Housing problem inflation and how and why it all started

[Mansory22022]

Before World War II, the U.S. was a nation of renters. During the Great Depression of the 1930s, housing crashed, and nobody could afford to buy.
The U.S. government panicked, fearing a return to the Depression, and decided to turn housing into the ultimate economic engine.

The G.I. Bill (1944): The government offered returning soldiers zero-down-payment, ultra-low-interest, 30-year mortgages. Suddenly, it was cheaper to buy a brand-new suburban home than to rent a small apartment in the city.

The Construction Explosion: Mass-produced suburbs (like the famous Levittowns) sprang up overnight across cheap, empty land. Millions of ordinary working-class citizens—plumbers, factory workers, clerks—became first-time homeowners for pennies on the dollar.

By the 1960s and 1970s, this first generation of post-war homeowners had either completely paid off their houses or had microscopic monthly payments locked in
this completely flipped the power dynamic between companies and workers:
The Leverage Shift: When a worker doesn’t have the terror of eviction hanging over their head every single month, they gain immense bargaining power. They can say "No" to bad working conditions. They can sit at home and comfortably wait for a better job offer.

The Wage-Price Spiral: To attract these secure workers, American companies had to continuously raise wages. But to pay those higher wages, companies had to raise the prices of their products. This created massive wage-push inflation, making everything from groceries to cars more expensive.
When workers have no housing debt, they lose their economic fear. If a company treats them poorly, forces them to work long hours, or offers low pay, the workers can simply walk away.

The Standoff: Workers can comfortably tell their boss: "I am only working 3 days a week, and I want double the hourly wage, or I quit and sit in my garden."
The Corporate Loss: Because companies must have labor to operate, they are forced to surrender. Corporate profit margins shrink dramatically. The ultra-rich CEOs and shareholders lose their massive profits because that money is now being paid out in high wages to the cleaners, drivers, and factory staff.

Because sellers have infinite time and zero bills, they force the baseline market price higher and higher. They refuse to lower their expectations because they simply don't need the money.
The early winners locked the doors behind them, leaving Gen Z and Millennials to fight like gladiators over a tiny, overpriced fraction of physical land.


the exact secret economic disease of Southern Europe (Greece, Italy, Spain).Many mainstream economists are afraid to say this out loud, but analysis is 100% correct: when a society reaches a point where too many people can just "sleep" on top of their inherited, paid-off legacy real estate and pick and choose their work, national productivity dies and structural inflation eats the country from the inside out.



the darkest, most invisible stage of the Western housing crisis. Millions of people did not become homeless on the streets overnight; they spent months or years living as "ghosts inside their own castles," hidden from public view before the banks finally arrived with eviction notices.In sociology and economics, this exact phenomenon is documented as "housing poverty," "under-housing," or being "asset-rich but cash-poor."The raw historical data and structural facts reveal how this tragic illusion operated inside the US, UK, and Canada, and how it directly caused the modern homelessness crisis.

Before a bank forecloses on a house, a long timeline of utility disconnections occurs.
According to data from the National Energy Assistance Directors Association (NEADA), millions of US households face utility shut-offs every year due to unpaid balances.
The Reality: Homeowners who refused to work or lacked modern skills could not keep up with the soaring hyper-inflation of electricity and water bills.
They spent years living in darkness—using candles for light, fetching water from public parks in plastic jugs, and using propane camp stoves inside multi-million-dollar suburban homes. They were structurally homeless while still owning a roof over their heads.

They didn't become low-skilled because they were homeless; they became homeless because they let their skills rot while relying on a physical asset to save them
When these no-skill, unemployed owners ran out of cash to buy food, they fell victim to predatory financial products designed to extract the physical equity of their homes.HELOCs and Cash-Out Refinancing: Banks and private lenders targeted these owners with Home Equity Lines of Credit (HELOCs).
Lenders told them: "Your house pumped from $100,000 to $600,000. Sign this paper, and we will give you a $50,000 cash loan against your house's value."

[Synchronice]

By the 1960s and 1970s, this first generation of post-war homeowners had either completely paid off their houses or had microscopic monthly payments locked in
this completely flipped the power dynamic between companies and workers:
The Leverage Shift: When a worker doesn’t have the terror of eviction hanging over their head every single month, they gain immense bargaining power. They can say "No" to bad working conditions. They can sit at home and comfortably wait for a better job offer.

The Wage-Price Spiral: To attract these secure workers, American companies had to continuously raise wages. But to pay those higher wages, companies had to raise the prices of their products. This created massive wage-push inflation, making everything from groceries to cars more expensive.
When workers have no housing debt, they lose their economic fear. If a company treats them poorly, forces them to work long hours, or offers low pay, the workers can simply walk away.

The Standoff: Workers can comfortably tell their boss: "I am only working 3 days a week, and I want double the hourly wage, or I quit and sit in my garden."
The Corporate Loss: Because companies must have labor to operate, they are forced to surrender. Corporate profit margins shrink dramatically. The ultra-rich CEOs and shareholders lose their massive profits because that money is now being paid out in high wages to the cleaners, drivers, and factory staff.

Because sellers have infinite time and zero bills, they force the baseline market price higher and higher. They refuse to lower their expectations because they simply don't need the money.
The early winners locked the doors behind them, leaving Gen Z and Millennials to fight like gladiators over a tiny, overpriced fraction of physical land.

It doesn't really work like that. In post-soviet union states, there is the highest number of home ownership but working conditions and salaries are so shit in these states that they come to Europe and prefer to rent an apartment and work here.
In post-soviet union states, despite the high homeownership, wages stay low because productivity is low, unemployment supply is high, unions are weak or don't exist, there isn't a big competition for workers  and people don't have better job alternatives because of the monopoly that creates an attractive situation for business owners, rich and powerful people.

It worked in the USA because the USA had fast growing productivity and industrial growth, strong labor laws and unions, high demand on labor in different niches, profitable business model, less corruption and overall, people with different mentality.

[Fortify]

It's so difficult to extract any sort of point or question from what you're posting because you bounce all over the place. You talk about 3 day weeks where workers have leverage over companies, a bill from 1944 which some very old people may have benefited from (quite rightly considering they saved the world) and then how according to you Southern Europe has some economic disease. You make no real effort to weave your narrative together so how can anyone extract value out of all these random things you've bunched together.

You could simplify what you've said into just a couple sentences: Over the last few decades all the gold plated pensions, sense of corporate responsibility and perks that older generations benefited from have evaporated. To be replaced by constant divergence in wages vs house prices, constantly suppressed wages and lately inflation getting rather crazy. The biggest pain is that the last one has largely been spurred by wars created by idiots - Putin and Trump. There was a point after Covid where things started to look normal again with prices stabilizing, yet these buffoons have caused prices to rocket in all sorts of places - from wheat to oil and everything in between.

[9ja Amaka]

I'll focus on the topic cause it is hard to read through the wall of text and grab a point. 

House inflation is everywhere. It costs so much to rent an apartment in my country, and it costs even more to own a house. 

Better to build a house than to buy an apartment from a real estate company.

In the U.S, housing inflation is a result of foreigners gaining citizenship in the country. The United States is becoming more saturated, filled with opportunities, which is the reason why houses are highly priced.

[bhadz]

They didn't become low-skilled because they were homeless; they became homeless because they let their skills rot while relying on a physical asset to save them
When these no-skill, unemployed owners ran out of cash to buy food, they fell victim to predatory financial products designed to extract the physical equity of their homes.HELOCs and Cash-Out Refinancing: Banks and private lenders targeted these owners with Home Equity Lines of Credit (HELOCs).
Lenders told them: "Your house pumped from $100,000 to $600,000. Sign this paper, and we will give you a $50,000 cash loan against your house's value."

They are not low skilled, the competition was just too tough for them and opportunities were limited and that's why they went homeless. At the same time, the rates and prices of houses ballooned up to the point that even you have 2-3 more jobs, it is not even enough to cover mortgages because of how low the wages are. And when there is no opportunity, there is no job then there's no money. It is expected that they have no money to feed themselves and even they have, it's the bare minimum for them to survive. Factory jobs decades ago allowed them to own houses and cars, mortgages are affordable and can even have multiple children. This generation we live in, it's too different and just can't.

[Decimetre]

OP, you can add source, maybe we'll get better facts to help understand this writeup.

Housing problem is everywhere, not only in the US or western world. I think that housing problem is more in developing countries and third world countries where, unlike the US and other developed countries where housing is costly with almost equal influx of money, the developing countries and the third world countries have high cost houses with significantly low income bases. This is what I think makes the life of the third world countries be in shambles with many sleeping in slots and low standard buildings.

The length of hours a person chooses to work and the number of days a person chooses to work, depends on his basic needs, his housing concerns, and his many number of mouths to feed. Housing is one of the basic needs of humanity, everyone understands the need to own a house but the challenge is income and other responsibilities.

The high availability of jobs as seen in the western world, the US and co has made this housing issue insignificant too because you earn what you spend or more unlike other areas where you have to spend more than you earn, and they still have same housing challenges to deal with.

[BALIK]

Your long post sounds very interesting & dramatic. But to me it seems confusing and convoluted. And there are several misinterpretation.

When a worker doesn’t have the terror of eviction hanging over their head every single month, they gain immense bargaining power. They can say "No" to bad working conditions. They can sit at home and comfortably wait for a better job offer.

You cannot call having roof over our head is a crime. but rather it is fundamental right. Making employee work under threat of eviction or holding them hostage is in no way a sound economy. I consider it as argument for corporate exploitation.

The Wage-Price Spiral: To attract these secure workers, American companies had to continuously raise wages. But to pay those higher wages, companies had to raise the prices of their products. This created massive wage-push inflation, making everything from groceries to cars more expensive.

This is misconception. As far as I know main cause of inflation of 1970s was removal of gold standard in 1971 and global oil crisis of 1970s. There is no way to blame this on small wage increases for ordinary worker. That is wrong.

The early winners locked the doors behind them, leaving Gen Z and Millennials to fight like gladiators over a tiny, overpriced fraction of physical land.

Why do you think in such way? Ordinary old homeowner should not be blamed for todays youth not being able to buy house. Real culprit here are big corporate funds and real estate mafia, who have taken housing out of the reach of the common people.

[Dreadboost]

I think that housing problem is more in developing countries and third world countries where, unlike the US and other developed countries where housing is costly with almost equal influx of money, the developing countries and the third world countries have high cost houses with significantly low income bases. This is what I think makes the life of the third world countries be in shambles with many sleeping in slots and low standard buildings.

You initially said the housing problem is a general problem. How did it end up being a problem for the developing countries? 

Developed countries face a greater surge in house prices than developing countries. True facts, because developing countries do not have the availability of houses compared to developed countries. Houses in developing countries are available at every standard. There are houses the middle class can afford, those for the wealthy, and that of the poor. But in developed countries, most houses are in the same price range. And some are highly inflated.

The length of hours a person chooses to work and the number of days a person chooses to work, depends on his basic needs, his housing concerns, and his many number of mouths to feed. Housing is one of the basic needs of humanity, everyone understands the need to own a house but the challenge is income and other responsibilities.

I also think people should work towards having a decent environment to live in. Out of the basic needs, housing and feeding should be the ones that come first before shelter and other expenses. 

A good environment can change status. The priority of a person is to get an environment that influences their life positively for a bigger change. It can happen only when you live in a good environment.

[Rruchi man]

The early winners locked the doors behind them, leaving Gen Z and Millennials to fight like gladiators over a tiny, overpriced fraction of physical land.

Why do you think in such way? Ordinary old homeowner should not be blamed for todays youth not being able to buy house. Real culprit here are big corporate funds and real estate mafia, who have taken housing out of the reach of the common people.

Common people are still able to buy properties; it is harder, but not impossible. It now just requires more planning, more commitments, and better sacrifices because there are always offers to own properties through plans from real estate agents, some even offering a payment structure to own the land, where you can pay in bits.

When common people start believing that it is very impossible for them to own land, it will definitely just become impossible. You have to see beyond the resources you have available and believe that even in common states you should be able to own a piece of land and then work towards it. You'll be surprised how you'll be able to achieve it within a very short while of planning.