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Homes 'Earn' Minimum Wage or More in Almost Half the Nation's Largest Cities
- api 8y agoStrong indicator of a real estate bubble 2.0.
- Latteland 8y agoI think loans without income to back them up is an indicator of a bubble, but that's not what we have. But new jobs, esp. higher paying jobs are concentrated into narrow areas, like Seattle, SF, Austin. There are only so many houses, they are building more but except for apartments in Seattle there's no evidence of enough housing to meet demand. So I think housing prices should keep going up. If housing prices were going up in towns without people moving there, that would be a different issue, but that's the opposite of what is happening. Interest rates are going up slowly, that should slow housing price gains.
- hedora 8y agoIf salaries were rising enough to justify the increase in house prices, then we’d also see rents going up at the same rate. That’s not happening. Also, back when houses were $200K cheaper, and interest rates were almost 1% lower, you needed exotic mortgages (like adjustable rate) to make the cash flow associated with buying make sense (assuming you make apples to apples comparisons between owning and buying).
- woolvalley 8y agoThey were until about 2 years ago in SF. You can chart the price / rental increases based on the marginal high earner. You have 1 'tech' salary rent levels and 2 'tech' salary rent levels.
- tcbawo 8y agoThere are probably a lot of young, childless professionals who can afford it now (with little additional savings) and plan to eventually sell and buy a home elsewhere. They may not be adequately diversified or prepared to stay in their home once they have the added costs of family, child care, aging parents, etc. though.
- EADGBE 8y ago"They may not be adequately diversified or prepared to stay in their home once they have the added costs of family, child care, aging parents, etc. though." But that's said like any generation is ready for that. I certainly wasn't. But it really provided enough drive for me to attain a higher status (Not status for status sake, just financial comfort). There will be those that make it, and those that break it.
- taurath 8y agoAs said elsewhere in the thread, some towns that are losing people have their house prices going up.
- quickben 8y agoSpeculation is a substantial part of it. Especially as some places are in economies at the end of a very long expansion cycle.
- apo 8y agoIn other news, most workers can't afford the median-priced home: https://www.attomdata.com/news/market-trends/home-sales-prices/home-affordability-report-q1-2018/ https://www.attomdata.com/news/market-trends/home-sales-pric...
- usaar333 8y agoWould it be expected for the median worker to be able to afford a median priced home? Most people buy homes these days with 2 incomes and therefore homes are priced (square footage, amenities, land value) for such income levels.
- vertex-four 8y agoOf course, then you have a societal problem in that you’re tying people’s ability to keep a roof over their head to their ability to correctly find a partner they can be with for multiple decades.
- EADGBE 8y agoThere are a slew of people out there who can keep a healthy relationship with someone much easier than keep a job. I'd venture to say that most people find benefit in finding a life partner. Hence why they keep doing it (even multiple times). Of course, once someone finds someone else I suppose one should ceremoniously back down and stay home in order to conform to other norms.
- usaar333 8y agoYou aren't though. The majority of people do, so the median household (by definition in the majority group) fits that group of people. There's plenty of 1 or 2 bedrooms for those who don't find a life partner, end their relationship, etc.
- freshcatch_ 8y agoDe-commodify housing.
- AnimalMuppet 8y agoWouldn't that make housing more expensive, rather than less?
- Teeer 8y agoNo, since it would reduce demand from investors. Look at Japan- their housing is surprisingly affordable in Tokyo despite being in a major city. Due to flexible zoning laws, houses can be built almost anywhere. Houses are deprecating assets, like cars, rather than investments, like houses in America/Canada/etc.
- AnimalMuppet 8y agoSo, if I understand you correctly, we need to make houses not "commodities" in an investment sense. But doing so requires producing a lot more housing. That may mean making them "commodities" in a colloquial sense - that they're ordinary, pretty much interchangeable. (Most people, most of the time, don't care very much which brand of potato chips someone brought to the party...)
- hedora 8y agoThe easiest way to do that is to make prop 13 for primary residences only.
- seibelj 8y agoWhen you artificially limit the amount of housing via the government (zoning, height maximums, lot size requirements, etc.) you make housing worth more than it would in a free market. This is not surprising and is exactly the outcome desired by home owners in elite cities.
- st26 8y agoLet's be real- maybe there's a cabal of homeowners trying to jack up the value of their house with government policy for their own gain. Or, maybe the homeowners don't like skyscrapers and do like seeing the mountains, in fact perhaps that's why they moved there in the first place pre-boom.
- seibelj 8y agoIncreasing density is the natural impulse when an area becomes more desirable. So much of our society is tied to the area you live - jobs, public schools, access to services. It’s immoral to kick the ladder down behind you and make entry into the area impossible, not because the market decides it, but because existing inhabitants have co-opted the government through NIMBY policies. I can think of many pro-market initiatives that would alleviate society’s ailments. But allowing more, denser housing to be built is one of the easiest, least burdensome solutions placed on the taxpayer. The damage caused by more housing is to delicate sensibilities as a homeowner’s “view” is blocked by new towers and the “character” of a neighborhood is ruined by lower income newcomers.
- llukas 8y agoIf you don't build more schools, hospitals etc. (essentially everything) along with allowing more housing - then you shift problem down the line.
- seibelj 8y agoYour argument - that increased population causes the support infrastructure to buckle - is 100% false. If supporting a growing population was an insurmountable obstacle, then no city would ever grow. We know how to handle growth, this is a solved problem.
- njarboe 8y agoUntil you 'earn' -$500,000 in six months during the next real estate crash.
- tardo99 8y agoShhh. Let them pretend economic history only goes back 10 years. Stop spoiling the party!
- TomVDB 8y agoHere’s a longer look at the economic history: https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-a-baby https://www.paragon-re.com/trend/3-recessions-2-bubbles-and-...
- tardo99 8y agoI know you guys are downvoting me but I don't give a shit. I used to see similar graphs for Incline Village (in Tahoe). But suddenly after 2008, the party stopped. The reason was that prices finally got to a level where people honestly just couldn't afford to bid higher. For prices to double again in the Bay Area, you need to start seeing engineers earning $400k per year. It isn't going to happen. Oh and by the way I have a house in Oakland that I bought in 2000 that has like quadrupled so I already won the lottery. I'm just trying to help others out here.
- woolvalley 8y agoThats pretty funny, because sr engineers at big tech are making close to $400k! Rents and prices have disconnected about 2 years ago. Rents are flat or slightly down while housing prices have kept on going up.
- tardo99 8y agoI do work in tech, and while that kind of comp exists, it's the exception and not the rule. There was a posting today here on HN about a database of salaries that more or less directly contradicts your assertion here. Oh and your entire comment is based on the premise that tech isn't in a bubble (hint: it is).
- crdoconnor 8y agohttps://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
- usaar333 8y agoIs this really surprising? Large amounts of capital give sizable returns. Even with a 2.5% return (inflation) on $1M, you'll earn $12/hr at a 40 hour workweek. Next up in not surprising news, people with $500k stock portfolios likely earn more in appreciation & dividends than the median US worker.
- bertjk 8y agoEven better than a wage, since the eventual cashout gets way nicer tax treatment.
- methodover 8y agoI don’t understand how affordable housing isn’t a huge political issue. It’s missing on the left and the right. Housing is way more important, most people would think, than say, free college tuition (left) or reducing immigration (right) — two issues that get tons of coverage by politicians. Where is the outrage? Where are the action plans and policy proposals? It bothers me.
- 1123581321 8y agoIt isn’t a problem in much of the United States.
- eurticket 8y agoWhat? How is that even possible?
- 1123581321 8y agoLook at this map that shows what a household needs to earn to buy an average (not low-cost) home by state. Most places do not have California’s problem. https://www.google.com/amp/s/www.fatherly.com/news/map-average-cost-house-each-state-us/amp/ https://www.google.com/amp/s/www.fatherly.com/news/map-avera...
- EADGBE 8y agoAh, the old "if it's happening here, it must be happening everywhere". The thing I like most about the US, is it's diversity across all fronts.
- rspeer 8y agoIf you look at local city politics, it is a huge political issue, but one that's an extremely divisive issue between the left and the left, between "affordable housing" and "affordable housing". This is the NIMBY vs YIMBY issue. "Where is the outrage?", you ask. The outrage is on the other side. Homeowners don't want their own homes to be affordable. When property values go down, the people who live on those properties get outraged, and those people are overrepresented among voters. When property taxes go up to redistribute even some of this unearned housing wealth, that leads to "constitutional amendment" levels of outrage.
- imh 8y agoI'd bet the typical mortgage interest is also above minimum wage. Google says San Francisco's median house price is 1.61M. If 80% of that is a mortgage and it's at 4.25%, that comes out to about $55k in interest alone during year 1. Zillow wants you to buy houses, so it'll make it look like you make money out of nothing. I
- deltateam 8y agothe rate of capital growth is intended to outpace the rate of labor this isn't news, this is the design: make enough money fast enough that you can live off it forever. if you do it too slow, you have to live off the principle and it is more likely that a large cost destroys your principle.