"You can not have price increases where values literally double every 5 years and expect it to continue forever. And salaries are not keeping pace with the price levels of many of these new developments."
That would be true in a zero-sum world, but that's not the reality that we live in.
Salaries do NOT have to keep up with the price levels of homes.
How can that be, you ask?
Easy. Lifestyles change.
First, we sent our wives to work. That's kept up our standard of living as well as our home prices.
Next, we started having fewer children.
Finally, we started leasing out our own rooms from our homes (in the areas under discussion - that really isn't necessary in my region).
Look at coastal areas of California. Everywhere you look, the streets are packed with parked cars.
Why? Because people are violating the zoning laws by leasing out their garages, attics, and bedrooms. Multiple families are now living in what old-timers would call "single-family dwellings".
So the streets are packed with parked cars because the parking was developed back when only 1 nuclear family lived in each house.
And there are more than 1 family living in each house in those areas because that's the only way that they can afford to live there.
People are metaphorically sacrificing their standard of living on the alter of "I've got to live in a hip/cool neighborhood at any cost - style philosophies".
They are also having fewer children. Why? To save money and time to help prop up their standard of living. We see this in spades in Japan today.
Supply versus Demand. Salaries aren't part of that equation. If/when salaries don't keep up with real-estate, you see the wife going to work, fewer children, and rooms getting leased out.
And that's not going to change unless people suddenly decide that they want to live in areas that permit higher standards of living on lower salaries.
If you want to watch a real-estate bubble burst, then simply look for areas that have declining populations. It's pretty tough to keep up real-estate prices, no matter how high the salaries of those who remain in the area, when the net population of that area is declining.
Conversely, it's pretty hard to drive down real-estate prices when the population of that area is increasing.
If you aren't looking at the population trend, then you won't accurately predict what the housing market will do, no matter how well you guess at the current and future states of the economy.
That's a fairly accurate observation for Fairbanks as well. Cabins and houses seem to have more people in them. There may be a few new structures here and there, but the building boom of a couple years ago has flattened out. There sure are a lot of cars around, easily double what it was five years ago, yet the Bureau of Census says population is holding steady. Also, the pupil enrollment at k-12 is holding or actually decreasing. We are not seeing an increase of child-bearing families, but people are flooding in, perhaps anticipating another oil boom, and enrollment at the university is up, up, and up.
People want to buy homes of moderate price, they are desperate to buy homes, but in the meantime they rent and share rents.
Official numbers don't agree with my observation, and I think they aren't getting the picture right.
Yes, but you haven't answered my arguement of this price inflation being created by a credit infusion that is government backed as stated in earlier posts. Government interference distorts the supply-demand curve, thus infusing variables which have sometimes opposite reactions to the desired effect in the long term. You can not use traditional economic models to predict economic development in any aspect of the economy, especially housing, when a credit bubble is created by the government through ficticious accounting. Fannie Mae is only as good as the defecit the Treasury backs. When the Euros and Asians sneeze, our housing market eventually, as a result of their withdrawl from the commercial market will give the residential credit supply a very severe cold.
People are metaphorically sacrificing their standard of living on the alter of "I've got to live in a hip/cool neighborhood at any cost - style philosophies". Good points, as usual, southack. But I object to this one. While this is a factor, its not the primary one, usually people are attracted to places like Cali, Colorado, etc. because of the JOBS. For whatever dumb reason there are high densities of venture capital and highly skilled labor in these areas. Yes, there are some trendy neighborhoods, but the primary motivation is the jobs.
You have an excellent take there but everyone has a car these days compared to 20 years ago. This can account for some of the cars you see. Back in 1970 is was not so common for a family to have more than 1-2 automobiles. Am I wrong?
Cars are everywhere with all kinds of unqualified drivers behind the wheel. These autos are parked on the streets you refer to.