PeakTrader.com

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PeakTrader:

The U.S. is a most diverse and fragmented society. There has been tremendous U.S. upward mobility and increases in absolute living standards.

Millions of Third World immigrants moved to the U.S., and had millions of children, to raise their living standards. Many of those immigrants, who earned less than $3 a day or didn’t have jobs in their countries, earn $30,000 to $50,000 a year with overtime in the U.S. Major U.S. cities would’ve become ghost towns without Third World immigrants.

Almost the entire overextended U.S. housing boom took place in upper and middle class neighborhoods, which expanded and new neighborhoods were created.

1900 To 2010: Evolution Of The American Home Today: Fun Housing Facts.
June 18, 2000

“In 1900, for instance, a typical American new home contained 700 to 1,200 square feet of living space, including two or three bedrooms and one or (just about as likely) no bathrooms.

At the turn of the 20th Century, more than 20 percent of the U.S. population lived in crowded units, with entire families often sharing one or two rooms. Most homes were small, rural farmhouses and lacked many basic amenities, complete plumbing and central heating chief among them.

By 1950, the typical new home had not grown at all, averaging about 1,000 square feet. It still had just two bedrooms and one bath…50 years ago, more than 35 percent of American homes still lacked complete plumbing facilities (hot and cold piped water, a bathtub or shower and a flush toilet).

By 2000, a typical new home had 2,000 or more square feet, three or more bedrooms and at least 2 1/2 baths. We added the garage as standard, and expanded it to make room for at least 2 1/2 cars. Fireplaces and central air conditioning were built into almost every new house.

While only 46.5 percent of the U.S. population owned its own house in 1900 and 53 percent in 1950, it is estimated that at the end of this year more than 67 percent of American households will own.”

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While new immigrants from dirt poor countries raised their living standards moving to the U.S., the native U.S. population also raised their living standards:

Rising riches: 1 in 5 in U.S. reaches affluence
December 6, 2013

“New research suggests that affluent Americans are more numerous than government data depict, encompassing 21% of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40% of total U.S. consumer spending.

In 2012, the top 20% of U.S. households took home a record 51% of the nation’s income. The median income of this group is more than $150,000.”

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run75441, I see, when you’re not being a political hack, you’re being ignorant.

You’re responding to an article dated in 2000 with a December 2013 article.

Chart of Home Ownership Rate:

http://research.stlouisfed.org/fred2/series/USHOWN

And, let’s look at real median household income. Chart:

http://research.stlouisfed.org/fred2/graph/?g=qHy

Larger chart:

http://research.stlouisfed.org/fred2/graph/?id=MEHOINUSA672N

Real median household income doesn’t rise steadily over time. There was a steep rise over five years in the 1990s, including when actual output exceeded potential output, when the Baby Boomers were at their prime, rising from $49,000 to $56,000.

However, it generally maintained that steep 1990s rise, falling to $54,000 and almost rising to $56,000 again in 2007.

It has declined from about $56,000 in 2007 to $51,000 today, over this recoverless expansion.

Moreover, I explained, more than once before to you, U.S. trade deficits continued to increase in the 2002-07 expansion, which subtracts from income = GDP = output.

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And, since you want to be political, when Clinton left office, real median household income was a little over $54,500 and falling. When Bush took over, it fell only to $54,000 and then rose to $55,500 on top of the huge 1990s boom and increasingly larger 2000s trade deficits.

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In the late 1980s, you could buy a mansion in Denver for $50,000, and there were lots of “For Rent” signs in front of apartments in nice neighborhoods. You could rent a spacious one-bedroom apartment with wooden floors and a view of the mountains for less than $300 a month.

Then, beginning in the early-1990s, many people moved to Colorado, e.g. from California. The “For Rent” signs disappeared and rents gradually rose (to over $400 a month by 2000).

The Denver Tech Center, about 20 miles south of downtown Denver, expanded quickly with dozens of new office buildings. There was a homebuilding boom, in the area, and many impressive shopping malls were built. These were “upper-middle” class houses built on empty fields.

Thousands of these large houses were built over many miles all the way towards the mountains in the west and towards Castle Rock in the south.

In Downtown Denver, government and business, and Democrats and Republicans, worked well together. There was little hostility (e.g. compared to California). Consequently, in the 1990s, there was a building boom in and around downtown Denver too, e.g. a new international airport, three new pro sports stadiums, a light rail system, a new convention center, and main library (where the G-8 meeting was held one year). Lower downtown was renovated to look like the 1920s when it was new, sidewalks were replaced, etc..

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The article says: “…the top 10 percent ranked by the aggregate value of their owner-occupied homes held 52 percent ($4.4 trillion) of the total housing wealth. The bottom 40 percent held just 8 percent ($700 billion).”

I suspect, older Americans have much more wealth than younger Americans, in part, because they paid-down mortgage debt to build-up equity.

My parents are generally “middle class.” However, they bought a house in the late-1970s for $100,000. It rose to over $900,000 by the mid-2000s and then fell to roughly $700,000. They paid-off the 30-year loan. So, they have $700,000 in housing equity, along with other wealth built-up over decades.

I suspect, they’re in the top 10% of “owner-occupied housing wealth.”

Other Americans, including the “middle class” who bought homes eventually extracted equity and spent it, while other Americans defaulted on their home loans and find it difficult to get another loan. Moreover, many others traded-up for better homes (e.g. after selling a “starter home”) and have less equity.

Savers should be rewarded, particularly in an era of overconsumption, over the past 30 years.

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Actually, during the housing boom, many homeowners extracted equity and refinanced at lower rates, more than once, which spurred consumption.

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I read several years ago, U.S. homeowners were improving the real value of their homes spending over $300 billion a year in home improvements.

The U.S. not only had a housing boom, raising the homeownership rate, it had a homebuilding boom, home improvement boom, refinancing boom, and a general consumption boom, particularly as low prices (for goods & services) and low interest rates induced demand.

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EMichael, as always, you don’t know what you’re talking about and always miss the point, e.g. savers accumulate wealth and spenders don’t. Of course, you wouldn’t understand a intertemporal model, for example.

My parents live in Orange County California and my dad is a civil engineer. I wouldn’t say they were rich. It’s much more accurate to say they were middle class, particularly in Orange County California.

If my links don’t support my statements, why don’t you explain why they don’t rather than just make declarations, which have so far made no sense.

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Here’s a house price index chart for all of California:

http://research.stlouisfed.org/fred2/series/CASTHPI

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