the X links aren’t working for me now. (dunno why?) 1/

i think you’ll find much of the country, however mistakenly, hasn’t gotten your caution, and perceives high home prices as not reflecting their consumption choices (they are not homeowners) but simply as a barrier to consumption and more importantly insurance they’d like but cannot have. 2/

i’m not saying you are wrong from a kind of macro perspective. among the population that is homeowners, there are choices the go bigger and nicer embedded in those prices for sure. but that reflects their consumption choices divergence of economic outcomes that homeownership noisily demarcates. 3/

people who’ve done well are disproportionately homeowners. and their consumption choices absolutely create barriers for more downscale people who would love a newish, smaller place of their own in a great neighborhood. 4/

those don’t pencil, because the consumption choices of the better off are where the money is, because land in nice places would price out more downscale buyers, because it’s only a small fraction of nonhomeowners who could afford to buy even reversing those consumption choices. 5/

to a first approximation, consumption choices have nothing at all to do with the post 2020 boom. as you say, there were special circumstances that can explain it. but however it came to be, it’s a fact and a huge, yawning, insurmountable barrier. 6/

you can definitely argue, from a macro and financial stability perspective, that the best way to address the overshoot is let nominal prices grow henceforth more slowly than inflation. from a macro perspective that makes sense. 7/

from a micro perspective, it means it will be a generation before half the country can think about buying a home rather than rent. 8/

a reversal of home prices would be a catastrophe for the financial system and the more upscale half of the country. the absence of such a reversal is a catastrophe for the rest of the country. 9/

of course, a financial crisis could disemploy everyone. we must always protect wall street (here interpreted broadly as assetholders) in order to protect main street. /fin