1000/mo will buy $84,400 worth of mortgage, but at 4%, it will buy $209,500. 2-1/2 times the borrowing power for the same payment. But wait, my friends at West Egg tell me that inflation means I can't compare $1000 in 1980 to the same $1000 in 2010. The $1,000 inflates to $2611 (i.e. an income rising only with inflation, no more) and that can fund a mortgage for $546,900. This is 6.5 times the original borrowing power, yet the housing index 'only' rose 3.8X. See that crazy chart? Housing actually got cheaper from 1980 to the peak. Statistics can say whatever you wish.  Interest rate change drove all the change in housing prices, but not quite as much as it should have.  To answer your question - I expect that when rates rise (and they will) housing prices will take a hit. In today's dollars, a current $1000 borrows (at 4%) nearly $210K, but at 6%, just $167K. If rates took a jump from these record lows, that's the nature of the risk you'd take.
Then suddenly the supply will begin to ""bulge"" instead (selling off portfolios of stocks -- even *required* as pensions need to be paid, or as Boomers reach +70-1/2 and are mandated by law to begin selling off &amp; cashing in specific %'s of their 401K and IRA holdings) -- and likewise with housing, aging Boomers will downsize, selling off the ""McMansions"" (which they never really needed, and which in retirement will be burdensome to maintain) and trying to move into (or selling off) the several second &amp; third ""vacation homes"". End result will be a big ""dump"" of supply of housing onto the market -- a supply that GenX does not have the demographic numbers to ""consume"" (and which it does not appear the frugal-minded GenX even WANT to buy at anything like the same rates the Boomers did, even if they were capable of paying the price, which it also appears they cannot, having been ""hindered"" in career &amp; salary gains by the bulge of Boomers in positions above/before them); and then GenY -- the ""Echo Boomers"" which while larger than X are NOT the equivalent of the original Boomers, and who are carrying an unprecedently huge (house-sized) debt load (but minus the house -- and in many cases as debt which cannot be erased as it is in student-loan form) from the beginning of their careers (in which they are being paid significantly LESS than previous generations) -- and who are delaying (and then limiting) the formation of ""households"" as a result. *And that is just how ""demographic bulges"" play out -- it was all entirely predictable (and was in fact predicted by many).*"
"Honestly, I think the best thing the government could do at this point is to stop with stimulus spending and let the market pick the winners and losers. The government is horrible at this because it just throws money where it makes sense politically, not economically (which is what got us into this mess in the first place).  Obama is repeating all of the same mistakes made by Bush, but to a larger degree. When the dot-com bubble burst, Bush &amp; Greenspan artificially lowered interest rates to 1% and printed money to ""stimulate"" the economy. The goal was not to create a housing bubble like what happened, but rather to get people to invest in stocks again. Instead, the people who had been bitten by stocks looked around and saw that housing had a history of increasing in value w/o nearly as much risk of loss, so they invested in housing instead. Clinton's and Bush's policies of guaranteeing loans to lower-income families for the purpose of buying homes also contributed to this, and the next thing you know - housing prices boomed because there was a massive demand... thus leading to the housing market crash of 2007/8.  But that's not all, you see, because as people started to believe that their homes would increase in value by huge amounts, they started spending more, risking more on the stock market, and generally going into massive debt because they felt wealthy.  So in 2008, when the housing bubble crashed, so did the stock bubble and the personal debt bubble, leaving many home owners broke, their retirement funds (401k's and IRA's) destroyed, and without any means of paying their mortgages, thus the rise in people losing their homes.  What has Obama's policy been? The same as Bush's policy, but he printed MORE (tripled our money supply in 3 years) and lowered interest rates even MORE (effectively to 0%).  What so many people don't seem to understand is that printing money effectively steals money from the middle class. It's a hidden tax on our savings accounts. If more people realized this, they'd be outraged. Luckily for the government, most people are mindless sheep willing to buy into the political propaganda being pushed by the media."
"Meh, not really.  While there was some idea that housing prices would continue to rise forever, the packaging of bad loans has nothing to do with optimism, that's outright fraud. If you really want to stretch the definition, you might be able to say they had a fantasy that they weren't going to get caught because...well they hadn't for nearly two decades.  Honestly though, just google ""fraud housing market"" or ""mortgage banks"" and you'll find more than enough direct proof of fraud and deception."