Wait – How Are We Seeing the Lowest Home Prices In Decades?

Guest Post by Peter Reagan

Most Americans see home prices at record highs. Housing affordability, by most standards, is worse than it’s ever been. But if we change the way we measure, today’s homes are more affordable than ever. Don’t be confused – just stop thinking in dollars…

The housing market is one of the single most important parts of the U.S. economy for a variety of reasons.

First, obviously, is the fact that you need a place to live, whether that is an apartment, a trailer, or a house. Having personal living space, aside from the mental health benefits of having personal psychological space from your neighbors, is crucial to stability for employment and for safety (it’s easy to rob or assault people living under bridges) and personal hygiene (which, of course, is important for employability).

Beyond that, though, housing is crucial because, for most Americans, their home is their single biggest investment asset. Take away their home, and they don’t typically own very much that they could sell to retire on.

So, home values and market demand can strongly impact a person’s long-term financial stability.

And when you start paying attention to the overall economic impact of housing, you look at how many industries provide material for building housing and how much of the labor market is employed in construction. It’s a huge part of the economy.

How much? The National Association of Realtors (NAR) estimated that the real estate market contributed $4.9 trillion, or 18%, to U.S. GDP as of 2023.

Yes, nearly one out of every five dollars spent in the U.S. economy goes towards home sales.

That doesn’t even begin to touch on the impact on the economy of home maintenance, furnishing, utilities, and financing the home (or apartment complex).

It’s massive.

But home sales have been struggling.

As I’ve mentioned before, unlike in 2003, when people overwhelmingly said that it was a good time to buy a house, people now overwhelmingly say that it’s not a good time to buy a house.

Specifically, 79% of Americans say that this isn’t a good time to buy a home.

That opinion has had the effect that you’d expect: Demand for housing is down which is causing decreasing housing inventory as builders try to adjust to the lowered demand.

And, as I’ve said, the housing market is about to get even worse.

Then, there comes along a guy, a podcaster, who says that we’re actually seeing the lowest home prices in decades?

What is he even talking about?

Knowing the housing market situation in America right now, you might be tempted to say that anyone who says that housing prices are low is being absurd for humor’s sake or is delusional.

In either of those cases, you wouldn’t take his statements about it seriously.

Especially not about what is the single biggest investment asset for most Americans.

But what if the guy isn’t delusional or being absurdist? What if his statement is true when you understand what he’s comparing housing prices to?

Then, maybe, it might be worth hearing him out to see the point that he’s making.

So, I’m going to let you do just that: hear him out. You can watch the under nine minute video below (or on Youtube).

Now, with context, his statement about home prices makes a lot more sense, doesn’t it?

When compared to something with stable purchasing power (gold, in his example), housing prices have not increased over the last few decades.

In fact, they’ve decreased.

And the only reason that housing prices look higher than they have been in decades is not because the houses have a higher valuation over that time period.

Not at all.

The problem is that the fiat money that we use in the U.S. have been devalued at an extraordinary rate (especially over the four years of the previous administration), so it takes a lot more dollars to buy the same thing than it did just a few years ago.

What we’re seeing is that it would take you less gold bars to buy a house now than it did a few decades ago, but it would take a whole lot more U.S. dollars now to buy each bar of gold.

Put that together, and you have that housing prices aren’t higher, they’re lower. But our currency’s valuation has gone into near free fall, making housing prices look higher.

And it’s supposed to be that way.

Now, I’m not saying that I want it to be that way.

I don’t. I want the value of money to be consistent.

What I am saying, though, is that the system is designed to have inflation (currency devaluation) built into it.

The system is designed so that your U.S. dollars are worth less and less as time goes on.

But don’t just take my word for it. The Mises Institute made the following statement in an article that they had published in the Wall Street Journal:

The Fed today assures us that economic growth depends on inflation, which ultimately destroys the dollar’s purchasing power. The Fed has gone to great lengths to institutionalize inflation, in fact.

Americans are being told that inflation is necessary for a healthy economy.

But we know that just isn’t true. Again from the Mises Institute:

Yet history has shown that economic growth and a rising standard of living hardly depend on the existence of the Fed. Indeed, in the second half of the nineteenth century—when the nation had no central bank at all—America experienced an incredibly dynamic period of rising standards of living. Notably, this period was also characterized by deflation—something the Fed hates—which helped drive down the prices of goods and services, thus increasing real wages. 

Yes, U.S. history proves that inflation isn’t necessary for Americans to have a vibrant and prosperous economy.

And the truth of the matter is that inflation ends up killing off a vibrant and prosperous economy, slowly at first and, then, at a faster and faster pace.

There is one thing that historically always helps to improve an economy…

… and that thing is having a stable currency.

Unfortunately, we don’t have that here in the U.S. In fact, not a single Western country uses a stable, non-inflationary currency. All of them use unbacked, intrinsically worthless currencies.

But you don’t have to give away your purchasing power to institutionalized depreciation of your money.

In fact, you can set up your own personal economy using inflation-resistant stores of wealth to insulate yourself from the designed devaluation of the dollar.

How?

By diversifying into precious metals now.