4 ms·

This article is really spot on. It feels like we're in a big speculative mess in Bay Area. The home-price-to-income ratio in SJ is about 20x [1] Anything over

by ctime 8y ago

This article is really spot on. It feels like we're in a big speculative mess in Bay Area. The home-price-to-income ratio in SJ is about 20x [1] Anything over 3x used to be considered "risky". Let's say in Costal Areas it was be allowed to double, then you have 6x. That's good, not great, but ok. And that's about what pricy DC and NY cost. SJ is 20x. How is this possibly sustainable? Not even going to get into the dual income trap that only makes it marginally more realistic. How is this good for average folks, like the ones that keep society running? How will this work in the long run? There will basically be two classes of people, the rich and the ultra poor who barely survive. I suspect poor don't have the money or the knowledge about elsewhere or they would be moving out in droves. [1] - https://www.citylab.com/equity/2018/05/where-the-house-price-to-income-ratio-is-most-out-of-whack/561404/ https://www.citylab.com/equity/2018/05/where-the-house-price... * I should note peak home prices in the last 12 mo were in mid july and houses have fallen by about 5%, so this ratio might actually be lower.

ummonk 8y ago
It works in the short run because a lot of people who own homes here bought them back when they were much cheaper, and are now sitting on piles of equity. The market price is driven by the high end of income, who are the people who actually bid for the limited supply of housing on the market.
dchichkov 8y ago
You might be underestimating the amount of money involved. California is 5th largest world economy, some of it is in the Bay and SF.
jswizzy 8y ago
The poor in California don't move because of the warm weather and 1/3rd of all welfare in the United States is spent in there.
malandrew 8y ago
Moving is really quite expensive, especially if you're moving a family. On top of that, many people have a support network of family and friends that they would leave behind too. If you have small kids, these support networks are super useful since you'd have the added cost of daycare or babysitting in a market where you have no support network.

by ctime 8y ago

ummonk 8y ago

It works in the short run because a lot of people who own homes here bought them back when they were much cheaper, and are now sitting on piles of equity. The market price is driven by the high end of income, who are the people who actually bid for the limited supply of housing on the market.

dchichkov 8y ago

You might be underestimating the amount of money involved. California is 5th largest world economy, some of it is in the Bay and SF.

jswizzy 8y ago

The poor in California don't move because of the warm weather and 1/3rd of all welfare in the United States is spent in there.

malandrew 8y ago

Moving is really quite expensive, especially if you're moving a family. On top of that, many people have a support network of family and friends that they would leave behind too. If you have small kids, these support networks are super useful since you'd have the added cost of daycare or babysitting in a market where you have no support network.