We reached that level finally. The straw man of a housing price issue in Grand Forks (and North Dakota for that matter)pushed us all into the merry old land of Oz. The article in the Grand Forks Herald (September 21, 2014 “A price problem?) is the latest effort in a litany of faulty economic reasoning.
There are several issues to tackle when discussing housing prices and they contribute to my issues with this whole discussion. Prior to dealing with any data issues let’s get to the point I make time and time again. Price is not the problem. If you believe there is a problem price is only a symptom, and you need to look further to find the cause.
This is what is so frustrating though. If you believe there is a problem you should want to find the root cause to fix it. Focusing so much attention on price is a distraction. What are the larger issues that need attention?
First, there is the question of the appropriate data to examine to answer this question. Second, there is a need to examine related variables, and fortunately economic theory will be a good guide. For example, home prices in Grand Forks are up 11% over last year’s level. Seems like a large amount right? Except when you find out personal income in Grand Forks us up 10.5% according to the latest data.
Third, you need to ask why is this story constantly resurfacing. I think it is part of the larger inequality debate going on at the macro level and inspired in part by Piketty’s book. The problem here is that it seems to be a bit of a manufactured crisis.
Fourth, as always, politics seem to come into play and that is never helpful. This is closely tied to the local fiscal policy too, and that needs to be discussed. Seems to be pretty clear to me what the week holds.