Some Economist Explain Something To Me, Please

[ThomWV]

I understand normal inflation of some small percentage. I just write that off to shit happens. This I don't understand though, how does the price of housing skyrocket up in a state that is losing population?

I am trying to come to understand my own state of West Virginia. I moved here 30 years ago and in that time the state has lost about 10% of its population and yet in the face of increased availability of build-able land from agricultural and reclaimed industrial sites home and lot prices have increased at an unimaginable rate. I simply can not understand why. Maybe someone much more knowledgeable in matters economic than I am would be good enough to explain how this came to be.

[Hannah Bell]

1. Outside money coming in. n/t

[ThomWV]

4. What do you mean?

What do you mean by outside money comming in? The population of the state is going down - no new people are comming in. So how is money somehow comming in from the outside if it is not accompanied by people to buy these homes?

[Selatius]

8. There are real estate speculators. Their activity can drive up prices.

I simply call them house flippers. They buy low. Then they sell high. Of course, if many house flippers enter a market and buy up property, it restricts the supply of houses normal people want to buy to live in. The restriction of the supply of houses will cause housing prices to go up.

[Morereason]

11. Ding Ding Ding... Institutional and small investing. The "boom" in prices was tax based not what we

are told. You will never hear this in the MSM, but the real cause of housing inflation is the change in tax policy. It used to be that specifically family homes tax benefits were mostly available to home owners and large speculators stayed out. Now they are treated like a commodity. Add to that lower capital gains and you have a frenzy. Fixing housing prices is simple. Increase capital gains of homes that are not lived in by the owners. But you won't hear anyone talking about the real solution because it is all about the wealthy, not the simple homeowners.

[Hannah Bell]

12. This is interesting.

Do you have more specifics? I'd like to research it. thanks.

[demnan]

2. Because suburban Washington DC is moving there

That's my best guess anyway. I've worked with plenty of people in DC who live in West Virginia and Virginia way out these days. As the price of housing became astronomical in and around DC the exburbs just kept extending outward.

[ThomWV]

7. That's the other side of the mountains in truckahoe country

[Jed Dilligan]

3. Not an economist, but have new industries moved in?

If they are higher-paying than the old industries, the price of housing will rise.

Another thing that makes it happen is if bedroom communities start popping up in formerly rural places, but I can't see that going along with the population loss.

[ThomWV]

5. No new industries, no new services - there are less people now than 10 years ago.

[Jed Dilligan]

9. So maybe locals are being replaced by long-haul commuters?

[spinbaby]

6. I can't figure out who shops at all those new stores

When we drive south, I'm always amazed at the commercial development in the I79 corridor and down through Summersville an Beckley. Who shops there if WV doesn't have a larger population than when we lived there 30 years ago?

[Dr.Phool]

10. When they upgraded to indoor plumbing.....

:rofl:

Sorry, just recalling visiting my grandmother 45-50 years ago in Logan County. I remember when they installed indoor plumbing and tore down the shit house. And running water.

[Extend a Hand]

13. it's the value of the dollar

it takes more dollars today to buy a gallon of milk or a loaf of bread than it did 30 years ago. The utilitarian value of milk and bread haven't gone up. The purchasing value of the dollar has gone down.

[LondonReign2]

14. Interest Rates

When Greenspan artifically held rates low, people coudl suddenly afford more house. So people bought higher priced homes, which started a cycle of more expensive homes. Adjustable rate mortgages piled on, allowing EVEN more people to buy EVEN more expensive houses.