5 ms·

Not really the Baby Boomers fault, but bad decisions made over the past 30/40 years are coming to fruit. Right now only a hand full of cities have 'real' jobs a

by jmclnx 9y ago

Not really the Baby Boomers fault, but bad decisions made over the past 30/40 years are coming to fruit. Right now only a hand full of cities have 'real' jobs and those cities have strict zoning laws (and NIMBY). So young people in the US, if they want to make any real $ need to move to those cities, otherwise all they will have are 'mcjobs'. I would not be surprised to see slums like the type seen in many poor countries start to occur near these cities in 20 or so years.

humanrebar 9y ago
> Not really the Baby Boomers fault... Eh... when the housing market corrected in 2008, it could have settled at a lower baseline but it was politically urgent to make sure that baby boomers could still on their houses as profitable investments.
- mjevans 9y ago
  So in other words it didn't correct (actually it really didn't in the parts of the west coast (of the US) with 'real jobs')
randomdata 9y ago
> if they want to make any real $ need to move to those cities This is the crux of the matter. The market always seeks equilibrium. If there is an income advantage in one location, people will move there, driving up costs in the process, until the point that there is no longer an advantage. Certain cities have held an advantage in earning ability for quite some time and the market is attempting to correct that disparity by increasing costs. People complain about how expensive these homes are, but in reality they are the cheap ones! The low dollar value homes out in the middle of nowhere are truly the expensive ones. Like you mention, the profitability in a high cost city outpaces the profitability elsewhere, even after you consider that your costs are lower. If the lower paying job, but also the lower expenditures, provided a higher income there would be absolutely no hesitation to take a 'mcjob'. The question is: At what point does the 'mcjob', where housing is low cost, actually provide – after accounting for costs – a higher income and become the more desirable type of work? That is when housing in the high-priced cities will stabilize, as there is no longer the financial advantage to live there. Until then, expect price to continue upward.
- Gibbon1 9y ago
  The income advantage is due to concentrated wealth and income inequality. What you see is a few industries and the people that run them receive the bulk of the excess capital. That results in a firehose of money pointed at a couple of cities where the golden industries leaders all live.
  - randomdata 9y ago
    But the fact remains that the income advantage only remains an advantage so long as the costs remain low. The expense side of the equation can only rise so high before income becomes zero, or even a negative value. NYC and SV are able to thrive because housing is still cheap, but the market is quickly correcting that fact. At some point, if the trend continues indefinitely, one's income in these cities will leave them with a lower income than someone working at a minimum wage job in a low-cost area. If the income advantage shifts to these other locations, people will follow.
    - Gibbon1 9y ago
      Trouble is you need a critical mass of social, technical, and cultural infrastructure. It's not like it doesn't happen. But unless a company with deep pockets is behind it, whatever one tries to plant there will die. Point is there are a lot of frictions. And big inequality is a big one.
      - randomdata 9y ago
        That is really a non-issue. We don't have to invent new places. Low-cost communities already exist and are abundantly found. Incomes just tend to be lower, thus they are less appealing. But that can quickly change. Imagine, 1. Community A provides revenues of $30,000 per year, and expenses of $20,000 per year, with an income of $10,000 per year. 2. Community B provides revenues of $100,000 per year, and expenses of $50,000 per year, with an income of $50,000 per year. Naturally Community B is going to be the more appealing option. But if housing costs (among others, but housing is the topic at hand) keep increasing in Community B, at some point you might find your expenses at $90,000 per year, leaving an income of $10,000 per year. Exactly the same as in Community A. At this point there is no income advantage in either location. Assuming you live in Community B, until your income is reduced to that of Community A it is worthwhile for you to spend more and more of your revenues on housing to keep a good thing going. Even if your expenses rise to $80,000/year in order to stay in Community B, it is still a good deal. Your income is still double that of Community A. But the market always seeks equilibrium. While corrections take time, eventually your Community B income will have to fall to the same level as Community A to eliminate the income advantage. As we discussed earlier, as long as one place has an advantage, people will move there and compete for resources (i.e. drive up costs) in the process until the advantage no longer exists. And this is why certain markets are seeing incredible housing price growth. The market is correcting such that your your six figure developer salary in San Francisco provides the same income as working at McDonalds in Detroit.
Mz 9y ago
An awful lot of US housing policy and general expectations are rooted in what happened when the soldiers came home from WW2. Modern suburbs were born of it. Then, in the 69s and 70s, massive amounts of affordable housing, like SROs, was straight up torn down because Boomers came from unprecedented wealth and mostly did not need cheap dives just starting out. I think they kind of can be largely blamed, but probably not for the reasons most people would think of.
kevinburke 9y ago
If you show up to City Council or Board of Supervisors meetings, most of the NIMBY's are in fact Baby Boomers. So I do think they share some of the blame; at least in California they've more or less pulled the economic opportunity door up behind them.
crdoconnor 9y ago
"Not really the Baby Boomers fault" No shit. This article is the 1% dodging pitchforks.
masklinn 9y ago
> those cities have strict zoning laws (and NIMBY) Strict zoning laws is not an issue, shit zoning laws is, especially exclusive ones (though I have no idea what zoning laws the bay uses). Zoning laws are just a way to define what can be mixed in areas, the US have notoriously garbage ones (often exclusive, overly complex and hyperlocal) but it doesn't have to be that way: http://urbankchoze.blogspot.be/2014/04/japanese-zoning.html http://urbankchoze.blogspot.be/2014/04/japanese-zoning.html
ghaff 9y ago
>Right now only a hand full of cities have 'real' jobs That's a pretty broad brush. The world really doesn't revolve around a few coastal US cities.

by jmclnx 9y ago

humanrebar 9y ago

> Not really the Baby Boomers fault... Eh... when the housing market corrected in 2008, it could have settled at a lower baseline but it was politically urgent to make sure that baby boomers could still on their houses as profitable investments.

mjevans 9y ago
So in other words it didn't correct (actually it really didn't in the parts of the west coast (of the US) with 'real jobs')

randomdata 9y ago

> if they want to make any real $ need to move to those cities This is the crux of the matter. The market always seeks equilibrium. If there is an income advantage in one location, people will move there, driving up costs in the process, until the point that there is no longer an advantage. Certain cities have held an advantage in earning ability for quite some time and the market is attempting to correct that disparity by increasing costs. People complain about how expensive these homes are, but in reality they are the cheap ones! The low dollar value homes out in the middle of nowhere are truly the expensive ones. Like you mention, the profitability in a high cost city outpaces the profitability elsewhere, even after you consider that your costs are lower. If the lower paying job, but also the lower expenditures, provided a higher income there would be absolutely no hesitation to take a 'mcjob'. The question is: At what point does the 'mcjob', where housing is low cost, actually provide – after accounting for costs – a higher income and become the more desirable type of work? That is when housing in the high-priced cities will stabilize, as there is no longer the financial advantage to live there. Until then, expect price to continue upward.

Gibbon1 9y ago
The income advantage is due to concentrated wealth and income inequality. What you see is a few industries and the people that run them receive the bulk of the excess capital. That results in a firehose of money pointed at a couple of cities where the golden industries leaders all live.
- randomdata 9y ago
  But the fact remains that the income advantage only remains an advantage so long as the costs remain low. The expense side of the equation can only rise so high before income becomes zero, or even a negative value. NYC and SV are able to thrive because housing is still cheap, but the market is quickly correcting that fact. At some point, if the trend continues indefinitely, one's income in these cities will leave them with a lower income than someone working at a minimum wage job in a low-cost area. If the income advantage shifts to these other locations, people will follow.
  - Gibbon1 9y ago
    Trouble is you need a critical mass of social, technical, and cultural infrastructure. It's not like it doesn't happen. But unless a company with deep pockets is behind it, whatever one tries to plant there will die. Point is there are a lot of frictions. And big inequality is a big one.
    - randomdata 9y ago
      That is really a non-issue. We don't have to invent new places. Low-cost communities already exist and are abundantly found. Incomes just tend to be lower, thus they are less appealing. But that can quickly change. Imagine, 1. Community A provides revenues of $30,000 per year, and expenses of $20,000 per year, with an income of $10,000 per year. 2. Community B provides revenues of $100,000 per year, and expenses of $50,000 per year, with an income of $50,000 per year. Naturally Community B is going to be the more appealing option. But if housing costs (among others, but housing is the topic at hand) keep increasing in Community B, at some point you might find your expenses at $90,000 per year, leaving an income of $10,000 per year. Exactly the same as in Community A. At this point there is no income advantage in either location. Assuming you live in Community B, until your income is reduced to that of Community A it is worthwhile for you to spend more and more of your revenues on housing to keep a good thing going. Even if your expenses rise to $80,000/year in order to stay in Community B, it is still a good deal. Your income is still double that of Community A. But the market always seeks equilibrium. While corrections take time, eventually your Community B income will have to fall to the same level as Community A to eliminate the income advantage. As we discussed earlier, as long as one place has an advantage, people will move there and compete for resources (i.e. drive up costs) in the process until the advantage no longer exists. And this is why certain markets are seeing incredible housing price growth. The market is correcting such that your your six figure developer salary in San Francisco provides the same income as working at McDonalds in Detroit.

Mz 9y ago

An awful lot of US housing policy and general expectations are rooted in what happened when the soldiers came home from WW2. Modern suburbs were born of it. Then, in the 69s and 70s, massive amounts of affordable housing, like SROs, was straight up torn down because Boomers came from unprecedented wealth and mostly did not need cheap dives just starting out. I think they kind of can be largely blamed, but probably not for the reasons most people would think of.

kevinburke 9y ago

If you show up to City Council or Board of Supervisors meetings, most of the NIMBY's are in fact Baby Boomers. So I do think they share some of the blame; at least in California they've more or less pulled the economic opportunity door up behind them.

crdoconnor 9y ago

"Not really the Baby Boomers fault" No shit. This article is the 1% dodging pitchforks.

masklinn 9y ago

> those cities have strict zoning laws (and NIMBY) Strict zoning laws is not an issue, shit zoning laws is, especially exclusive ones (though I have no idea what zoning laws the bay uses). Zoning laws are just a way to define what can be mixed in areas, the US have notoriously garbage ones (often exclusive, overly complex and hyperlocal) but it doesn't have to be that way: http://urbankchoze.blogspot.be/2014/04/japanese-zoning.html http://urbankchoze.blogspot.be/2014/04/japanese-zoning.html

ghaff 9y ago

>Right now only a hand full of cities have 'real' jobs That's a pretty broad brush. The world really doesn't revolve around a few coastal US cities.