Profile picture for the_country_hick

Inflation inflicting pain, wages fail to keep pace with price hikes: lower house prices coming?

As people spend more on necessities this will cause their house buying money to shrink. Will this not further hurt the housing market and add more downward pressure to prices?

Inflation inflicting pain, as wages fail to keep pace with price hikes

"Inflation is back, with higher prices for food and fuel hammering American consumers, and this time it really hurts.

In the past three months, consumer prices have been rising at a 5.7 percent annual rate while average weekly wages have barely budged, increasing at an annual rate of only 1.3 percent.

And the particular prices that are rising are for products that people encounter most frequently in their daily lives and have the least flexibility to avoid. "
  • April 05 2011 - US
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Answers (4)

Profile picture for Connie Klemme
Every extra dollar spent on food and fuel takes that dollar away from buying a house or anything else

the anything else is far beyond real estate,  things people cut...cable tv, vacations, dining out shopping, movies, etc. -vicious cycle.
  • April 07 2011
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Profile picture for the_country_hick
If you are making $10,000 a month or more it does not matter.

If you are making $2,000 or less a month that extra $150 a month expense can make a huge difference in what is able to be spent on housing (or anything else).

Had I bought a house a few years ago at $1.00 a gallon gas going to $4 a gallon would remove about $40 a week from my wallet just for the gas used driving to work. Food has had a similar affect on my wallet. Not everyone lives 2 miles from work or can use public transportation you know.

For some people that is pocket change. For most people $160 more a month for fuel is a lot of real money. It could even be enough to remove the possibility of saving for the future.

Every extra dollar spent on food and fuel takes that dollar away from buying a house or anything else. It has the potential to hurt the lower income worker. It also has the potential to take the average workers affordable payment for a house to a lower amount. You can pay more to eat and drive to work but that takes money away from other things including house monthly payments.
  • April 05 2011
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Profile picture for wetdawgs
Dog food (our favorite variety) went up 18% from January 15 to March 25 2011.  Yikes!
  • April 05 2011
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Profile picture for Blue Nile
Well, I check the Bureau of Labor & Statistics website, and I still see no CPI data for March yet.

And I already provided the chart up through February:

From bls.gov (Bureau of Labor and Statistics); the Annual inflation rate by month in the Consumer Price Index for the average of all Urban areas of the U.S.: (CPI-U); using Year over Year differences by month:



web address for image legibility:
http://photos2.zillow.com/is/image/i0/i6/i1882/IS1j8akb574qm5f.jpg

And enlarged for the recent trend:



Web address:
http://photos3.zillow.com/is/image/i0/i6/i1883/ISeue4esckkcyr.jpg

So, about 2% annual recently.

And without including housing:




Web address to read text:
http://photos3.zillow.com/is/image/i0/i6/i1983/IS1j9hcteggrhr7.jpg

And using the U.S. government's Inflation Calculator on the Bureau of Labor and Statistic's website...

From 1997 to 2011, the amount $1000 could buy now requires $1378.87.  That is 14 years; so 2.32% annual inflation.

So, I still don't see what the "issue" is.  To me, it just looks like sensationalism to get people to "buy" believing that prices will not come back down.

Really, who cares if beef, and copper, and gasoline, and butter prices are up?  They are still "very cheep" compared to actual production/labor costs.
  • April 05 2011
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