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HOUSING: Prices hurting economy

| October 20, 2021 1:00 AM

Have you noticed the skyrocketing cost of rents and home prices? Rents in the area are up about $500 to $700 per month. Home prices have literally doubled, which pushes mortgage payments up more than $1,000 per month. Where did that extra money come from? Did everyone get a big raise, or what?

With only a minor in economics, I feel inadequate to give a full analysis but can imagine that the average worker must try to make more income, and/or cut their spending. In economics, we typically label that extra spending “discretionary spending.”

Could it be that the extra $500 to $1,000 per month that now goes for rent, or high mortgage payments, was previously spent at J.C. Penney, Kmart, Shopko, Sears, IHOP, The Outback steak house, Pier One, The Golden Corral, and a long list of local merchants who are gone?

It is not hard to guess that virtually none of that extra $500 to $1,000 per month ends up in the local economy. But isn’t it wonderful that the homes and apartment buildings are worth more, which means more property tax revenues?

Oops…there goes another $200 per month.

“Why did you pay $450,000 for that tract home?” “OH, IT’S…JUST…GOING TO GO UP!”

Could it be that as rents and home prices go up, up, up, the local economy goes down, down, down?

ROBERT DUFFIELD

Coeur d’Alene

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