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This generational change in house price to income ratios is also apparent in Britain and supply constrained US cities. It can be largely explained by the fall i

This generational change in house price to income ratios is also apparent in Britain and supply constrained US cities. It can be largely explained by the fall in mortgage interest rates from the 12-15% in the 80's to the 3-5% we see in the 2010's. This windfall provided a massive generational wealth transfer from young to old, and with interest rates near the zero lower bound cannot be replicated. This makes housing a far worse bet for our generation, even for those of us earning sufficiently more than our parents to be able to take a shot at home ownership.

seem_2211 7y ago
100% agreed. It won't end well, and politicians being politicians (and voters being voters), we're going to continue this mad show as long as possible, ensuing we get the worst possible outcome here. The weird bit is that San Francisco prices make more sense than where I grew up (suburban New Zealand). Sure a house in SF might cost $1.2m but two people working in tech can expect to make $250-300k all in by their early thirties. That's only $200k more than a house in New Zealand, but you're working with an income that's easily 2x the size.
- laurencerowe 7y ago
  A $250K household income is on the 96 percentile for San Francisco. Working in tech gives us a slightly warped perspective. Moving from Britain to the US I've seen the income of my profession as a software engineer move from the 75th to 90th percentile and the variance of the income distribution widen so an income of the 90th percentile earns 2.6x rather than 2.0x the median. We're far richer here than we were at home.
sgt101 7y ago
In Britain the concentration of wealth and opportunity in London and the SE is a fundamental driver. If Government were to focus on creating alternative centres of wealth generation the vast stock of infrastructure that surround some of the urban centres in England could be unlocked. For example within 40km of Manchester there is Bolton, Preston, Blackburn, St Helens, Wigan, Halifax, Warrington, Macclesfield. All of these are substantial urban centres in their own right with working infrastructures including schools, hospitals, parks, leisure centres, shopping, residential districts and so on. None of them are economically exploited at this time. Similar pictures exist for the northeast.

seem_2211 7y ago

100% agreed. It won't end well, and politicians being politicians (and voters being voters), we're going to continue this mad show as long as possible, ensuing we get the worst possible outcome here. The weird bit is that San Francisco prices make more sense than where I grew up (suburban New Zealand). Sure a house in SF might cost $1.2m but two people working in tech can expect to make $250-300k all in by their early thirties. That's only $200k more than a house in New Zealand, but you're working with an income that's easily 2x the size.

laurencerowe 7y ago
A $250K household income is on the 96 percentile for San Francisco. Working in tech gives us a slightly warped perspective. Moving from Britain to the US I've seen the income of my profession as a software engineer move from the 75th to 90th percentile and the variance of the income distribution widen so an income of the 90th percentile earns 2.6x rather than 2.0x the median. We're far richer here than we were at home.

sgt101 7y ago

In Britain the concentration of wealth and opportunity in London and the SE is a fundamental driver. If Government were to focus on creating alternative centres of wealth generation the vast stock of infrastructure that surround some of the urban centres in England could be unlocked. For example within 40km of Manchester there is Bolton, Preston, Blackburn, St Helens, Wigan, Halifax, Warrington, Macclesfield. All of these are substantial urban centres in their own right with working infrastructures including schools, hospitals, parks, leisure centres, shopping, residential districts and so on. None of them are economically exploited at this time. Similar pictures exist for the northeast.