3 ms·

> A big part of the problem is that it’s difficult for a 25-year-old to afford to buy a house near their job in San Francisco, not that it’s difficult for them

> A big part of the problem is that it’s difficult for a 25-year-old to afford to buy a house near their job in San Francisco, not that it’s difficult for them to buy a house near the middle-America suburb they likely grew up in. I think both are problems, because if they remain in the middle-America suburb, salaries are a lot lower. A 25 year old living where they grew up often doesn't earn enough to buy the local house either.

bhupy 6y ago
Salaries are indeed a lot lower, but the multiple of the median salary required to buy a home is a lot higher in the coastal metros. In other words, the salaries are nominally lower, but in real terms they’re actually higher. This thread actually breaks it down by metro -> https://twitter.com/jmhorp/status/1221828310000271361 https://twitter.com/jmhorp/status/1221828310000271361 The home-price-to-income ratio has remained mostly unchanged for all metros except for the infamous coastal ones. At this moment, here’s a quick breakdown of the salary necessary to buy the median home, by metro -> https://www.hsh.com/finance/mortgage/salary-home-buying-25-cities.html https://www.hsh.com/finance/mortgage/salary-home-buying-25-c...
- lotsofpulp 6y ago
  But volatility of income is higher, or at least it’s perceived to be. If you think the future is volatile, you need to be in a place where you have multiple options for income as backup, and that is why people will put up with cities even if they prefer other places.
  - bhupy 6y ago
    Do you have a source for income volatility per metro?
    - lotsofpulp 6y ago
      I do not. I imagine it's pretty difficult to quantify, but given the economic stagnation of many rural areas that depended on one or a handful of manufacturing or natural resource extraction facilities, I imagine many people can see and feel it. It sort of makes sense with cheaper labor abroad and cheaper transportation and cheaper communications that money can move very quickly to take advantage of arbitrage. Unfortunately, for people with families, that isn't as easy, so next best solution is to live somewhere with lots of employers, and is experiencing growth.
      - bhupy 6y ago
        Then I'm not sure that you can definitively claim that income "volatility" is necessarily higher outside of {list of expensive coastal metros}. It could be higher, but there's no information to suggest that to be case. > given the economic stagnation of many rural areas that depended on one or a handful of manufacturing or natural resource extraction facilities, I imagine many people can see and feel it. Rural areas have almost never been economically dynamic, in any society (outside of agriculture, at least). Nobody is arguing that one ought to live in a rural town — but there are a ton of tier-2 and tier-3 cities, and suburbs of tier-1 cities where gainful employment is within reach, especially for wage earners in the bottom 3 quintiles. This includes Pittsburgh, Atlanta, Omaha, Little Rock, St. Louis, Milwaukee, Madison, Nashville, Salt Lake City, Minneapolis, Philadelphia, etc etc etc. Even Chicago, a tier-1 city went from having an income-to-home-price multiple of 2.45x in 1984, to 3.55x in 2017.
  - mrep 6y ago
    Well, Chicago, Dallas, and Houston are the third, fourth, and fifth largest metropolitan areas in the US so you should be able to find other jobs there and they all are in the affordable housing areas.

bhupy 6y ago

Salaries are indeed a lot lower, but the multiple of the median salary required to buy a home is a lot higher in the coastal metros. In other words, the salaries are nominally lower, but in real terms they’re actually higher. This thread actually breaks it down by metro -> https://twitter.com/jmhorp/status/1221828310000271361 https://twitter.com/jmhorp/status/1221828310000271361 The home-price-to-income ratio has remained mostly unchanged for all metros except for the infamous coastal ones. At this moment, here’s a quick breakdown of the salary necessary to buy the median home, by metro -> https://www.hsh.com/finance/mortgage/salary-home-buying-25-cities.html https://www.hsh.com/finance/mortgage/salary-home-buying-25-c...

lotsofpulp 6y ago
But volatility of income is higher, or at least it’s perceived to be. If you think the future is volatile, you need to be in a place where you have multiple options for income as backup, and that is why people will put up with cities even if they prefer other places.
- bhupy 6y ago
  Do you have a source for income volatility per metro?
  - lotsofpulp 6y ago
    I do not. I imagine it's pretty difficult to quantify, but given the economic stagnation of many rural areas that depended on one or a handful of manufacturing or natural resource extraction facilities, I imagine many people can see and feel it. It sort of makes sense with cheaper labor abroad and cheaper transportation and cheaper communications that money can move very quickly to take advantage of arbitrage. Unfortunately, for people with families, that isn't as easy, so next best solution is to live somewhere with lots of employers, and is experiencing growth.
    - bhupy 6y ago
      Then I'm not sure that you can definitively claim that income "volatility" is necessarily higher outside of {list of expensive coastal metros}. It could be higher, but there's no information to suggest that to be case. > given the economic stagnation of many rural areas that depended on one or a handful of manufacturing or natural resource extraction facilities, I imagine many people can see and feel it. Rural areas have almost never been economically dynamic, in any society (outside of agriculture, at least). Nobody is arguing that one ought to live in a rural town — but there are a ton of tier-2 and tier-3 cities, and suburbs of tier-1 cities where gainful employment is within reach, especially for wage earners in the bottom 3 quintiles. This includes Pittsburgh, Atlanta, Omaha, Little Rock, St. Louis, Milwaukee, Madison, Nashville, Salt Lake City, Minneapolis, Philadelphia, etc etc etc. Even Chicago, a tier-1 city went from having an income-to-home-price multiple of 2.45x in 1984, to 3.55x in 2017.
- mrep 6y ago
  Well, Chicago, Dallas, and Houston are the third, fourth, and fifth largest metropolitan areas in the US so you should be able to find other jobs there and they all are in the affordable housing areas.