Links to Consider, 11/10
Allison Schrager on the economy; me on Emmanuel Todd; Rikki Schlott on kids today; housing buy-rent comparisons
The bottom 50% does not have much more money. Their net worth is up (which you probably read about any number of places), but much of that increase came from housing prices. Financial wealth is higher, but not much, like $100 more for lower earners compared to 2019 and still lower than it was in the past. Which does not suggest more resiliency and money to spend. Debt is down, but not that much. If you are in the bottom 50%, you are probably in better shape than in, say, 2007 but not much better off than before the pandemic.
…Though the top 50% is doing great. They have much more money compared to 2019, so unless asset values crash—they’ll keep spending.
I attempt to review Lineages of the Feminine, by Emmanuel Todd.
I take away from Lineages three phases illustrating how the Western world has answered these questions. The first phase, from roughly 1500 to 1950, was a patriarchy. The second phase, from roughly 1950 to 2000, was women’s liberation. The third phase, still ongoing, Todd sees as headed toward matriarchy.
A curmudgeonly French anthropologist, Todd is not exactly my cup of tea. I will be on Zoom discussing his book on Tuesday, November 28, at 3 PM NY time, with Rebecca Burgess and Michael Lucchese. No charge, but advance registration required.
Sentiments I hear often from peers:
Love — “Monogamy is so outdated.”
Community — “I have enough friends online.”
Country — “I’m embarrassed to be an American.”
Work — “I’m quiet-quitting.”
Family — “I’m not bringing kids into this melting world.”
Faith — “My parents are such naive Bible thumpers. By the way, what’s your star sign?”
…My suggestion: delay. Wait until high school to give them a phone. (As Jon recommends, you can give them a flip phone before that.) Wait even longer to let them have an Instagram or TikTok account. The resentment is temporary. They’ll thank you later.
Intercontinental Exchange, Incorporated reports,
The last time affordability was this bad in the 80s, rates were in the double digits and the average home was about 3.5 times median income, in stark contrast to today’s price-to-income ratio of nearly 6-to-1.
Pointer from Bill McBride. They are discussing house price affordability. Monthly payments on the average home are way beyond the median family’s ability to pay. One reason is that mortgage rates are around 7.5 percent. Another reason is that house prices remain stubbornly high.
Here is how I think of the price-to-income ratio for a house:
(price/income) = (price/rent)(rent/income).
A historical norm for the price/rent ratio is about 12. A norm for the rent/income ratio is about 1/3. Multiplying the two gives a norm the price/income ratio of 4. So 6 is suspiciously high.
The price/income ratio is actually much higher in places like LA or Boston, where there has been a decades-long run-up in prices relative to rents. People who took a risk by buying have been bailed out by low interest rates and greater fools taking even more risk. I think at some point there are going to be homeowners left holding the bag. Unlike in 2008, it will be the buyers rather than the banks taking the losses, because the days of buying with no money down are gone.
I think that the most likely scenario going forward is for a gradual decline over the next ten years in home prices relative to inflation. I give this scenario a 60 percent chance. There is a 25 percent chance that home prices will keep up with inflation over this period. There is a 15 percent chance that home prices will crash by 20 percent over the next three years. Of course, real estate markets are local, and there are many markets outside of the big metros where prices are not as volatile.
McBride himself uses inventory figures to forecast house prices in the short run.
It is possible that the NAR report months-of-supply for October 2023 at 3.5 or 3.6 months - not that far below 2019 levels.
Still, prices don’t usually decline until inventory is close to 6 months-of-supply.
But these are strange times. How many homeowners would have their homes on the market, but they are staying put because they have low-rate mortgages from a few years ago that they could not replicate today?
substacks referenced above:
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> "Again, Todd ignores this theory. He sees sexual repression as an anachronism. He links the shift toward sexual freedom since 1950 to the advent of better birth control, notably the pill, and to Christianity’s rapid decline ... By the 1960s ... Extramarital sex and divorce lose some of their stigma. Women’s sexual desire is acknowledged."
Birth control the libido killer - is invented - at the very same moment women's sexual desire is acknowledged!
This is just one of the little ways that we don't seem to be grown up enough, ironically, to be totally free and frank about sex (others concern the shared pretense of (once) magazines and (still) the popular culture, that certain practices are actually wildly enjoyable for women, instead of a sacrifice, or more coldly, a compromise or trade; another is the notion, that surely must confuse a lot of young women, that sex is and must be and can be an equal exchange, a one-to-one correspondence of outcome for men and women, through all seasons. It's like people are simultaneously vulgar and prudish, too prudish to discuss what real life is like).
Anyway, I can assure you that nobody acknowledged anything of the kind to a teenaged girl in the 1980s. Which, I suppose, was because they had a thoroughly grown-up understanding of teenaged boys' sexual desire, and so viewed the usefulness of a prescription for the pill solely in that light.
Still and all, since I accepted feminism, the water we swam in (not by study or thought, but in a conformist sort of way; a callow "feminist" framing was a lazy way to write English papers, especially if your teacher was stressed-out with career and family, and if you had no gift for literary analysis [and who does at sixteen? I continue to believe that at that age they should just be telling you things, not asking you, good God) - or if you hadn't actually read "Macbeth"] - maybe if a doctor had said - this pill rather than being a badge of feminism is something that will curb your sexual interest - which, I see that you weigh 100 pounds so it's probably not very great anyway - and so accommodate the desires of the opposite sex -- I might have kept boys at arm's length and elected not to go in for chemical alteration.
In any case, I was forgetful, then as now, and far from systematic, and would miss a day here and there, then try to swallow a couple down at once, and throw up; and was soon pregnant.
Never underestimate how very, very badly the body of an adolescent girl - wants to be pregnant, never mind desire. It is the total opposite of your 30-something career women "trying to conceive". It's hard to fool Mother Nature, as the ad used to say.
Which is why I think it's so funny that everybody is now worried that "the teenagers aren't having enough sex!".
There is no way to argue for "be normal teens, like we used to be!" while also arguing that babies are the one evil that must be thwarted. Babies may be discouraged, sure, but the flip side is that they aren't that big a deal - you, teenaged girl, aren't that big a deal. The babies are going to slip through, or they are going to have to be stopped; and abortion is not a beautiful rite of passage. And pace Freddie Deboer's piece the other day, it is not a simple matter of revealed preference. It is very unlike other choices, and more significantly, it is something to which your attitude may change over time, because life is long.*
*If your attitude doesn't ever change - well, yeah, FdeB is right, you've revealed yourself - and humanity may have dodged a bullet.
I think you have a good point about the very regional nature of housing markets. I am pretty skeptical of numbers talking national averages, and would like to see numbers at the state, or better county (or even more betterer school district) levels. My suspicion is that a few metro areas, which have a lot of the population and shy high prices, probably drive most of the results. That's still a problem to be considered, of course, but the answers for dealing with housing prices in 15 cities will be very different than the answers if it is truly a national problem affecting all regions.
Well, ideally, at least.