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People are going to be in for a shock when it becomes normal to spend 70% of your gross income on housing (ownership). The amount of things people value these d

People are going to be in for a shock when it becomes normal to spend 70% of your gross income on housing (ownership). The amount of things people value these days other than living in an "important" city with jobs is declining. House in a nice neighborhood with good schools, near transportation, cell phone, broadband, Netflix account, food, healthcare. Everything else is "disposable," pun intended.

lukeschlather 9y ago
It would be interesting to look at land value vs. labor requirements to build an additional floor. In the absence of regulations limiting building height, I think 70% is unlikely to become the norm. Just physically it seems likely that you could add 1000 square feet on top of a building for something that works out to less than 10 years worth of full-time labor. Assuming you amortize that over a 30 year mortgage, that's well under 50%. I could see a future in which land use regulations drive up the cost of housing to 70% of income. Also a future in which people work half the number of hours they do today and spend 70% of their income on housing, which is less of a nightmare scenario. There is a point where an additional floor becomes too expensive for the math to ever work out, but it seems to me the population of the Earth would have to more than triple for it to become as bad as you suggest.
user5994461 9y ago
It's already common to spend around 50% after taxes. 70% is unlikely considering you still have to pay utilities, bills and food on top. That would leave nothing at the end of the month. P.S. You'll note that expenses can be a massive percentage of "lower" rents. For instance, a studio in a small city can be $500 a month, as much as the car expenses you need to go to work.
anonymoushn 9y ago
First we'll have to have our net income be at least 70% of our gross income...

lukeschlather 9y ago

It would be interesting to look at land value vs. labor requirements to build an additional floor. In the absence of regulations limiting building height, I think 70% is unlikely to become the norm. Just physically it seems likely that you could add 1000 square feet on top of a building for something that works out to less than 10 years worth of full-time labor. Assuming you amortize that over a 30 year mortgage, that's well under 50%. I could see a future in which land use regulations drive up the cost of housing to 70% of income. Also a future in which people work half the number of hours they do today and spend 70% of their income on housing, which is less of a nightmare scenario. There is a point where an additional floor becomes too expensive for the math to ever work out, but it seems to me the population of the Earth would have to more than triple for it to become as bad as you suggest.

user5994461 9y ago

It's already common to spend around 50% after taxes. 70% is unlikely considering you still have to pay utilities, bills and food on top. That would leave nothing at the end of the month. P.S. You'll note that expenses can be a massive percentage of "lower" rents. For instance, a studio in a small city can be $500 a month, as much as the car expenses you need to go to work.

anonymoushn 9y ago

First we'll have to have our net income be at least 70% of our gross income...