16 ms·

The Middle Class Can't Afford to Live in Cities Anymore

174 points by dvdhnt 10y ago

fbreduc 10y ago
then don't live in cities?
- rch 10y ago
  The job market is slower to redistribute, so that creates tension. It'll probably balance eventually, but it's valid news until it does.
- legodt 10y ago
  Where are we supposed to work then?
  - ghaff 10y ago
    Many, many jobs may be in urban areas but aren't actually in cities/urban cores. In fact, the movement of many professional jobs into cities is a relatively recent phenomenon. And while Silicon Valley and the greater NYC area are something of exceptions, you get out of the urban cores of somewhere like Boston/Cambridge and housing prices go down fairly quickly except for some particularly upscale towns.
    - eli_gottlieb 10y ago
      Somerville is expensive as hell, despite the fact that it used to be known as "Slumerville" and the housing stock hasn't improved one bit.
      - jghn 10y ago
        I think they're counting Somerville and similar locales as part of the urban core. By that metric though places like Mattapan should also be part of the urban core and are a lot more affordable.
        ghaff 10y ago
        Somerville is more accessible to both Cambridge and downtownish Boston where a lot of the professional jobs are than somewhere like Mattapan. But to your broader point, yes, there are certainly parts of the City of Boston that are considerably cheaper albeit less desirable from housing stock, safety, environment, etc. perspectives.
      - ghaff 10y ago
        Well, I certainly consider Somerville part of the urban cores of Boston being on the T (sort of) etc. And it's expensive as a result. But get out beyond 128 and, with the exception of some specific communities like Concord, housing prices drop considerably.
- nocoolnametom 10y ago
  What about those who provide social services to city-dwellers? Teachers, firefighters? It can be problematic to have the police tasked with protecting a city they don't even live in. Next time you see an SFPD officer with a free moment ask him/her what they think of the explosive growth in SoMa.
  - sandworm101 10y ago
    Lol sfpd with a free moment. The sfpd and sffd are some of the most busy. I remember reading last year that one sf fire truck rolled more than a thousand times over the previous twelve months.
  - superbaconman 10y ago
    If they can't afford to live where they work maybe they're under payed?
    - drdeadringer 10y ago
      I don't think that's a "maybe".
- mac01021 10y ago
  Maybe... But it would be pretty sad to grow up in a working class family and then be forced to move away from your hometown at the age of 30 because rent had grown faster than your ability to generate income.
  - danielweber 10y ago
    Of the various promises society has made to various people, when did "you always get to live in the city you were born in" end up on the list? There are trade-offs everywhere. The reason these crazy cycles continue is because people refuse to accept alternatives. If more people said "screw you guys, I'm leaving" to expensive cities, the cities would start to become cheaper. There are also cities that die off because the industry in them goes away. Are we going to force them to stay where they are so that they don't end up bidding up prices, driving kids born in Oakland out of Oakland?
Clubber 10y ago
Strange, I'm middle class and I live in a city. There are other cities than NYC, SF, LA and Boston.
- legodt 10y ago
  Yes, but those cities don't have the same job markets. Not everybody is a coder or an engineer with skills in high demand in non-metropolitan areas
  - mac01021 10y ago
    Serious question (because I'm ignorant): What sets of skills are in high demand in those 4 or 5 metropolises but nowhere else?
    - legodt 10y ago
      Anything in fashion, design, media, etc. Fields that have global distribution for creative work at large scale is what I'm familiar with and unless you are willing to work for a smaller company (I.e. not large consultancy or high profile work), you have to be in a major urban center.
      - ghaff 10y ago
        Not sure why people disagree with this answer. There are clearly creative fields where the top jobs and opportunities are indeed concentrated in a specific set of large cities. Probably more so than most other types of fields. More so than tech, for example, web/social/mobile in Silicon Valley notwithstanding. That said, other industries are geographically concentrated as well. If you have your heart set on working in the oil business, you probably shouldn't set your sights on living in Boston.
    - skewart 10y ago
      It's less about specific skills (e.g. writing or accounting) being in demand in those places and nowhere else, and more about what kinds of companies are demanding those skills and how much they're willing to pay. Like legodt mentioned in a sibling comment, the most influential and prestigious companies in a lot of industries are pretty concentrated in a handful of big cities. It's not just that different industries have their hubs - media, design, finance in NYC, entertainment in LA, tech in SF. A whole ecosystem of supporting firms grows around these companies. So the most influential and prestigious law, accounting, and consulting firms tend to cluster in these cities too. There also are a lot of people who don't necessarily want to spend their entire lives in, say, NYC but think it will be a good career move to get a prestigious name on their resume before going somewhere else. At this point I think there's kind of a chicken and egg situation where a lot of ambitious, talented people flock to major cities because firms are there, and firms stay planted in these cities because so many talented, ambitious people are flocking there.
cddotdotslash 10y ago
This article fails to mention that the middle class can't afford to live in the "nicest parts" of cities, but many cities have other areas as well. Take NYC for example. Sure, if you want to live in the Chelsea or West Village neighborhoods in Manhattan, it's going to cost you. But there are tons of available houses in Queens, Brooklyn, and the Bronx that are plenty affordable. The other day I saw a house for sale in a decent part of Queens for $240k - definitely affordable for middle class. Unfortunately, though, the most desirable areas of the densest part of the city is being reserved for poor and upper class, which I think is the point of the article.
- 1_2__3 10y ago
  Link to that Queens listing? Or one like it? Not that I don't believe you but... I kind of don't believe you.
  - curun1r 10y ago
    There's no reason to disbelieve him when you can disbelieve the price. It's probably some agent pricing the listing below the seller's floor with the hope of generating lots of interest and a bidding war. Listing prices are pretty useless. Better to look at the prices homes actually sell for.
  - cm2012 10y ago
    I've lived in Queens for 25 years. A house is minimum 400k, more often 500k in the towns furthest from Manhattan (Floral Park, Douglaston, Far Rockaway). Anything closer is 600-1 mil.
  - nommm-nommm 10y ago
    Quick search for recently sold houses http://www.zillow.com/homedetails/11730-170th-St-Jamaica-NY-11434/32189780_zpid/ http://www.zillow.com/homedetails/11730-170th-St-Jamaica-NY-... http://www.zillow.com/homedetails/332-Beach-89th-St-Rockaway-Beach-NY-11693/32225419_zpid/ http://www.zillow.com/homedetails/332-Beach-89th-St-Rockaway... http://www.zillow.com/homedetails/17349-103rd-Rd-Jamaica-NY-11433/32140260_zpid/ http://www.zillow.com/homedetails/17349-103rd-Rd-Jamaica-NY-...
two2two 10y ago
This article mentions "hot cities" including Austin, which not too long ago was just another small eclectic city with steady growth. Once it grew large enough and provided the ingredients to hold it's own, industry wise, against other "hot cities" it became what it is today. Austin was just a little weird city in Texas when I grew up in Dallas, but now it's up there with the big boys. What this tells me is there are many Austin like cities out there waiting to be discovered and grow in a similar way. I believe, in large part, Austin's recent growth and success is attributed to the very problems presented in this article. As long as the economy keeps pushing in this direction, the more of these smaller cities will grow to compete.
- jimlawruk 10y ago
  I hope are right in that other cities become more competitive. More companies will need to take the plunge and move to the more affordable cities.
- Eric_WVGG 10y ago
  ”What’s the next [favorite hip city]?” is a cliche for a reason.
- Glyptodon 10y ago
  I'd like to think this. Fingers crossed Tucson is next, but not optimistic.
- larsiusprime 10y ago
  Until those cities inevitably become too expensive, too, just like Austin did. (I desperately hope I'm eventually proved wrong) "I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, 'I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.' Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege." -- Henry George
  - 10y ago
nkoren 10y ago
I'm a founder bootstrapping a startup, so at the moment both my income and my assets are very well short of middle class. Nonetheless, I can afford to live in London Zone 2 -- a ten-minute walk away from Tower Bridge -- because I'm happy to live communally with a handful of excellent flatmates. There's nothing wrong with this arrangement, and I think it's an arrangement that will only grow in the future. I'm seeing the property development and and rental industries evolve to accommodate it. This is good. That's not to defend the way that most of the property industry has become simply a vehicle for financial speculation, which is to the benefit of nobody who isn't at the apex of the financial services industry.
- skybrian 10y ago
  Yes, there's a lot you can do to cut costs when single (or without kids) that won't work for a family.
- bgeeek 10y ago
  The poor and unemployed are also being priced out of London with the rise in rent and gentrification. It's a bit sad when people are priced out of the area that they grew up in. I do appreciate that this problem is not confined to London, but in some ways London is a more extreme city than anywhere else in the UK (extreme wealth and poverty side by side). This rise in rents has also made it difficult for generation/s to ever consider buying while living in London. Young people typically move to London and then when they want to settle down, they leave. As you get older the idea of communal living soon loses its appeal.
  - ghaff 10y ago
    >Young people typically move to London and then when they want to settle down, they leave. This has long been a dynamic in many large cities though and only in part because of housing costs. Of the significant number of classmates in my MBA program who moved to Manhattan for jobs after graduation, only a handful remained in the city once they got married and had children. Many of those could have remained in Manhattan if they made the inevitable compromises--and there will always be trade-offs city vs. suburbs--but didn't choose to do so.
muninn_ 10y ago
The middle class can afford to live in cities, just not in a 3500 sqft house with a 2 car garage and a boat, and with the best school district and certainly not in NYC, SF, Boston, DC, etc. There are plenty of places to live in America. You have to adjust your standard of living and your expectations according to your income and desires.
- contracantor 10y ago
  If you're going to make a statement like that I'm going to need an example of what you consider middle class, what you consider affordable and what a reasonable square footage is for a family of 4.
  - ryanSrich 10y ago
    Middle class in a small to mid size city is $200k in annual household income. A family of three should have no problem in 1200sqft. Two kids is excessive, but if you do have two kids you'd be fine in 1500sqft.
    - pradn 10y ago
      Two kids is excessive? By what measure? Human populations need a birth rate of 2.1 to even stay at the same level.
      - mac01021 10y ago
        At the moment, though, we are probably better off shrinking our numbers.
        rayiner 10y ago
        Not in the US. We're facing a huge impending labor shortage. (And immigration just externalizes the problem of accommodating raising children from US policy to India or China policy.)
Ericson2314 10y ago
The cities skew Democratic, but I wonder if increasing urban migration will create more Democrats. Then the Democratic Party has more of an incentive to build more nice-city. ...Might have worked 8 years ago.
- Eric_WVGG 10y ago
  This is absolutely the case, there are loads of books about the phenomenon. And every mid-sized city has some chamber of commerce that is trying to crack the code on how to be "the next Austin/Portland/whichever-hip-city". Hell, I've got friends in Virginia and Maine who are working on this. They're doing it for fiscal/influential reasons, not political, but yes, this trend would benefit the Democrats, except that you can't attract hipsters with policy.
  - analog31 10y ago
    I live in such a city. We are trying to make the city more desirable to economic growth. One factor is that people will tend to locate their businesses where they want to live, so it makes sense to add amenities associated with upper middle class lifestyle, such as good public schools and bike infrastructure. But there are some things that we don't control. Probably the most important engine of growth in the entire state is located in our city -- the university -- but the city doesn't operate it, and we have no voice in state government thanks to partisan gerrymandering.
aaronchall 10y ago
The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction) and if we'd stop subsidizing people who can't even marginally afford to live there. I figure if we'd eliminate the latter, we'd take care of a lot of the former. In NYC, we have recently seen rents reduce due to new housing supply coming on the market.
- 21 10y ago
  I'm not so sure. In London there's a lot of construction going around, but at the same time a lot of buying for investment purposes, properties which are not even rented afterwards.
- colordrops 10y ago
  In Beijing they dealt with this problem by disallowing foreign investment in real estate except for personal use. Seems like a huge chunk of properties in L.A. are being purchased as investments by Chinese and other foreign entities, without ever physically visiting the house, which is at least as much of a problem as those you list.
- kafkaesq 10y ago
  The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction). "Howdy, neighbor! I'm gonna build 70'-high sludge containment tower on these vacant lots I just bought next to your property. Got a problem with that?" Of course you would. Everyone is a NIMBYist, to dome degree or another. It's just a question of degree.
tabeth 10y ago
I agree with the article. However, people should be able and willing to make the appropriate sacrifices commensurate with their future expectations. If someone is 22 and is making 35k a year, and can keep all of their expenses at 15k per year (it's easy to find places in Dorchester 850 rent all inclusive for a room plus 150 food and 3k year entertainment), save 5k per year for retirement and emergencies and finally save 10k for a house they'll be have 100k when they're 32. With 100k in boston that's 25 percent on a 400k house in a suburb or parts of Dorchester. Worst case, move somewhere cheaper and that can be as much as 50% down. Keep in mind this assumes no salary increases and no spouse. It's very doable, but people want to live a lavish life. Can you live a lavish life in Boston for 35k? Nope.
- paulddraper 10y ago
  $5/day for food...you're a very long way from lavish.
- Glyptodon 10y ago
  Your numbers are entirely unreasonable unless they're after tax. Maybe in Arizona and not saving 5k for retirement. But even there $150/week for food is like Ramen, Beans, and Rice, you're not accounting for transportation or medical costs, etc. You can live on 35k for sure, but saving 10k of it every year is pretty optimistic.
  - tabeth 10y ago
    35k after tax is about 28k [1]. What's wrong with rice and beans and occasional meat? An average 22 year old doesn't need medical insurance. Given that many people don't save at all this would be pretty good. Also the plan I described already had leeway for unexpected expenses. 12k housing and food 3k entertainment 10k house 5k saving I agree that it would be a boring life. That being said, this is using 35k and not the 50k minimum being defined as middle class, per the article. 1. http://taxformcalculator.com/state_tax/massachusetts/35000.html http://taxformcalculator.com/state_tax/massachusetts/35000.h...
    - 10y ago
jamespitts 10y ago
The reasons behind the housing supply crisis are many, and the situation can seem intractable. I have been assisting architect Eugene Lew with a comprehensive and audacious solution to this problem. If you are interested in reading a draft version of his white paper, DM me on https://twitter.com/jamiepitts https://twitter.com/jamiepitts. The concept is tailor-made for the west districts of SF but can be applied to any city. It combines finance, architecture, land-creation, community involvement, and propagation, and the output is a nonsubsidized 3BDR, 2BA home for households with incomes between $100,000 and $150,000. There are 15 homes in a six story elevator building, and the goal is to build hundreds of them across SF.
- ilamont 10y ago
  If 300 units are built it will help 4500 middle-income households. That's great, but how many middle-income households will still be unable to find affordable housing, therefore keeping market-rate rents sky-high? I think the solution is not trying to cram more units into a small area. Manhattan has done that for decades, and it's still not enough to balance supply and demand. Rather, it's to encourage business development and residential living elsewhere, either nearby or far away. We're seeing that with Oakland and northern NJ but there are many more opportunities to expand this to other areas of the country. A lot of credit goes to southern states which encouraged (through tax breaks and other incentives) heavy industry to set up shop in smaller cities and rural areas. What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle?
  - twblalock 10y ago
    > What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle? It's a chicken and egg problem: companies don't want to invest in cities where there aren't a lot of qualified workers, and workers don't want to move to cities where there aren't a lot of jobs. Furthermore, the most competitive workers tend to move to the cities you mentioned, so companies located in those cities can stay where they are and enjoy having the best workers come to them. Consider the Sacramento area: it's about 2 hours from Silicon Valley by car, with significantly cheaper housing, and plenty of well-connected people because Sacramento is the state capital. Why doesn't that area have a booming tech economy? Because the most competitive tech workers from Sacramento have already moved to the Bay Area. Bay Area companies don't need to open offices in Sacramento to attract those workers.
chmaynard 10y ago
The first sentence is obviously false -- the well-known landscape architect Frederick Olmsted was born in 1822, so he could not have designed Highland Park in the 1700s. Not a good way to start the article.
paulddraper 10y ago
Huge cities...good riddance. I live nearish to Salt Lake City (whose metro pop. is less than a quarter of Boston's), have tons of software job opportunities, have a 17-20 min commute, and bought a 2k sqft house on 0.19 acres for less than 200k. Big cities are crowded. They have their advantages, but even if they weren't overpriced, I'd probably still prefer my elbow room.
- RUG3Y 10y ago
  Do you mind sharing what area you live in specifically? I've been seeing a lot of software jobs in SLC and I'm curious.
  - paulddraper 10y ago
    Sure. I live on the border of West Valley City and Taylorsville, near I-215 (https://www.google.com/maps/@40.6779915,-111.96276,15z https://www.google.com/maps/@40.6779915,-111.96276,15z). Utah's always had a strong software industry, dating back to WordPerfect and Novell. Lots of jobs are in SLC of course, but the rest of Utah Valley has even more, e.g. Lehi and Thanksgiving Point. Known as "Silicon Slopes" (https://en.wikipedia.org/wiki/Silicon_Slopes https://en.wikipedia.org/wiki/Silicon_Slopes) Great place for families or outdoorsy people.
    - RUG3Y 10y ago
      Thanks for responding, I appreciate.
- vectorjohn 10y ago
  Well good for you, but you don't speak for everyone.
  - vanderreeah 10y ago
    Isn't that implicit in every comment in an online forum?
  - 10y ago
rmason 10y ago
I think this article is coastal centric. If you don't want to live on either coast the cities are affordable by the middle class. Certain neighborhoods might not be. I see millennials just a few years out of college buying houses in Detroit for example. Just not downtown or in Corktown. Similarly I've got friends with houses in Chicago, Cleveland and Minneapolis. I've got upper middle class friends who can't afford to buy a house anywhere in Silicon Valley.
- WillEngler 10y ago
  Yes yes yes. I seemed to me that the article defined "hot" cities as ones with expensive housing, which prevented it from looking at hot cities with less housing problems. Pittsburgh and Columbus come to mind as two cities with growing creative/professional industries where the middle class can afford to live. (Although housing in the epicenter of these cities' tech boomlets can be absurd compared to the rest of the city. This new construction in Pittsburgh's East End - http://www.zillow.com/b/bakery-living-pittsburgh-pa-63CwP3/ http://www.zillow.com/b/bakery-living-pittsburgh-pa-63CwP3/ - charges the same for 1 bed that I paid for a 3-bedroom townhouse in a solid neighborhood ~1 mile away 2 years ago.)
alexnewman 10y ago
THe problem is we still believe america has a middle class. It really doesn't. Even the people I know with household incomes in the bay exceeding 250k a year aren't really saving any money. Easy access to debt has confused access to capital with savings in america. I'm just glad I'm rich
- moron4hire 10y ago
  Bullshit. There is no place in the United States where $250K means you're living paycheck to paycheck. You know people who don't know how to manage their money.
  - cobookman 10y ago
    People are just spending too much of their money and lack fiscal disaplin. 250k/year is more than enough for the bay area. But you'll not be able to live like a king.
  - wott 10y ago
    On this forum, there are plenty of people who are totally out of touch with reality when it comes to salaries, doubled by the fact they they believe they are so above everyone else that they should earn 10 times average Joe's salary and live like kings, hence everything else is a failure. Very recently, there were the 'unworthy' Japanese salaries. They were 50%-80% higher that what I am used to see around me for equivalent qualifications, but no, the general opinion here was that they were outrageously low (without consideration for any other factor). I also remember one guy saying he was earning 150k$/year and that leaving in France was with that salary OK but barely so. Truth is that's 3 to 4 times what most mid-career engineer earn, and their salary allows them to have an easy life. That's 6 times the median salary, which means that half of the population can live 6 years or more with a single year of his salary. That's 8 times the minimum wage, and lots of people live with it, some without any problem, some with difficulties, depending on the family situation, the location and the spending habits, but they all make do. Finally that's 20 times the amount of welfare, which is enough to live a poor and simple life. So the guy could have lived, say 10 years with a single year of his income, and yet he was whining. My jaw regularly falls when I read money/salary related posts on this forum.
laughfactory 10y ago
This article reflects my wife and my experience: just a month ago we left San Diego for a small town north of Salt Lake City. We make over six-figures and San Diego held only poor economic prospects for us. We'd have a very difficult time buying a decent home (2000 sq ft, good neighborhood, reasonable commute) for a price which wouldn't jeopardize other essentials like retirement savings, kids college savings, savings in general, and debt payoff and avoidance. When a small box in Clairemont (neighborhood of San Diego) cost $500-600K you know things are out-of-wack. Things are more reasonably priced here, but probably still higher than their intrinsic value. However, at least we can afford them without mortgaging our (and our kids') future. The truth is that this isn't a situation the government has shown any ability to solve for. There are a myriad of reasons, but ultimately my feeling is that federal housing policy is deeply flawed. Inevitably, by necessity, the solution to this mess will come from all those in the middle class who've been forced to find another way. Our voting with our feet will shape the next ten to twenty years in ways which are hard to predict. One likely outcome is that big cities will not be able to maintain their current housing price structures. A tipping point will come. You can't build a viable local economy only on the top and bottom of the income spectrum. You need a robust middle class. Otherwise the absence of the middle class creates a vacuum, and conditions for an implosion into that vacuum.
- BipolarElsa 10y ago
  Not really. There's nothing stopping the capitalist class from reverting back to, say, de facto feudalism. Don't think that the working-class always has a way forward. We do regress, and we have been regressing.
- mhneu 10y ago
  It's not just housing policy that's gone wrong, it's transit policy. We haven't built good public transit in our cities, and now that cars are filling all available roads, even houses far away from cities are too expensive for how long commutes are. We wish we had a train system in many cities that allowed the middle class to live 40-60 minutes away from their jobs. Ultimately however the main problem is wealth inequality. If median income had increased with GDP since 1980, instead of all gains going to the 0.01%, you would be able to afford to live in the suburbs of San Diego.
Girlang 10y ago
There are plenty of Middle Class families living in Cities. But they have to look like "poor people" to the Government and work off the books.
1024core 10y ago
I live in SF, and am flabbergasted at the number of 1- or 2- floor single-family homes. A city the size of SF (46 sq mi) and population (850K+ and growing) simply can't afford so many SFHs. I was in Barcelona recently (yay NIPS!) and Barcelona is smaller than SF (36 sq mi) and has nearly twice the population! Everywhere you see are 6-floor buildings, with the bottom reserved for shops and people living above them. It is so walkable, with great (and reliable) public transportation. We kept thinking: why can't SF be more like BCN?
- cies 10y ago
  > why can't SF be more like BCN? 1. Earthquakes. 2. City planning policies over the years (or lack thereof).
  - ohwello 10y ago
    We know how to safe six-story buildings in SF are a solved prblem, and developers have no problem following building codes when zoning allows them to build 6 stories.
    - seanp2k2 10y ago
      The problem is that most of the inhabitable stuff in SF is being rented out at >$2500 per studio in those old Victorian homes, and it's not exactly easy to just evict everyone for a few years to build higher density housing. A lot of stuff is also under rent control, and since no new buildings are under RC (and all the new construction I've seen is explicitly luxury), tearing old things down to build means tearing down "affordable" (relatively) housing to build luxury junk. It'd sure be nice to be able to clear a few blocks at a time and start over with fresh buildings, but it's more a matter of changing wheels on a bus while it's full of people driving down the street.
      - ohwello 10y ago
        These issues can be addressed, but in any case they don't seem related to restrictions that limit construction to a certain number of stories.
ctulek 10y ago
I have 2 questions: (1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? * (2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse? * I exclude the gentrification problem which is really affecting the lives of poor and old people as their mobility is far worse than middle class, and most of the time they won't be able to buy the new houses and apartments anyway.
- ohwello 10y ago
  Cities are expensive for a reason - they are not just a Veblen good like a Mercedes AMG, mainly valuable due to scarcity. Cities are more like doctors - they are extremely useful, and we would all be better off if there were enough to go around. Throughout US history there have been economically booming areas where people could move to become more prosperous. The majority of good new jobs are in cities. The fact that we are not building enough housing and transit infrastructure so people can actually live somewhere while working those jobs is a problem for national employment and economic growth. The landlords end up taking home a great share of the economic benefit instead of the workers as the price for scarce housing is bid up. This is also the root cause of gentrification. This leads to megacommutes as people occupy housing further and further from the booming economy. That's clearly the case in the Bay Area, where many cities have built more units of office space than housing, guaranteeing a rough commute for the people who work in those buildings.
- closeparen 10y ago
  >(1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? * It would be useful, for many reasons, to have a greater proportion of people living in cities. So, it's useful to challenge your implicit assumption that doing so ought to be a luxury. (2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse? a) The commute is awful because the Bay Area is overpopulated relative to its transit infrastructure, not some natural limit. Or, conversely, the Bay Area's transit infrastructure is under-provisioned relative to its population. Faster, more extensive transit infrastructure can drastically improve the commute at both current and higher population levels. b) We also underutilize the land close to commute destinations, so everyone (but the residents of single-family homes near downtown) has to travel further than they should. Pedestrians don't need much in the way of infrastructure (just sidewalks, which most of SF already has). Building more residential skyscrapers in the midst of business districts lets more people walk to work in a short time. Building more mid-rises (~6 stories) where there are currently single-family homes gets more people into commute distances that are reasonably quick on a bicycle, motor scooter, or public transit. Density of residents also promotes density of stores, so that i.e. everyone can be a short walk from their grocery store, rather than needing a car to shop, and the reclaimed land previously dedicated to parking can house more people.
noobermin 10y ago
>In Fort Hill in 2016, meanwhile, initiatives to build new affordable housing to keep those long-time residents in the neighborhood were met with resistance by some homeowners fearing an influx of low-cost housing would negatively affect their home values. Someone enlighten me, why does the government have to listen to the wealthy NIMBY's over the longtime residents? Are certain voices more important than others? We live in a egalitarian democracy, no?
jorblumesea 10y ago
I really think a big part of this is the QE/low interest rates the Fed used to dig us out of the hole. Everything seems inflated, from stocks to housing prices, because borrowing is so cheap and you can over-leverage yourself quite easily. Anecdotal story: I live in a decent but not super nice part of Seattle and we had a house a few blocks away sell for 750k, which seems insane as everything else in the area goes for 400-500k and historically has basically been the ghetto. I could not imagine trying to get into this market, I would be living 6 miles down the road. Will be interesting to see how prices are impacted once the fed raises rates. Borrowing will be more expensive and should have a depressing effect on home prices.
- user5994461 10y ago
  Agree. It's the trivial consequences of interest rates. People will always pay most of their money in rents, everyone needs a place to live [and wants it to be nice]. Low interest rates are allowing people to take 20-40 years mortgages, for huge total sums of money. If rates were higher, the duration and sum would be forced to be lower. It's basic maths.
SmallBets 10y ago
While pricing people out of "hot cities" sucks, there is an upside to up and coming cities being built up. Even Austin and Denver mentioned in the story were not on par with 'out of reach' cities a decade ago. There will continue to be waves of this as we see places like Nashville, NC cities, SLC, Charleston etc building up now. This relocation is a form of spreading the wealth and based on geography the optimistic view is some of the benefit will go to areas we saw most left behind and divided this election (south, midwest). In the long term that could be a boon to middle class outside megacities and more opportunity to escape the mega city bubbles/echo chambers
cozzyd 10y ago
That's one nice thing about Chicago, you can live in a high-rise downtown for a fraction of what it would cost in in SF, NYC, or Boston.
amyjess 10y ago
Good. I don't want to live in a city. I dislike density and can't stand not having lots and lots of space. I love the look and feel of sprawl, and I want more of it... you couldn't pay me to live in an urban environment. Crowded cities feel like something out of the past to me. Like, my great-grandparents lived in a crowded city when they first came to this country, and every subsequent generation has moved farther and farther out into the burbs. Moving to a city would feel like moving to 1901 to me.
sh_tinh_hair 10y ago
In order to afford a decent newer house in the suburban beltway (DC) you need to spend 500k+. That's $2200 a month. Personal property tax on a 3 year old SUV and a new sports car is $2700 yearly. Car insurance is > $300 monthly. Car payments >= $1900 month. (college + personal) Loan repayment = $400 monthly. Food and gas + energy >= $600 monthly. State and federal tax + ss take about 45% of gross. Upper middle class == ~ 170k a year. Welcome to northern virginia.
- freshyill 10y ago
  We live in Silver Spring, and between our two kids, we pay ~$2,000/month for private middle school and preschool. Our older one has one more year at his middle school (started there when we lived in an area with pretty crappy public schools), and the younger one finishes preschool this summer. We moved and now pay ~$1,000/month more for a roughly equal house, but better public schools and a better neighborhood. A shorter commute (40 minutes on a good day, but usually 50-60) is a minor side benefit. I'm really looking forward to the end of paying for school because we can finally get a much-needed new car. Once they're both done, it'll be the equivalent of getting a pretty decent raise.
- closeparen 10y ago
  Pretty sure you could have 2 brand new GTIs for less than $1900/mo. Holy crap, that's a lot of car.
  - freshyill 10y ago
    D.C. is definitely a very expensive area. But luxury cars aren't dramatically more expensive here. It is a poor example to cite when discussing the cost of living. On the other hand, It's possible they could be normal cars and very short loans.
- snowwrestler 10y ago
  The car numbers jump out at me. The rest sounds familiar but you must have some nice cars to run up those car tax, loan, and insurance bills. For comparison, a couple of 5 year old Japanese cars run me less than $100/month insurance and around $600/year in property tax in NoVA. No payments because we saved up and paid cash, but if there were, they'd be well under $1,900/month. > State and federal tax + ss take about 45% of gross. Even after the mortgage deduction? Have you calculated your effective tax rate? Mine is around 30%, including sales taxes.
bootload 10y ago
Just read this article, "The retirement wave changing Sydney" about the effects of boomers retiring in Sydney and ^holding the crease^ in the housing market. [0] Interesting effects (economy slows as displaced younger workers have to travel further). [0] http://www.smh.com.au/nsw/the-retirement-wave-changing-sydney-20161229-gtjj01.html http://www.smh.com.au/nsw/the-retirement-wave-changing-sydne...
ensiferum 10y ago
ad blocker blocker blocks reading the article.
rukittenme 10y ago
The people who write these articles almost always live in California or New York City. I just have to laugh. Move to any major Texan city, any major Floridian city -- really any city in "The South" -- and the situation is much different. There are tons of great properties for unsubsidized, lower class purchasers. Seriously, zillow downtown Nashville TN. You can find great deals for the poorest amongst us. People in (sorry to say) liberal cities have such warped, contradictory views of housing that it blows my mind. "We need more transport, we need more subsidies, we need X!" No, what you need to do is to let go. Let housing take care of itself. All of these schemes have contributed and will continue to contribute to the eviction of the middle and working class tenants.
- abalashov 10y ago
  That may be, but first-class cities concentrate a lot more of the most desirable economic opportunities. Living in the Silicon Valley and SF area would be completely irrational on all grounds, except for the fact that you're within driving distance of 900 of the world's top 1000 technology employers (figurative example, I wouldn't have an exact count). Similar arguments can be made for entertainment, music and film in LA, and for finance, fashion and media in NYC. Yeah, Charlotte, Tampa, Atlanta, Indianapolis, Salt Lake City, and Phoenix are a lot cheaper. But that's in large part because they're not SF or NYC. :) First-class cities can literally provide 10x-20x the value for a lot of folks. I have no dog in this fight; I lived in Atlanta for ten years and now live in a small-medium college town. Being self-employed for a long time now, I have no intention of moving to SF or NYC. But I can certainly see why someone would. That said, the US has a unique advantage here compared to most of the world, "developed" and otherwise; it is very decentralised economically. In the grand scheme of things here, life in Charlotte just isn't _that_ different from NYC. In many other economies, a sizable chunk of the GDP is parked in the capital and maybe one or two other top-tier cities, and the difference between life there and life anywhere else—anywhere else at all, even another fairly large city—is considerable. In my native USSR—and as I understand it, its descendant Russia—there a huge chasm between "Moscow" and "not Moscow", even though there are dozens of other sizable cities in Russia. The Soviet economy was exceptionally geographically centralised, so makes for a very extreme example, but I think you get my point.
jgalt212 10y ago
Once and if we ever get away from zero interest rates this problem will solve itself.
vidoc 10y ago
Speaking of housing in the city, an amazing display of the situation, in SF at least, is the number of people who share housing. I'd actually love to have stats!
bdcravens 10y ago
I live just north of Houston in a 1600 sq ft, corner lot, large porch, 2 car detached garage, 3 bedroom house. Currently valued at $130,000.
- nunez 10y ago
  Houston's is a great place to work too, especially if you're into oil and gas!
brequinn 10y ago
Worth pointing out that the article defines middle class as an annual household income of $50-125K. That's higher than I would've expected on the high end. Also, they rightfully call out too-restrictive zoning as being responsible for a lot of the shortage.
DoodleBuggy 10y ago
If you ever want to see evidence of just how thick of a bubble the tech world lives in, and how disconnected it is from the rest of the population and economy, read comments on any article with "middle class" in the title. Good grief.
dragonwriter 10y ago
The article talks about "the middle class", but the people it talks about (teachers, etc.) are wage laborers with respectable pay, not independent business owners deriving income by applying labor to their own capital -- that is, they are middle income working class, not middle class.
badwulf 10y ago
> Landlords are able to charge more, and long-time rental residents get displaced when they can’t afford the new prices. So just because you rent a place somewhere for a couple of years you are entitled to be able to stay there forever? even if everything around you changes? What if I have more money, and I want to move in as well, but can't because you are still renting the place you are entitled to for cheap? > That’s what’s happening in Fort Hill, a traditionally African American neighborhood that is whitening every year as black residents who’ve rented there for decades are replaced by high-turnover college students willing to pay the ever-higher market rates for apartments. I find it disturbing that this article throws in race despite this being a purely economic situation.

174 points by dvdhnt 10y ago

fbreduc 10y ago

then don't live in cities?

rch 10y ago
The job market is slower to redistribute, so that creates tension. It'll probably balance eventually, but it's valid news until it does.
legodt 10y ago
Where are we supposed to work then?
- ghaff 10y ago
  Many, many jobs may be in urban areas but aren't actually in cities/urban cores. In fact, the movement of many professional jobs into cities is a relatively recent phenomenon. And while Silicon Valley and the greater NYC area are something of exceptions, you get out of the urban cores of somewhere like Boston/Cambridge and housing prices go down fairly quickly except for some particularly upscale towns.
  - eli_gottlieb 10y ago
    Somerville is expensive as hell, despite the fact that it used to be known as "Slumerville" and the housing stock hasn't improved one bit.
    - jghn 10y ago
      I think they're counting Somerville and similar locales as part of the urban core. By that metric though places like Mattapan should also be part of the urban core and are a lot more affordable.
      - ghaff 10y ago
        Somerville is more accessible to both Cambridge and downtownish Boston where a lot of the professional jobs are than somewhere like Mattapan. But to your broader point, yes, there are certainly parts of the City of Boston that are considerably cheaper albeit less desirable from housing stock, safety, environment, etc. perspectives.
    - ghaff 10y ago
      Well, I certainly consider Somerville part of the urban cores of Boston being on the T (sort of) etc. And it's expensive as a result. But get out beyond 128 and, with the exception of some specific communities like Concord, housing prices drop considerably.
nocoolnametom 10y ago
What about those who provide social services to city-dwellers? Teachers, firefighters? It can be problematic to have the police tasked with protecting a city they don't even live in. Next time you see an SFPD officer with a free moment ask him/her what they think of the explosive growth in SoMa.
- sandworm101 10y ago
  Lol sfpd with a free moment. The sfpd and sffd are some of the most busy. I remember reading last year that one sf fire truck rolled more than a thousand times over the previous twelve months.
- superbaconman 10y ago
  If they can't afford to live where they work maybe they're under payed?
  - drdeadringer 10y ago
    I don't think that's a "maybe".
mac01021 10y ago
Maybe... But it would be pretty sad to grow up in a working class family and then be forced to move away from your hometown at the age of 30 because rent had grown faster than your ability to generate income.
- danielweber 10y ago
  Of the various promises society has made to various people, when did "you always get to live in the city you were born in" end up on the list? There are trade-offs everywhere. The reason these crazy cycles continue is because people refuse to accept alternatives. If more people said "screw you guys, I'm leaving" to expensive cities, the cities would start to become cheaper. There are also cities that die off because the industry in them goes away. Are we going to force them to stay where they are so that they don't end up bidding up prices, driving kids born in Oakland out of Oakland?

Clubber 10y ago

Strange, I'm middle class and I live in a city. There are other cities than NYC, SF, LA and Boston.

legodt 10y ago
Yes, but those cities don't have the same job markets. Not everybody is a coder or an engineer with skills in high demand in non-metropolitan areas
- mac01021 10y ago
  Serious question (because I'm ignorant): What sets of skills are in high demand in those 4 or 5 metropolises but nowhere else?
  - legodt 10y ago
    Anything in fashion, design, media, etc. Fields that have global distribution for creative work at large scale is what I'm familiar with and unless you are willing to work for a smaller company (I.e. not large consultancy or high profile work), you have to be in a major urban center.
    - ghaff 10y ago
      Not sure why people disagree with this answer. There are clearly creative fields where the top jobs and opportunities are indeed concentrated in a specific set of large cities. Probably more so than most other types of fields. More so than tech, for example, web/social/mobile in Silicon Valley notwithstanding. That said, other industries are geographically concentrated as well. If you have your heart set on working in the oil business, you probably shouldn't set your sights on living in Boston.
  - skewart 10y ago
    It's less about specific skills (e.g. writing or accounting) being in demand in those places and nowhere else, and more about what kinds of companies are demanding those skills and how much they're willing to pay. Like legodt mentioned in a sibling comment, the most influential and prestigious companies in a lot of industries are pretty concentrated in a handful of big cities. It's not just that different industries have their hubs - media, design, finance in NYC, entertainment in LA, tech in SF. A whole ecosystem of supporting firms grows around these companies. So the most influential and prestigious law, accounting, and consulting firms tend to cluster in these cities too. There also are a lot of people who don't necessarily want to spend their entire lives in, say, NYC but think it will be a good career move to get a prestigious name on their resume before going somewhere else. At this point I think there's kind of a chicken and egg situation where a lot of ambitious, talented people flock to major cities because firms are there, and firms stay planted in these cities because so many talented, ambitious people are flocking there.

cddotdotslash 10y ago

This article fails to mention that the middle class can't afford to live in the "nicest parts" of cities, but many cities have other areas as well. Take NYC for example. Sure, if you want to live in the Chelsea or West Village neighborhoods in Manhattan, it's going to cost you. But there are tons of available houses in Queens, Brooklyn, and the Bronx that are plenty affordable. The other day I saw a house for sale in a decent part of Queens for $240k - definitely affordable for middle class. Unfortunately, though, the most desirable areas of the densest part of the city is being reserved for poor and upper class, which I think is the point of the article.

1_2__3 10y ago
Link to that Queens listing? Or one like it? Not that I don't believe you but... I kind of don't believe you.
- curun1r 10y ago
  There's no reason to disbelieve him when you can disbelieve the price. It's probably some agent pricing the listing below the seller's floor with the hope of generating lots of interest and a bidding war. Listing prices are pretty useless. Better to look at the prices homes actually sell for.
- cm2012 10y ago
  I've lived in Queens for 25 years. A house is minimum 400k, more often 500k in the towns furthest from Manhattan (Floral Park, Douglaston, Far Rockaway). Anything closer is 600-1 mil.
- nommm-nommm 10y ago
  Quick search for recently sold houses http://www.zillow.com/homedetails/11730-170th-St-Jamaica-NY-11434/32189780_zpid/ http://www.zillow.com/homedetails/11730-170th-St-Jamaica-NY-... http://www.zillow.com/homedetails/332-Beach-89th-St-Rockaway-Beach-NY-11693/32225419_zpid/ http://www.zillow.com/homedetails/332-Beach-89th-St-Rockaway... http://www.zillow.com/homedetails/17349-103rd-Rd-Jamaica-NY-11433/32140260_zpid/ http://www.zillow.com/homedetails/17349-103rd-Rd-Jamaica-NY-...

two2two 10y ago

This article mentions "hot cities" including Austin, which not too long ago was just another small eclectic city with steady growth. Once it grew large enough and provided the ingredients to hold it's own, industry wise, against other "hot cities" it became what it is today. Austin was just a little weird city in Texas when I grew up in Dallas, but now it's up there with the big boys. What this tells me is there are many Austin like cities out there waiting to be discovered and grow in a similar way. I believe, in large part, Austin's recent growth and success is attributed to the very problems presented in this article. As long as the economy keeps pushing in this direction, the more of these smaller cities will grow to compete.

jimlawruk 10y ago
I hope are right in that other cities become more competitive. More companies will need to take the plunge and move to the more affordable cities.
Eric_WVGG 10y ago
”What’s the next [favorite hip city]?” is a cliche for a reason.
Glyptodon 10y ago
I'd like to think this. Fingers crossed Tucson is next, but not optimistic.
larsiusprime 10y ago
Until those cities inevitably become too expensive, too, just like Austin did. (I desperately hope I'm eventually proved wrong) "I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, 'I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.' Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege." -- Henry George
- 10y ago

nkoren 10y ago

I'm a founder bootstrapping a startup, so at the moment both my income and my assets are very well short of middle class. Nonetheless, I can afford to live in London Zone 2 -- a ten-minute walk away from Tower Bridge -- because I'm happy to live communally with a handful of excellent flatmates. There's nothing wrong with this arrangement, and I think it's an arrangement that will only grow in the future. I'm seeing the property development and and rental industries evolve to accommodate it. This is good. That's not to defend the way that most of the property industry has become simply a vehicle for financial speculation, which is to the benefit of nobody who isn't at the apex of the financial services industry.

skybrian 10y ago
Yes, there's a lot you can do to cut costs when single (or without kids) that won't work for a family.
bgeeek 10y ago
The poor and unemployed are also being priced out of London with the rise in rent and gentrification. It's a bit sad when people are priced out of the area that they grew up in. I do appreciate that this problem is not confined to London, but in some ways London is a more extreme city than anywhere else in the UK (extreme wealth and poverty side by side). This rise in rents has also made it difficult for generation/s to ever consider buying while living in London. Young people typically move to London and then when they want to settle down, they leave. As you get older the idea of communal living soon loses its appeal.
- ghaff 10y ago
  >Young people typically move to London and then when they want to settle down, they leave. This has long been a dynamic in many large cities though and only in part because of housing costs. Of the significant number of classmates in my MBA program who moved to Manhattan for jobs after graduation, only a handful remained in the city once they got married and had children. Many of those could have remained in Manhattan if they made the inevitable compromises--and there will always be trade-offs city vs. suburbs--but didn't choose to do so.

muninn_ 10y ago

The middle class can afford to live in cities, just not in a 3500 sqft house with a 2 car garage and a boat, and with the best school district and certainly not in NYC, SF, Boston, DC, etc. There are plenty of places to live in America. You have to adjust your standard of living and your expectations according to your income and desires.

contracantor 10y ago
If you're going to make a statement like that I'm going to need an example of what you consider middle class, what you consider affordable and what a reasonable square footage is for a family of 4.
- ryanSrich 10y ago
  Middle class in a small to mid size city is $200k in annual household income. A family of three should have no problem in 1200sqft. Two kids is excessive, but if you do have two kids you'd be fine in 1500sqft.
  - pradn 10y ago
    Two kids is excessive? By what measure? Human populations need a birth rate of 2.1 to even stay at the same level.
    - mac01021 10y ago
      At the moment, though, we are probably better off shrinking our numbers.
      - rayiner 10y ago
        Not in the US. We're facing a huge impending labor shortage. (And immigration just externalizes the problem of accommodating raising children from US policy to India or China policy.)

Ericson2314 10y ago

The cities skew Democratic, but I wonder if increasing urban migration will create more Democrats. Then the Democratic Party has more of an incentive to build more nice-city. ...Might have worked 8 years ago.

Eric_WVGG 10y ago
This is absolutely the case, there are loads of books about the phenomenon. And every mid-sized city has some chamber of commerce that is trying to crack the code on how to be "the next Austin/Portland/whichever-hip-city". Hell, I've got friends in Virginia and Maine who are working on this. They're doing it for fiscal/influential reasons, not political, but yes, this trend would benefit the Democrats, except that you can't attract hipsters with policy.
- analog31 10y ago
  I live in such a city. We are trying to make the city more desirable to economic growth. One factor is that people will tend to locate their businesses where they want to live, so it makes sense to add amenities associated with upper middle class lifestyle, such as good public schools and bike infrastructure. But there are some things that we don't control. Probably the most important engine of growth in the entire state is located in our city -- the university -- but the city doesn't operate it, and we have no voice in state government thanks to partisan gerrymandering.

aaronchall 10y ago

The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction) and if we'd stop subsidizing people who can't even marginally afford to live there. I figure if we'd eliminate the latter, we'd take care of a lot of the former. In NYC, we have recently seen rents reduce due to new housing supply coming on the market.

21 10y ago
I'm not so sure. In London there's a lot of construction going around, but at the same time a lot of buying for investment purposes, properties which are not even rented afterwards.
colordrops 10y ago
In Beijing they dealt with this problem by disallowing foreign investment in real estate except for personal use. Seems like a huge chunk of properties in L.A. are being purchased as investments by Chinese and other foreign entities, without ever physically visiting the house, which is at least as much of a problem as those you list.
kafkaesq 10y ago
The problem could be lessened if NIMBY's would stop trying to dictate how property they don't own should be used (that is, we allow construction). "Howdy, neighbor! I'm gonna build 70'-high sludge containment tower on these vacant lots I just bought next to your property. Got a problem with that?" Of course you would. Everyone is a NIMBYist, to dome degree or another. It's just a question of degree.

tabeth 10y ago

I agree with the article. However, people should be able and willing to make the appropriate sacrifices commensurate with their future expectations. If someone is 22 and is making 35k a year, and can keep all of their expenses at 15k per year (it's easy to find places in Dorchester 850 rent all inclusive for a room plus 150 food and 3k year entertainment), save 5k per year for retirement and emergencies and finally save 10k for a house they'll be have 100k when they're 32. With 100k in boston that's 25 percent on a 400k house in a suburb or parts of Dorchester. Worst case, move somewhere cheaper and that can be as much as 50% down. Keep in mind this assumes no salary increases and no spouse. It's very doable, but people want to live a lavish life. Can you live a lavish life in Boston for 35k? Nope.

paulddraper 10y ago
$5/day for food...you're a very long way from lavish.
Glyptodon 10y ago
Your numbers are entirely unreasonable unless they're after tax. Maybe in Arizona and not saving 5k for retirement. But even there $150/week for food is like Ramen, Beans, and Rice, you're not accounting for transportation or medical costs, etc. You can live on 35k for sure, but saving 10k of it every year is pretty optimistic.
- tabeth 10y ago
  35k after tax is about 28k [1]. What's wrong with rice and beans and occasional meat? An average 22 year old doesn't need medical insurance. Given that many people don't save at all this would be pretty good. Also the plan I described already had leeway for unexpected expenses. 12k housing and food 3k entertainment 10k house 5k saving I agree that it would be a boring life. That being said, this is using 35k and not the 50k minimum being defined as middle class, per the article. 1. http://taxformcalculator.com/state_tax/massachusetts/35000.html http://taxformcalculator.com/state_tax/massachusetts/35000.h...
  - 10y ago

jamespitts 10y ago

The reasons behind the housing supply crisis are many, and the situation can seem intractable. I have been assisting architect Eugene Lew with a comprehensive and audacious solution to this problem. If you are interested in reading a draft version of his white paper, DM me on https://twitter.com/jamiepitts https://twitter.com/jamiepitts. The concept is tailor-made for the west districts of SF but can be applied to any city. It combines finance, architecture, land-creation, community involvement, and propagation, and the output is a nonsubsidized 3BDR, 2BA home for households with incomes between $100,000 and $150,000. There are 15 homes in a six story elevator building, and the goal is to build hundreds of them across SF.

ilamont 10y ago
If 300 units are built it will help 4500 middle-income households. That's great, but how many middle-income households will still be unable to find affordable housing, therefore keeping market-rate rents sky-high? I think the solution is not trying to cram more units into a small area. Manhattan has done that for decades, and it's still not enough to balance supply and demand. Rather, it's to encourage business development and residential living elsewhere, either nearby or far away. We're seeing that with Oakland and northern NJ but there are many more opportunities to expand this to other areas of the country. A lot of credit goes to southern states which encouraged (through tax breaks and other incentives) heavy industry to set up shop in smaller cities and rural areas. What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle?
- twblalock 10y ago
  > What will it take Google, GE, or Microsoft to move a big chunk of their respective operations away from San Francisco, Boston, and Seattle? It's a chicken and egg problem: companies don't want to invest in cities where there aren't a lot of qualified workers, and workers don't want to move to cities where there aren't a lot of jobs. Furthermore, the most competitive workers tend to move to the cities you mentioned, so companies located in those cities can stay where they are and enjoy having the best workers come to them. Consider the Sacramento area: it's about 2 hours from Silicon Valley by car, with significantly cheaper housing, and plenty of well-connected people because Sacramento is the state capital. Why doesn't that area have a booming tech economy? Because the most competitive tech workers from Sacramento have already moved to the Bay Area. Bay Area companies don't need to open offices in Sacramento to attract those workers.

chmaynard 10y ago

The first sentence is obviously false -- the well-known landscape architect Frederick Olmsted was born in 1822, so he could not have designed Highland Park in the 1700s. Not a good way to start the article.

paulddraper 10y ago

Huge cities...good riddance. I live nearish to Salt Lake City (whose metro pop. is less than a quarter of Boston's), have tons of software job opportunities, have a 17-20 min commute, and bought a 2k sqft house on 0.19 acres for less than 200k. Big cities are crowded. They have their advantages, but even if they weren't overpriced, I'd probably still prefer my elbow room.

RUG3Y 10y ago
Do you mind sharing what area you live in specifically? I've been seeing a lot of software jobs in SLC and I'm curious.
- paulddraper 10y ago
  Sure. I live on the border of West Valley City and Taylorsville, near I-215 (https://www.google.com/maps/@40.6779915,-111.96276,15z https://www.google.com/maps/@40.6779915,-111.96276,15z). Utah's always had a strong software industry, dating back to WordPerfect and Novell. Lots of jobs are in SLC of course, but the rest of Utah Valley has even more, e.g. Lehi and Thanksgiving Point. Known as "Silicon Slopes" (https://en.wikipedia.org/wiki/Silicon_Slopes https://en.wikipedia.org/wiki/Silicon_Slopes) Great place for families or outdoorsy people.
  - RUG3Y 10y ago
    Thanks for responding, I appreciate.
vectorjohn 10y ago
Well good for you, but you don't speak for everyone.
- vanderreeah 10y ago
  Isn't that implicit in every comment in an online forum?
- 10y ago

rmason 10y ago

I think this article is coastal centric. If you don't want to live on either coast the cities are affordable by the middle class. Certain neighborhoods might not be. I see millennials just a few years out of college buying houses in Detroit for example. Just not downtown or in Corktown. Similarly I've got friends with houses in Chicago, Cleveland and Minneapolis. I've got upper middle class friends who can't afford to buy a house anywhere in Silicon Valley.

WillEngler 10y ago
Yes yes yes. I seemed to me that the article defined "hot" cities as ones with expensive housing, which prevented it from looking at hot cities with less housing problems. Pittsburgh and Columbus come to mind as two cities with growing creative/professional industries where the middle class can afford to live. (Although housing in the epicenter of these cities' tech boomlets can be absurd compared to the rest of the city. This new construction in Pittsburgh's East End - http://www.zillow.com/b/bakery-living-pittsburgh-pa-63CwP3/ http://www.zillow.com/b/bakery-living-pittsburgh-pa-63CwP3/ - charges the same for 1 bed that I paid for a 3-bedroom townhouse in a solid neighborhood ~1 mile away 2 years ago.)

alexnewman 10y ago

THe problem is we still believe america has a middle class. It really doesn't. Even the people I know with household incomes in the bay exceeding 250k a year aren't really saving any money. Easy access to debt has confused access to capital with savings in america. I'm just glad I'm rich

moron4hire 10y ago
Bullshit. There is no place in the United States where $250K means you're living paycheck to paycheck. You know people who don't know how to manage their money.
- cobookman 10y ago
  People are just spending too much of their money and lack fiscal disaplin. 250k/year is more than enough for the bay area. But you'll not be able to live like a king.
- wott 10y ago
  On this forum, there are plenty of people who are totally out of touch with reality when it comes to salaries, doubled by the fact they they believe they are so above everyone else that they should earn 10 times average Joe's salary and live like kings, hence everything else is a failure. Very recently, there were the 'unworthy' Japanese salaries. They were 50%-80% higher that what I am used to see around me for equivalent qualifications, but no, the general opinion here was that they were outrageously low (without consideration for any other factor). I also remember one guy saying he was earning 150k$/year and that leaving in France was with that salary OK but barely so. Truth is that's 3 to 4 times what most mid-career engineer earn, and their salary allows them to have an easy life. That's 6 times the median salary, which means that half of the population can live 6 years or more with a single year of his salary. That's 8 times the minimum wage, and lots of people live with it, some without any problem, some with difficulties, depending on the family situation, the location and the spending habits, but they all make do. Finally that's 20 times the amount of welfare, which is enough to live a poor and simple life. So the guy could have lived, say 10 years with a single year of his income, and yet he was whining. My jaw regularly falls when I read money/salary related posts on this forum.

laughfactory 10y ago

This article reflects my wife and my experience: just a month ago we left San Diego for a small town north of Salt Lake City. We make over six-figures and San Diego held only poor economic prospects for us. We'd have a very difficult time buying a decent home (2000 sq ft, good neighborhood, reasonable commute) for a price which wouldn't jeopardize other essentials like retirement savings, kids college savings, savings in general, and debt payoff and avoidance. When a small box in Clairemont (neighborhood of San Diego) cost $500-600K you know things are out-of-wack. Things are more reasonably priced here, but probably still higher than their intrinsic value. However, at least we can afford them without mortgaging our (and our kids') future. The truth is that this isn't a situation the government has shown any ability to solve for. There are a myriad of reasons, but ultimately my feeling is that federal housing policy is deeply flawed. Inevitably, by necessity, the solution to this mess will come from all those in the middle class who've been forced to find another way. Our voting with our feet will shape the next ten to twenty years in ways which are hard to predict. One likely outcome is that big cities will not be able to maintain their current housing price structures. A tipping point will come. You can't build a viable local economy only on the top and bottom of the income spectrum. You need a robust middle class. Otherwise the absence of the middle class creates a vacuum, and conditions for an implosion into that vacuum.

BipolarElsa 10y ago
Not really. There's nothing stopping the capitalist class from reverting back to, say, de facto feudalism. Don't think that the working-class always has a way forward. We do regress, and we have been regressing.
mhneu 10y ago
It's not just housing policy that's gone wrong, it's transit policy. We haven't built good public transit in our cities, and now that cars are filling all available roads, even houses far away from cities are too expensive for how long commutes are. We wish we had a train system in many cities that allowed the middle class to live 40-60 minutes away from their jobs. Ultimately however the main problem is wealth inequality. If median income had increased with GDP since 1980, instead of all gains going to the 0.01%, you would be able to afford to live in the suburbs of San Diego.

Girlang 10y ago

There are plenty of Middle Class families living in Cities. But they have to look like "poor people" to the Government and work off the books.

1024core 10y ago

I live in SF, and am flabbergasted at the number of 1- or 2- floor single-family homes. A city the size of SF (46 sq mi) and population (850K+ and growing) simply can't afford so many SFHs. I was in Barcelona recently (yay NIPS!) and Barcelona is smaller than SF (36 sq mi) and has nearly twice the population! Everywhere you see are 6-floor buildings, with the bottom reserved for shops and people living above them. It is so walkable, with great (and reliable) public transportation. We kept thinking: why can't SF be more like BCN?

cies 10y ago
> why can't SF be more like BCN? 1. Earthquakes. 2. City planning policies over the years (or lack thereof).
- ohwello 10y ago
  We know how to safe six-story buildings in SF are a solved prblem, and developers have no problem following building codes when zoning allows them to build 6 stories.
  - seanp2k2 10y ago
    The problem is that most of the inhabitable stuff in SF is being rented out at >$2500 per studio in those old Victorian homes, and it's not exactly easy to just evict everyone for a few years to build higher density housing. A lot of stuff is also under rent control, and since no new buildings are under RC (and all the new construction I've seen is explicitly luxury), tearing old things down to build means tearing down "affordable" (relatively) housing to build luxury junk. It'd sure be nice to be able to clear a few blocks at a time and start over with fresh buildings, but it's more a matter of changing wheels on a bus while it's full of people driving down the street.
    - ohwello 10y ago
      These issues can be addressed, but in any case they don't seem related to restrictions that limit construction to a certain number of stories.

ctulek 10y ago

I have 2 questions: (1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? * (2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse? * I exclude the gentrification problem which is really affecting the lives of poor and old people as their mobility is far worse than middle class, and most of the time they won't be able to buy the new houses and apartments anyway.

ohwello 10y ago
Cities are expensive for a reason - they are not just a Veblen good like a Mercedes AMG, mainly valuable due to scarcity. Cities are more like doctors - they are extremely useful, and we would all be better off if there were enough to go around. Throughout US history there have been economically booming areas where people could move to become more prosperous. The majority of good new jobs are in cities. The fact that we are not building enough housing and transit infrastructure so people can actually live somewhere while working those jobs is a problem for national employment and economic growth. The landlords end up taking home a great share of the economic benefit instead of the workers as the price for scarce housing is bid up. This is also the root cause of gentrification. This leads to megacommutes as people occupy housing further and further from the booming economy. That's clearly the case in the Bay Area, where many cities have built more units of office space than housing, guaranteeing a rough commute for the people who work in those buildings.
closeparen 10y ago
>(1) Do not such articles sound like "not everyone can afford a holiday in Hawai"? Or "all my friends have a Mercedes AMG but I don't"? What is the difference? * It would be useful, for many reasons, to have a greater proportion of people living in cities. So, it's useful to challenge your implicit assumption that doing so ought to be a luxury. (2) In Bay Area, the daily commute itself is an obvious sign of overpopulation. How does more housing not make it even worse? a) The commute is awful because the Bay Area is overpopulated relative to its transit infrastructure, not some natural limit. Or, conversely, the Bay Area's transit infrastructure is under-provisioned relative to its population. Faster, more extensive transit infrastructure can drastically improve the commute at both current and higher population levels. b) We also underutilize the land close to commute destinations, so everyone (but the residents of single-family homes near downtown) has to travel further than they should. Pedestrians don't need much in the way of infrastructure (just sidewalks, which most of SF already has). Building more residential skyscrapers in the midst of business districts lets more people walk to work in a short time. Building more mid-rises (~6 stories) where there are currently single-family homes gets more people into commute distances that are reasonably quick on a bicycle, motor scooter, or public transit. Density of residents also promotes density of stores, so that i.e. everyone can be a short walk from their grocery store, rather than needing a car to shop, and the reclaimed land previously dedicated to parking can house more people.

noobermin 10y ago

>In Fort Hill in 2016, meanwhile, initiatives to build new affordable housing to keep those long-time residents in the neighborhood were met with resistance by some homeowners fearing an influx of low-cost housing would negatively affect their home values. Someone enlighten me, why does the government have to listen to the wealthy NIMBY's over the longtime residents? Are certain voices more important than others? We live in a egalitarian democracy, no?

jorblumesea 10y ago

I really think a big part of this is the QE/low interest rates the Fed used to dig us out of the hole. Everything seems inflated, from stocks to housing prices, because borrowing is so cheap and you can over-leverage yourself quite easily. Anecdotal story: I live in a decent but not super nice part of Seattle and we had a house a few blocks away sell for 750k, which seems insane as everything else in the area goes for 400-500k and historically has basically been the ghetto. I could not imagine trying to get into this market, I would be living 6 miles down the road. Will be interesting to see how prices are impacted once the fed raises rates. Borrowing will be more expensive and should have a depressing effect on home prices.

user5994461 10y ago
Agree. It's the trivial consequences of interest rates. People will always pay most of their money in rents, everyone needs a place to live [and wants it to be nice]. Low interest rates are allowing people to take 20-40 years mortgages, for huge total sums of money. If rates were higher, the duration and sum would be forced to be lower. It's basic maths.

SmallBets 10y ago

While pricing people out of "hot cities" sucks, there is an upside to up and coming cities being built up. Even Austin and Denver mentioned in the story were not on par with 'out of reach' cities a decade ago. There will continue to be waves of this as we see places like Nashville, NC cities, SLC, Charleston etc building up now. This relocation is a form of spreading the wealth and based on geography the optimistic view is some of the benefit will go to areas we saw most left behind and divided this election (south, midwest). In the long term that could be a boon to middle class outside megacities and more opportunity to escape the mega city bubbles/echo chambers

cozzyd 10y ago

That's one nice thing about Chicago, you can live in a high-rise downtown for a fraction of what it would cost in in SF, NYC, or Boston.

amyjess 10y ago

Good. I don't want to live in a city. I dislike density and can't stand not having lots and lots of space. I love the look and feel of sprawl, and I want more of it... you couldn't pay me to live in an urban environment. Crowded cities feel like something out of the past to me. Like, my great-grandparents lived in a crowded city when they first came to this country, and every subsequent generation has moved farther and farther out into the burbs. Moving to a city would feel like moving to 1901 to me.

sh_tinh_hair 10y ago

In order to afford a decent newer house in the suburban beltway (DC) you need to spend 500k+. That's $2200 a month. Personal property tax on a 3 year old SUV and a new sports car is $2700 yearly. Car insurance is > $300 monthly. Car payments >= $1900 month. (college + personal) Loan repayment = $400 monthly. Food and gas + energy >= $600 monthly. State and federal tax + ss take about 45% of gross. Upper middle class == ~ 170k a year. Welcome to northern virginia.

freshyill 10y ago
We live in Silver Spring, and between our two kids, we pay ~$2,000/month for private middle school and preschool. Our older one has one more year at his middle school (started there when we lived in an area with pretty crappy public schools), and the younger one finishes preschool this summer. We moved and now pay ~$1,000/month more for a roughly equal house, but better public schools and a better neighborhood. A shorter commute (40 minutes on a good day, but usually 50-60) is a minor side benefit. I'm really looking forward to the end of paying for school because we can finally get a much-needed new car. Once they're both done, it'll be the equivalent of getting a pretty decent raise.
closeparen 10y ago
Pretty sure you could have 2 brand new GTIs for less than $1900/mo. Holy crap, that's a lot of car.
- freshyill 10y ago
  D.C. is definitely a very expensive area. But luxury cars aren't dramatically more expensive here. It is a poor example to cite when discussing the cost of living. On the other hand, It's possible they could be normal cars and very short loans.
snowwrestler 10y ago
The car numbers jump out at me. The rest sounds familiar but you must have some nice cars to run up those car tax, loan, and insurance bills. For comparison, a couple of 5 year old Japanese cars run me less than $100/month insurance and around $600/year in property tax in NoVA. No payments because we saved up and paid cash, but if there were, they'd be well under $1,900/month. > State and federal tax + ss take about 45% of gross. Even after the mortgage deduction? Have you calculated your effective tax rate? Mine is around 30%, including sales taxes.

bootload 10y ago

Just read this article, "The retirement wave changing Sydney" about the effects of boomers retiring in Sydney and ^holding the crease^ in the housing market. [0] Interesting effects (economy slows as displaced younger workers have to travel further). [0] http://www.smh.com.au/nsw/the-retirement-wave-changing-sydney-20161229-gtjj01.html http://www.smh.com.au/nsw/the-retirement-wave-changing-sydne...

ensiferum 10y ago

ad blocker blocker blocks reading the article.

rukittenme 10y ago

The people who write these articles almost always live in California or New York City. I just have to laugh. Move to any major Texan city, any major Floridian city -- really any city in "The South" -- and the situation is much different. There are tons of great properties for unsubsidized, lower class purchasers. Seriously, zillow downtown Nashville TN. You can find great deals for the poorest amongst us. People in (sorry to say) liberal cities have such warped, contradictory views of housing that it blows my mind. "We need more transport, we need more subsidies, we need X!" No, what you need to do is to let go. Let housing take care of itself. All of these schemes have contributed and will continue to contribute to the eviction of the middle and working class tenants.

abalashov 10y ago
That may be, but first-class cities concentrate a lot more of the most desirable economic opportunities. Living in the Silicon Valley and SF area would be completely irrational on all grounds, except for the fact that you're within driving distance of 900 of the world's top 1000 technology employers (figurative example, I wouldn't have an exact count). Similar arguments can be made for entertainment, music and film in LA, and for finance, fashion and media in NYC. Yeah, Charlotte, Tampa, Atlanta, Indianapolis, Salt Lake City, and Phoenix are a lot cheaper. But that's in large part because they're not SF or NYC. :) First-class cities can literally provide 10x-20x the value for a lot of folks. I have no dog in this fight; I lived in Atlanta for ten years and now live in a small-medium college town. Being self-employed for a long time now, I have no intention of moving to SF or NYC. But I can certainly see why someone would. That said, the US has a unique advantage here compared to most of the world, "developed" and otherwise; it is very decentralised economically. In the grand scheme of things here, life in Charlotte just isn't _that_ different from NYC. In many other economies, a sizable chunk of the GDP is parked in the capital and maybe one or two other top-tier cities, and the difference between life there and life anywhere else—anywhere else at all, even another fairly large city—is considerable. In my native USSR—and as I understand it, its descendant Russia—there a huge chasm between "Moscow" and "not Moscow", even though there are dozens of other sizable cities in Russia. The Soviet economy was exceptionally geographically centralised, so makes for a very extreme example, but I think you get my point.

jgalt212 10y ago

Once and if we ever get away from zero interest rates this problem will solve itself.

vidoc 10y ago

Speaking of housing in the city, an amazing display of the situation, in SF at least, is the number of people who share housing. I'd actually love to have stats!

bdcravens 10y ago

I live just north of Houston in a 1600 sq ft, corner lot, large porch, 2 car detached garage, 3 bedroom house. Currently valued at $130,000.

nunez 10y ago
Houston's is a great place to work too, especially if you're into oil and gas!

brequinn 10y ago

Worth pointing out that the article defines middle class as an annual household income of $50-125K. That's higher than I would've expected on the high end. Also, they rightfully call out too-restrictive zoning as being responsible for a lot of the shortage.

DoodleBuggy 10y ago

If you ever want to see evidence of just how thick of a bubble the tech world lives in, and how disconnected it is from the rest of the population and economy, read comments on any article with "middle class" in the title. Good grief.

dragonwriter 10y ago

The article talks about "the middle class", but the people it talks about (teachers, etc.) are wage laborers with respectable pay, not independent business owners deriving income by applying labor to their own capital -- that is, they are middle income working class, not middle class.

badwulf 10y ago

> Landlords are able to charge more, and long-time rental residents get displaced when they can’t afford the new prices. So just because you rent a place somewhere for a couple of years you are entitled to be able to stay there forever? even if everything around you changes? What if I have more money, and I want to move in as well, but can't because you are still renting the place you are entitled to for cheap? > That’s what’s happening in Fort Hill, a traditionally African American neighborhood that is whitening every year as black residents who’ve rented there for decades are replaced by high-turnover college students willing to pay the ever-higher market rates for apartments. I find it disturbing that this article throws in race despite this being a purely economic situation.